Debt

Our outstanding borrowings at December 31, 2015 and 2014 consisted of the following:



	December 31,
(In millions)	2015			2014
Marathon Petroleum Corporation:
Senior notes, 3.500%, due March 2016	$	—		$	750
Bank revolving credit facility due 2017	—			—
Term loan agreement due 2019	700			700
Senior notes, 2.700% due December 2018	600			—
Senior notes, 3.400% due December 2020	650			—
Senior notes, 5.125% due March 2021	1,000			1,000
Senior notes, 3.625%, due September 2024	750			750
Senior notes, 6.500%, due March 2041	1,250			1,250
Senior notes, 4.750%, due September 2044	800			800
Senior notes, 5.850% due December 2045	250			—
Senior notes, 5.000%, due September 2054	400			400
MPLX LP:
MPLX term loan facility due 2019	250			250
MPLX bank revolving credit facility due 2020	877			385
MPLX senior notes, 5.500%, due February 2023	710			—
MPLX senior notes, 4.500%, due July 2023	989			—
MPLX senior notes, 4.875%, due December 2024	1,149			—
MPLX senior notes, 4.000%, due February 2025	500			—
MPLX senior notes, 4.875%, due June 2025	1,189			—
MarkWest senior notes, 4.500% - 5.500%	63			—
Capital lease obligations due 2016-2028	348			372
Trade receivables securitization facility due December 2016	—			—
Total	12,475			6,657
Unamortized debt issuance costs^(a)	(51		)	(35		)
Unamortized discount^(b)	(499		)	(26		)
Fair value adjustments^(c)	—			6
Amounts due within one year	(29		)	(27		)
Total long-term debt due after one year	$	11,896		$	6,575


^(a)	We adopted the updated FASB debt issuance cost standard as of June 30, 2015 and applied the changes retrospectively to the prior period presented. We reclassified unamortized debt issuance costs from other noncurrent assets to long-term debt.


^(b)	2015 includes $465 million discount related to the difference between the fair value and the principal amount of the assumed MarkWest debt.

^(c)

In 2012, we terminated our interest rate swap agreements with a notional amount of $500 million that had been entered into as fair value accounting hedges on our 3.50 percent senior notes due in March 2016. The $20 million gain on the termination of our interest rate swap agreements was amortized over the remaining life of the 3.50 percent senior notes. As a result of the December 2015 extinguishment of our obligation for the 3.50 percent senior notes, the remaining unamortized gain was credited to net interest and other financial income (costs).

The following table shows five years of scheduled debt payments.



(In millions)
2016	$	29
2017	28
2018	630
2019	977
2020	1,560

MPC Bank Revolving Credit Facility

We have a $2.5 billion unsecured bank revolving credit facility (“revolving credit facility”) in place with a maturity date of September 14, 2017. Our revolving credit facility includes letter of credit issuing capacity of up to $2.0 billion and swingline loan capacity of up to $100 million. We may increase our borrowing capacity under our revolving credit facility by up to an additional $500 million, subject to certain conditions including the consent of the lenders whose commitments would be increased. In addition, the maturity date may be extended for up to two additional one-year periods subject to the approval of lenders holding greater than 50 percent of the commitments then outstanding, provided that the commitments of any non-consenting lenders will terminate on the then-effective maturity date.

Borrowings under our revolving credit facility bear interest, at our election, at either the Adjusted LIBO Rate (as defined in our revolving credit facility) plus a margin or the Alternate Base Rate (as defined in our revolving credit facility), plus a margin. We are charged various fees and expenses in connection with our revolving credit facility, including administrative agent fees, commitment fees on the unused portion of our borrowing capacity and fees related to issued and outstanding letters of credit. The applicable margin to the benchmark interest rates and the margin to the benchmark commitment fees payable under our revolving credit facility fluctuate from time-to-time based on our credit ratings.

