BORROWINGS

3 Months Ended

Jun. 30, 2022

BORROWINGS

BORROWINGS

NOTE 9. BORROWINGS

Debt

The following table presents the components of our debt:

			June 30,		March 31,
(Dollars in millions)	Interest Rate	Maturity	2022		2022
Unsecured floating-rate term loan	2.24%*	November 2024	$	500	$	500
Commercial loan agreement	3.00%	July 2026		116		123
Unsecured senior notes due 2026	2.05%	October 2026		700		700
Unsecured senior notes due 2028	2.70%	October 2028		500		500
Unsecured senior notes due 2031	3.15%	October 2031		650		650
Unsecured senior notes due 2041	4.10%	October 2041		550		550
Finance lease obligations **	1.85%	2022-2027		204		219
			$	3,219	$	3,242
Less: Unamortized discount				5		5
Less: Unamortized debt issuance costs				14		15
Less: Current maturities of long-term debt				93		96
Total long-term debt			$	3,107	$	3,127

* Floating rate calculated as of June 30, 2022, using a rate equal to one-month U.S. dollar LIBOR plus 1.125%.

** Finance lease obligations presented using the weighted-average interest rate and calendar-year maturity dates.

Contractual obligations of long-term debt outstanding at June 30, 2022, exclusive of finance lease obligations, are as follows:

(Dollars in millions)*	Principal
Year ending March 31:
2023 (remaining nine months)	$	20
2024		28
2025		529
2026		29
2027		710
Thereafter		1,700
Total	$	3,016

*    Contractual obligations approximate scheduled repayments.

Revolving Credit Agreement

In October 2021, we entered into a $3.15 billion multi-currency revolving credit agreement (the “Revolving Credit Agreement”) for our future liquidity needs.

The Revolving Credit Agreement expires, unless extended, in October 2026. Interest rates on borrowings under the Revolving Credit Agreements are based on prevailing market interest rates, plus a margin, as further described in the Revolving Credit Agreement. The total expense recorded by the Company for the Revolving Credit Agreement was not material in any of the periods presented.

We may voluntarily prepay borrowings under the Revolving Credit Agreement without premium or penalty, subject to customary “breakage” costs. The Revolving Credit Agreement includes certain customary mandatory prepayment provisions.

Interest on Debt

Interest expense for the three months ended June 30, 2022 and 2021 was $20 million and $15 million, respectively. Most of the interest for the pre-Separation period presented in the historical Consolidated Income Statement reflects the allocation of interest expense associated with debt issued by IBM for which a portion of the proceeds benefited Kyndryl.