13.

BORROWINGS

On October 2, 2017, Blackstone, through its indirect subsidiary Blackstone Holdings Finance Co. L.L.C. (the “Issuer”), issued $300 million aggregate principal amount of senior notes maturing October 2, 2027 (the “2027 Notes”) and $300 million aggregate principal amount of senior notes maturing October 2, 2047 (the “2047 Notes”). The 2027 Notes have an interest rate of 3.150% per annum, accruing from October 2, 2017. The 2047 Notes have an interest rate of 4.000% per annum, accruing from October 2, 2017. Interest on the 2027 Notes and 2047 Notes is payable semi-annually in arrears on October 2 and April 2 of each year, commencing on April 2, 2018. The 2027 Notes and 2047 Notes are unsecured and unsubordinated obligations of the Issuer. The 2027 Notes and 2047 Notes are fully and unconditionally guaranteed, jointly and severally, by the Partnership and its indirect subsidiaries, Blackstone Holdings I L.P., Blackstone Holdings AI L.P., Blackstone Holdings II L.P., Blackstone Holdings III L.P. and Blackstone Holdings IV L.P. (the “Guarantors”). The guarantees are unsecured and unsubordinated obligations of the Guarantors. Transaction costs related to the issuance of the 2027 Notes and 2047 Notes have been capitalized and are being amortized over the life of the 2027 Notes and 2047 Notes. Blackstone used the proceeds from these notes to repurchase all of its 6.625% senior notes maturing on August 15, 2019 (the “2019 Notes”). Blackstone recognized a loss of $32.9 million in conjunction with the extinguishment of the 2019 Notes and is included in Interest Expense in the Consolidated Statement of Operations.

The Partnership borrows and enters into credit agreements for its general operating and investment purposes and certain Blackstone Funds borrow to meet financing needs of their operating and investing activities. Borrowing facilities have been established for the benefit of selected Blackstone Funds. When a Blackstone Fund borrows from the facility in which it participates, the proceeds from the borrowing are strictly limited for its intended use by the borrowing fund and not available for other Partnership purposes. The Partnership’s credit facilities consist of the following:


	December 31,
	2017							2016
	Credit Available		Borrowing Outstanding		Weighted Average Interest Rate			Credit Available		Borrowing Outstanding		Weighted Average Interest Rate
Revolving Credit Facility (a)	$	1,500,000	$	683		0.88	%	$	1,500,000	$	683		0.88	%
Blackstone Issued Senior Notes (b)
6.625%, Due 8/15/2019 (c)		—		—		—			585,000		585,000		6.63	%
5.875%, Due 3/15/2021		400,000		400,000		5.88	%		400,000		400,000		5.88	%
4.750%, Due 2/15/2023		400,000		400,000		4.75	%		400,000		400,000		4.75	%
6.250%, Due 8/15/2042		250,000		250,000		6.25	%		250,000		250,000		6.25	%
5.000%, Due 6/15/2044		500,000		500,000		5.00	%		500,000		500,000		5.00	%
4.450%, Due 7/15/2045		350,000		350,000		4.45	%		350,000		350,000		4.45	%
2.000%, Due 5/19/2025		360,150		360,150		2.00	%		315,510		315,510		2.00	%
1.000%, Due 10/5/2026		720,300		720,300		1.00	%		631,020		631,020		1.00	%
3.150%, Due 10/2/2027		300,000		300,000		3.15	%		—		—		—
4.000%, Due 10/2/2047		300,000		300,000		4.00	%		—		—		—

		5,080,450		3,581,133		3.76	%		4,931,530		3,432,213		4.37	%
Blackstone Fund Facilities (d)		2,803		2,803		2.79	%		2,793		2,793		2.32	%
CLO Vehicles (e)		11,583,607		11,583,607		2.32	%		5,506,976		5,506,976		2.02	%

	$	16,666,860	$	15,167,543		2.54	%	$	10,441,299	$	8,941,982		2.92	%

(a)

