DEBT OBLIGATIONS AND CREDIT FACILITIES

The Company’s debt obligations are set forth below:



	As of
	June 30, 2017			December 31, 2016

$250,000, 6.75%, issued in November 2009, payable on December 2, 2019	$	250,000		$	250,000
$250,000, variable-rate term loan, issued in March 2014, payable on March 31, 2021 ⁽¹⁾	150,000			150,000
$50,000, 3.91%, issued in September 2014, payable on September 3, 2024	50,000			50,000
$100,000, 4.01%, issued in September 2014, payable on September 3, 2026	100,000			100,000
$100,000, 4.21%, issued in September 2014, payable on September 3, 2029	100,000			100,000
$100,000, 3.69%, issued in July 2016, payable on July 12, 2031	100,000			100,000
Total remaining principal	750,000			750,000
Less: Debt issuance costs	(3,664		)	(4,103		)
Debt obligations	$	746,336		$	745,897

(1)

The credit agreement consists of a $250 million term loan and a $500 million revolving credit facility. Borrowings generally bear interest at a spread to either LIBOR or an alternative base rate. Based on the current credit ratings of Oaktree Capital Management, L.P., the interest rate on borrowings is LIBOR plus 1.00% per annum and the commitment fee on the unused portions of the revolving credit facility is 0.125% per annum. The credit agreement contains customary financial covenants and restrictions, including ones regarding a maximum leverage ratio and a minimum required level of assets under management (as defined in the credit agreement). As of June 30, 2017, the Company had no outstanding borrowings under the revolving credit facility.

As of June 30, 2017, future scheduled principal payments of debt obligations were as follows:



Last six months of 2017	$	—
2018	—
2019	250,000
2020	—
2021	150,000
Thereafter	350,000
Total	$	750,000

The Company was in compliance with all financial maintenance covenants associated with its senior notes and bank credit facility as of June 30, 2017 and December 31, 2016.

The fair value of the Company’s debt obligations, which are carried at amortized cost, is a Level III valuation that is estimated based on a discounted cash-flow calculation using estimated rates that would be offered to Oaktree for debt of similar terms and maturities. The fair value of these debt obligations, gross of debt issuance costs, was $787.6 million and $756.6 million as of June 30, 2017 and December 31, 2016, respectively, utilizing an average borrowing rate of 3.3% and 3.9%, respectively. As of June 30, 2017, a 10% increase in the assumed average borrowing rate would lower the estimated fair value to $772.9 million, whereas a 10% decrease would increase the estimated fair value to $802.8 million.

Credit Facilities of the Consolidated Funds

Certain consolidated funds may maintain revolving credit facilities that are secured by the assets of the fund or may issue senior variable rate notes to fund investments on a longer term basis, generally up to ten years. The obligations of the consolidated funds are nonrecourse to the Company.

The consolidated funds had the following debt obligations outstanding:



	Outstanding Amount as of						Facility Capacity		LIBOR Margin ⁽¹⁾	Maturity	Commitment Fee Rate	L/C Fee
Credit Agreement	June 30, 2017			December 31, 2016			Facility Capacity		LIBOR Margin ⁽¹⁾	Maturity	Commitment Fee Rate	L/C Fee
Revolving credit facility	$	254,000		$	—		$	450,000	1.25%	4/19/2019	N/A	N/A
Senior variable rate notes ⁽²⁾	488,998			488,997			$	489,000	Various	10/20/2027	N/A	N/A
Total debt obligations	742,998			488,997
Less: Debt issuance costs	(4,448		)	(5,041		)
Total debt obligations, net	$	738,550		$	483,956


(1)	The facility bears interest at an annual rate of LIBOR plus the applicable margin.


(2)	The weighted average interest rate was 2.70% as of June 30, 2017.

As of June 30, 2017 and December 31, 2016, the consolidated funds had debt obligations with an aggregate outstanding principal balance of $743.0 million and $489.0 million, respectively. The fair value of the revolving credit facility is a Level III valuation and approximated carrying value due to the short-term or revolving nature. The fair value of the senior variable rate notes is a Level III valuation and approximated carrying value as of June 30, 2017 and December 31, 2016 due to their recent issuance date. Financial instruments that are valued using quoted prices for the security or similar securities are generally classified as Level III because the quoted prices may be indicative in nature for securities that are in an inactive market, may be for similar securities, or may require adjustment for investment-specific factors or restrictions.