Our revolving credit facility contains certain representations and warranties, affirmative and restrictive covenants and events of default that we consider to be usual and customary for arrangements of this type, including a financial covenant that requires us to maintain a ratio of Consolidated Net Debt to Total Capitalization (each as defined in our revolving credit facility) of no greater than 0.65 to 1.00 as of the last day of each fiscal quarter. Other covenants, among other things, restrict our ability to incur debt, create liens on our assets or enter into transactions with affiliates. As of December 31, 2015, we were in compliance with the covenants contained in the revolving credit facility.

There were no borrowings or letters of credit outstanding at December 31, 2015.

MPC Term Loan Agreement

On August 26, 2014, we entered into a $700 million five-year senior unsecured term loan credit agreement (“term loan agreement”) with a syndicate of lenders to fund a portion of the purchase price for the acquisition of Hess’ Retail Operations and Related Assets. The term loan was drawn in full on September 24, 2014. The term loan agreement matures on September 24, 2019 and may be prepaid at any time without premium or penalty. We pay certain customary fees under the term loan agreement, including an annual administrative fee to the administrative agent.

Borrowings under the term loan agreement bear interest, at our election, at either the Adjusted LIBO Rate (as defined in the term loan agreement) plus a margin or the Alternate Base Rate (as defined in the term loan agreement) plus a margin. The applicable margin to the benchmark interest rates fluctuate from time-to-time based on our credit ratings. The borrowings under this facility during 2015 were at an average interest rate of 1.3 percent.

The term loan agreement contains representation and warranties, affirmative and negative covenants and events of default that are substantially similar to those contained in our revolving credit facility, which we consider to be usual and customary for an agreement of this type. Among other things, our term loan agreement requires us to maintain, as of the last day of each fiscal quarter, a ratio of Consolidated Net Debt to Total Capitalization (as defined in the term loan agreement) of no greater than 0.65 to 1.00. As of December 31, 2015, we were in compliance with the covenants contained in the term loan agreement.

MPC Senior Notes

On December 14, 2015, we completed a public offering of $1.5 billion in aggregate principal amount of unsecured senior notes (“MPC senior notes”), consisting of $600 million aggregate principal amount of senior notes due 2018, $650 million aggregate principal amount of senior notes due 2020 and $250 million aggregate principal amount of senior notes due 2045. The net proceeds from the offering of the MPC senior notes were $1.49 billion, after deducting underwriting discounts and offering expenses. We used a majority of the net proceeds from this offering to fund the extinguishment of our obligation for the $750 million aggregate principal amount of our 3.500% senior notes due 2016. During December 2015, $763 million was deposited with the trustee and under the terms of the senior notes indenture we relieved our obligation related to these notes, including principal and interest to the maturity date. As a result, we recorded a loss on extinguishment of debt of $5 million. We intend to use the remaining net proceeds for general corporate purposes, which may include investments in and advances to our affiliates and subsidiaries, including MPLX. Interest on each series of MPC senior notes is payable semi-annually in arrears on June 15 and December 15, commencing on June 15, 2016.

The MPC senior notes are unsecured and unsubordinated obligations of ours and rank equally with all our other existing and future unsecured and unsubordinated indebtedness.

MPLX Credit Agreement

MPLX is party to a credit agreement, dated as of November 20, 2014, and amended as of October 27, 2015 (“MPLX credit agreement”), providing for a $2 billion bank revolving credit facility with a maturity date of December 4, 2020 and an outstanding $250 million term loan facility with a maturity date of November 20, 2019.

The MPLX credit agreement includes letter of credit issuing capacity of up to $250 million and swingline loan capacity of up to $100 million. The revolving borrowing capacity under the MPLX credit agreement may be increased by up to an additional $500 million, subject to certain conditions, including the consent of the lenders whose commitments would increase. In addition, the maturity date of the bank revolving credit facility may be extended up from time-to-time during its term to a date that is one year after the then-effective maturity date, subject to the approval of lenders holding the majority of the loans and commitments then outstanding, provided that the commitments of any non-consenting lenders will be terminated on the then-effective maturity date.

The maturity date for the term loan facility may be extended for up to two additional one-year periods subject to the consent of the lenders holding a majority of the outstanding term loan borrowings, provided that the portion of the term loan borrowings held by any non-consenting lenders will continue to be due and payable on the then-effective maturity date. The borrowings under this facility during 2015 were at an average interest rate of 1.7 percent.