Blackstone Holdings Finance Co. L.L.C. (the “Issuer”), an indirect subsidiary of the Partnership, has a revolving credit facility (the “Credit Facility”) with Citibank, N.A., as Administrative Agent in the amount of $1.5 billion with a maturity date of August 31, 2021. Interest on the borrowings is based on an adjusted LIBOR rate or alternate base rate, in each case plus a margin, and undrawn commitments bear a commitment fee. Borrowings may also be made in U.K. sterling or euros, in each case subject to certain sub-limits. The Credit Facility contains customary representations, covenants and events of default. Financial covenants consist of a maximum net leverage ratio and a requirement to keep a minimum amount of fee-earning assets under management, each tested quarterly. The Borrowing Outstanding at each date represent outstanding but undrawn letters of credit against the credit facility.

(b)

The Issuer, has issued long term borrowings in the form of senior notes (the “Notes”). The Notes are unsecured and unsubordinated obligations of the Issuer. The Notes are fully and unconditionally guaranteed, jointly and severally, by the Partnership, Blackstone Holdings (the “Guarantors”), and the Issuer. The guarantees are unsecured and unsubordinated obligations of the Guarantors. Transaction costs related to the issuance of the Notes have been deducted from the Note liability and are being amortized over the life of the Notes. The indentures include covenants, including limitations on the Issuer’s and the Guarantors’ ability to, subject to exceptions, incur indebtedness secured by liens on voting stock or profit participating equity interests of their subsidiaries or merge, consolidate or sell, transfer or lease assets. The indentures also provide for events of default and further provide that the trustee or the holders of not less than 25% in aggregate principal amount of the outstanding Notes may declare the Notes immediately due and payable upon the occurrence and during the continuance of any event of default after expiration of any applicable grace period. In the case of specified events of bankruptcy, insolvency, receivership or reorganization, the principal amount of the Notes and any accrued and unpaid interest on the Notes automatically become due and payable. All or a portion of the Notes may be redeemed at the Issuer’s option in whole or in part, at any time and from time to time, prior to their stated maturity, at the make-whole redemption price set forth in the Notes. If a change of control repurchase event occurs, the holders of the Notes may require the Issuer to repurchase the Notes at a repurchase price in cash equal to 101% of the aggregate principal amount of the Notes repurchased plus any accrued and unpaid interest on the Notes repurchased to, but not including, the date of repurchase. Interest expense on the Notes was $200.4 million, $145.6 million and $136.5 million for the years ended December 31, 2017, December 31, 2016 and December 31, 2015, respectively.

(c)	The Credit Available and Borrowing Outstanding are determined using the original $600 million par amount less $15 million attributable to these notes which were acquired but not retired by Blackstone during 2012. The entire amount of these bonds were retired in 2017.

(d)

Represents borrowing facilities for the various consolidated Blackstone Funds used to meet liquidity and investing needs. Certain borrowings under these facilities were used for bridge financing and general liquidity purposes. Other borrowings were used to finance the purchase of investments with the borrowing remaining in place until the disposition or refinancing event. Such borrowings have varying maturities and are rolled over until the disposition or a refinancing event. Because the timing of such events is unknown and may occur in the near term, these borrowings are considered short-term in nature. Borrowings bear interest at spreads to market rates. Borrowings were secured according to the terms of each facility and are generally secured by the investment purchased with the proceeds of the borrowing and/or the uncalled capital commitment of each respective fund. Certain facilities have commitment fees. When a fund borrows, the proceeds are available only for use by that fund and are not available for the benefit of other funds. Collateral within each fund is also available only against the borrowings by that fund and not against the borrowings of other funds.

(e)	Represents borrowings due to the holders of debt securities issued by CLO vehicles consolidated by Blackstone. These amounts are included within Loans Payable and Due to Affiliates within the Consolidated Statements of Financial Condition.

The following table presents the general characteristics of each of our Notes, as well as their carrying value and fair value. The Notes are included in Loans Payable within the Consolidated Statements of Financial Condition. All of the Notes were issued at a discount. All of the Notes accrue interest from the Issue Date and all pay interest in arrears on a semi-annual basis or annual basis as indicated by the Interest Payment Dates.