Debt Obligations of CLOs

Debt obligations of CLOs represent amounts due to holders of debt securities issued by the CLOs, as well as term loans of CLOs that had not priced as of period end. The table below sets forth the outstanding debt obligations of CLOs as of the date indicated.



	As of June 30, 2017				As of December 31, 2016
	Fair Value ⁽¹⁾		Weighted Average Interest Rate	Weighted Average Remaining Maturity (years)	Fair Value ⁽¹⁾		Weighted Average Interest Rate	Weighted Average Remaining Maturity (years)
Senior secured notes ⁽²⁾⁽³⁾	$	398,563	3.01%	12.0	$	471,603	2.90%	8.2
Senior secured notes ⁽²⁾⁽⁴⁾	458,294		2.92%	9.4	470,298		3.03%	9.9
Senior secured notes ⁽⁵⁾	24,129		3.62%	1.5	49,336		3.31%	2.0
Senior secured notes ⁽⁶⁾	385,301		1.73%	10.2	357,706		1.73%	10.7
Senior secured notes ⁽²⁾	462,930		3.23%	10.5	467,084		2.96%	11.0
Senior secured notes ⁽⁶⁾⁽⁷⁾	411,248		1.73%	13.1	360,234		2.29%	11.3
Senior secured notes ⁽⁶⁾	424,810		2.28%	11.9	395,458		2.28%	12.4
Senior secured notes ⁽⁶⁾	423,486		1.99%	12.7	382,161		1.99%	13.2
Subordinated note ⁽⁸⁾	17,024		N/A	9.4	12,281		N/A	9.9
Subordinated note ⁽⁸⁾	19,601		N/A	10.2	17,871		N/A	10.7
Subordinated note ⁽⁸⁾	18,952		N/A	10.5	18,432		N/A	11.0
Subordinated note ⁽⁸⁾	17,115		N/A	13.1	13,422		N/A	11.3
Subordinated note ⁽⁸⁾	20,096		N/A	11.9	17,073		N/A	12.4
Subordinated note ⁽⁸⁾	18,480		N/A	12.7	21,251		N/A	13.2
Total CLO debt obligations	$	3,100,029			$	3,054,210


(1)	The fair value of CLO liabilities was measured as the fair value of CLO assets less the sum of (a) the fair value of any beneficial interests held by the Company and (b) the carrying value of any beneficial interests that represent compensation for services. Please see notes 2 and 5 for more information.


(2)	The weighted average interest rate is based on LIBOR plus a margin.


(3)	These notes were reset in May 2017, resulting in a lower interest rate spread and an extension to the original maturity date.


(4)	These notes were refinanced in March 2017, resulting in a lower interest rate spread. There was no change to the original maturity date.


(5)	The interest rate is LIBOR plus a margin determined based on a formula as defined in the respective borrowing agreements, which incorporate different borrowing values based on the characteristics of collateral investments purchased. The weighted average unused commitment fee rate ranged from 0% to 2.0%.


(6)	The weighted average interest rate is based on EURIBOR (subject to a zero floor) plus a margin.


(7)	These notes were reset in May 2017, resulting in a lower interest rate spread and an extension to the original maturity date.


(8)	The subordinated notes do not have a contractual interest rate; instead, they receive distributions from the excess cash flows generated by the CLO.

The debt obligations of CLOs are nonrecourse to the Company and are backed by the investments held by the respective CLO. Assets of one CLO may not be used to satisfy the liabilities of another. As of June 30, 2017 and December 31, 2016, the fair value of CLO assets was $3.7 billion and $3.4 billion, respectively, and consisted of cash, corporate loans, corporate bonds and other securities.

As of June 30, 2017, future scheduled principal or par value payments with respect to the debt obligations of CLOs were as follows:



Last six months of 2017	$	—
2018	24,129
2019	—
2020	—
2021	—
Thereafter	3,099,250
Total	$	3,123,379