Borrowings under the MPLX credit agreement bear interest, at our election, at the Adjusted LIBO Rate or the Alternate Base Rate (as defined in the MPLX credit agreement) plus a specified margin. MPLX is charged various fees and expenses in connection with the agreement, including administrative agent fees, commitment fees on the unused portion of the borrowing capacity and fees with respect to issued and outstanding letters of credit. The applicable margins to the benchmark interest rates and the commitment fees payable under the MPLX credit agreement fluctuate from time-to-time based on MPLX’s credit ratings.

The MPLX credit agreement includes certain representations and warranties, affirmative and restrictive covenants and events of default that we consider to be usual and customary for an agreement of this type, including a financial covenant that requires MPLX to maintain a ratio of Consolidated Total Debt as of the end of each fiscal quarter to Consolidated EBITDA (both as defined in the MPLX credit agreement) for the prior four fiscal quarters of no greater than 5.0 to 1.0 (or 5.5 to 1.0 for up to two fiscal quarters following certain acquisitions). Consolidated EBITDA is subject to adjustments for certain acquisitions completed and capital projects undertaken during the relevant period. Other covenants, among other things, restrict MPLX and certain of its subsidiaries from incurring debt, creating liens on its assets and entering into transactions with affiliates. As of December 31, 2015, MPLX was in compliance with the covenants contained in the MPLX credit agreement.

In connection with the closing of the MarkWest Merger, MarkWest’s existing credit facility was terminated and the approximately $943 million outstanding under MarkWest’s bank revolving credit facility was repaid with $850 million of borrowings under MPLX’s bank revolving credit facility and $93 million in cash. During 2015, MPLX borrowed $992 million under the bank revolving credit facility, at an average interest rate of 1.6 percent, per annum, and repaid $500 million of these borrowings. At December 31, 2015, MPLX had $877 million of borrowings and $8 million of letters of credit outstanding under the bank revolving credit facility, resulting in total unused loan availability of $1.1 billion.

MPLX and MarkWest Senior Notes

In connection with the MarkWest Merger, MPLX assumed MarkWest’s outstanding debt, which included $4.1 billion aggregate principal amount of senior notes. On December 22, 2015, approximately $4.04 billion aggregate principal amount of MarkWest’s outstanding senior notes were exchanged for an aggregate principal amount of approximately $4.04 billion of new unsecured senior notes issued by MPLX and cash of $1 for each $1,000 of principal amount exchanged in an exchange offer and consent solicitation undertaken by MPLX and MarkWest.

The new MPLX senior notes consist of approximately $710 million aggregate principal amount of 5.500% senior notes due February 15, 2023, approximately $989 million aggregate principal amount of 4.500% senior notes due July 15, 2023, approximately $1.15 billion aggregate principal amount of 4.875% senior notes due December 1, 2024 and approximately $1.19 billion aggregate principal amount of 4.875% senior notes due June 1, 2025. Interest on each series of new MPLX senior notes is payable semi-annually in arrears on February 15^th and August 15^th of each year with respect to the 5.500% 2023 senior notes, on January 15^th and July 15^th of each year with respect to the 4.500% 2023 senior notes and on June 1^st and December 1^st of each year with respect to the 4.875% 2024 senior notes and the 4.875% 2025 senior notes.

After giving effect to the exchange offer and consent solicitation referred to above, as of December 31, 2015, MarkWest had outstanding approximately $40 million aggregate principal amount of 5.500% senior notes due February 15, 2023, approximately $11 million aggregate principal amount of 4.500% senior notes due July 15, 2023, approximately $1 million aggregate principal amount of 4.875% senior notes due December 1, 2024 and approximately $11 million aggregate principal amount of 4.875% senior notes due June 1, 2025. Interest on each series of the MarkWest senior notes is payable semi-annually in arrears on February 15^th and August 15^th of each year with respect to the 5.500% 2023 senior notes, on January 15^th and July 15^th of each year with respect to the 4.500% 2023 senior notes and on June 1^st and December 1^st of each year with respect to the 4.875% 2024 senior notes and the 4.875% 2025 senior notes.