	December 31,
	2017				2016
Senior Notes	Carrying Value		Fair Value (a)		Carrying Value (b)		Fair Value (a)
6.625%, Due 8/15/2019 (c)	$	—	$	—	$	607,121	$	648,765
5.875%, Due 3/15/2021		398,514		438,320		398,105		447,600
4.750%, Due 2/15/2023		394,137		434,200		393,158		426,520
6.250%, Due 8/15/2042		238,019		328,200		237,830		285,450
5.000%, Due 6/15/2044		488,536		574,100		488,337		497,200
4.450%, Due 7/15/2045		343,925		372,575		343,816		322,525
2.000%, Due 5/19/2025		355,425		385,433		310,805		331,096
1.000%, Due 10/5/2026		709,871		711,440		620,750		598,270
3.150%, Due 10/2/2027		296,399		295,320		—		—
4.000%, Due 10/2/2047		289,989		296,940		—		—

Total	$	3,514,815	$	3,836,528	$	3,399,922	$	3,557,426

(a)	Fair value is determined by broker quote and these notes would be classified as Level II within the fair value hierarchy.

(b)	The carrying value has been adjusted to reflect the presentation of debt issuance costs as a direct deduction from the related liability for all periods presented in accordance with amended guidance on simplifying the presentation of such costs.

(c)	The carrying and fair values are determined using the original $600 million par amount less $15 million attributable to these notes which were acquired but not retired by Blackstone during 2012.

Included within Loans Payable and Due to Affiliates within the Consolidated Statements of Financial Condition are amounts due to holders of debt securities issued by Blackstone’s consolidated CLO vehicles. Borrowings through the consolidated CLO vehicles consisted of the following:


	December 31,
	2017							2016
	Borrowing Outstanding		Weighted Average Interest Rate			Weighted Average Remaining Maturity in Years		Borrowing Outstanding		Weighted Average Interest Rate			Weighted Average Remaining Maturity in Years
Senior Secured Notes	$	10,689,240		2.35	%		4.1	$	5,124,241		2.17	%		5.4
Subordinated Notes		894,367		(a	)		N/A		382,735		(a	)		N/A

	$	11,583,607						$	5,506,976

(a)	The Subordinated Notes do not have contractual interest rates but instead receive distributions from the excess cash flows of the CLO vehicles.

Senior Secured Notes and Subordinated Notes comprise the following amounts:


	December 31,
	2017						2016
			Amounts Due to Non- Consolidated Affiliates						Amounts Due to Non- Consolidated Affiliates
	Fair Value		Borrowing Outstanding		Fair Value		Fair Value		Borrowing Outstanding		Fair Value
Senior Secured Notes	$	10,595,652	$	1,000	$	996	$	5,125,804	$	—	$	—
Subordinated Notes		743,554		53,400		40,390		345,594		10,000		7,748

	$	11,339,206	$	54,400	$	41,386	$	5,471,398	$	10,000	$	7,748

The Loans Payable of the consolidated CLO vehicles are collateralized by assets held by each respective CLO vehicle and assets of one vehicle may not be used to satisfy the liabilities of another. As of December 31, 2017 and 2016, the fair value of the consolidated CLO assets was $13.4 billion and $6.4 billion, respectively. This collateral consisted of Cash, Corporate Loans, Corporate Bonds and other securities.

As part of Blackstone’s borrowing arrangements, the Partnership is subject to certain financial and operating covenants. The Partnership was in compliance with all of its loan covenants as of December 31, 2017.

Scheduled principal payments for borrowings at December 31, 2017 are as follows:


	Operating Borrowings		Blackstone Fund Facilities / CLO Vehicles		Total Borrowings
2018	$	—	$	290,437	$	290,437
2019		—		—		—
2020		—		540,225		540,225
2021		400,000		—		400,000
2022		—		—		—
Thereafter		3,180,450		10,755,747		13,936,197

Total	$	3,580,450	$	11,586,409	$	15,166,859