The new MPLX notes are unsecured senior obligations of MPLX and rank equally in right of payment with all of its other senior unsecured debt and are structurally subordinate to the secured and unsecured debt of MPLX’s subsidiaries, including any debt of MarkWest that remains outstanding.

On February 12, 2015, MPLX completed a public offering of $500 million aggregate principal amount of four percent unsecured senior notes due February 15, 2025. The net proceeds, which were approximately $495 million after deducting underwriting discounts, were used to repay the amounts outstanding under the MPLX bank revolving credit facility, as well as for general partnership purposes. Interest is payable semi-annually in arrears on February 15^th and August 15^th of each year.

Trade Receivables Securitization Facility

On December 18, 2013, we entered into a three-year, $1.3 billion trade receivables securitization facility (“trade receivables facility”), with a group of financial institutions that act as committed purchasers, conduit purchasers, letter of credit issuers and managing agents under the trade receivables facility. The trade receivables facility is evidenced by a Receivables Purchase Agreement and a Second Amended and Restated Receivables Sale Agreement. In October 2015, we reduced the maximum capacity under the trade receivables facility from $1.3 billion to $1.0 billion.

The trade receivables facility consists of one of our wholly-owned subsidiaries, Marathon Petroleum Company LP (“MPC LP”), selling or contributing on an on-going basis all of its trade receivables (including trade receivables acquired from Marathon Petroleum Trading Canada LLC, a wholly-owned subsidiary of MPC LP), together with all related security and interests in the proceeds thereof, without recourse, to another wholly-owned, bankruptcy-remote special purpose subsidiary, MPC Trade Receivables Company LLC (“TRC”), in exchange for a combination of cash, equity or a subordinated note issued by TRC to MPC LP. TRC, in turn, has the ability to finance its purchase of the receivables from MPC LP by selling undivided ownership interests in qualifying trade receivables, together with all related security and interests in the proceeds thereof, without recourse, to the purchasing group in exchange for cash proceeds. The trade receivables facility also provides for the issuance of letters of credit up to $1.0 billion, provided that the aggregate credit exposure of the purchasing group, including outstanding letters of credit, may not exceed the lessor of $1.0 billion or the balance of our eligible trade receivables at any one time.

To the extent that TRC retains an ownership interest in the receivables it has purchased or received from MPC LP, such interest will be included in our consolidated financial statements solely as a result of the consolidation of the financial statements of TRC with those of MPC. The receivables sold or contributed to TRC are available first and foremost to satisfy claims of the creditors of TRC and are not available to satisfy the claims of creditors of MPC. TRC has granted a security interest in all of its assets to the purchasing group to secure its obligations under the Receivables Purchase Agreement.

Proceeds from the sale of undivided percentage ownership interests in qualifying receivables under the trade receivables facility will be reflected as debt on our consolidated balance sheet. We will remain responsible for servicing the receivables sold to the purchasing group. TRC pays floating-rate interest charges and usage fees on amounts outstanding under the trade receivables facility, if any, and certain other fees related to the administration of the facility and letters of credit that are issued and outstanding under the trade receivables facility.

The Receivables Purchase Agreement and Second Amended and Restated Receivables Sale Agreement include representations and covenants that we consider usual and customary for arrangements of this type. Trade receivables are subject to customary criteria, limits and reserves before being deemed to qualify for sale by TRC pursuant to the trade receivables facility. In addition, further purchases of qualified trade receivables under the trade receivables facility are subject to termination, and TRC may be subject to default fees, upon the occurrence of certain amortization events that are included in the Receivables Purchase Agreement, which we consider to be usual and customary for arrangements of this type. At December 31, 2015, we were in compliance with the covenants contained in the Receivables Purchase Agreement and Second Amended and Restated Receivables Sale Agreement.

As of December 31, 2015, eligible trade receivables supported borrowings and letter of credit issuances of $668 million. There were no borrowings or letters of credit outstanding under the trade receivables facility at December 31, 2015.