Debt

Credit Facilities

At December 31, 2016, our short-term liquidity sources include a $2.5 billion revolving credit facility (“Credit Facility”), domestic and international uncommitted credit lines and the ability to issue up to $2 billion of commercial paper. In July 2016, we extended the term of our Credit Facility to July 31, 2021. The uncommitted credit lines aggregate $1.1 billion and $1.2 billion at December 31, 2016 and 2015, respectively. There were no outstanding commercial paper issuances or borrowings under the Credit Facility or the uncommitted credit lines at December 31, 2016 and 2015.

Available and unused credit lines at December 31, 2016 and 2015 were (in millions):



	2016		2015
Credit Facility	$	2,500.0	$	2,500.0
Uncommitted credit lines	1,132.0		1,157.7
Available and unused credit lines	$	3,632.0	$	3,657.7

The Credit Facility contains financial covenants that require us to maintain a Leverage Ratio of consolidated indebtedness to consolidated EBITDA of no more than 3 times for the most recently ended 12-month period (EBITDA is defined as earnings before interest, taxes, depreciation and amortization) and an Interest Coverage Ratio of consolidated EBITDA to interest expense of at least 5 times for the most recently ended 12-month period. At December 31, 2016, we were in compliance with these covenants as our Leverage Ratio was 2.2 times and our Interest Coverage Ratio was 11.0 times. The Credit Facility does not limit our ability to declare or pay dividends or repurchase our common stock.

Short-Term Debt

Short-term debt at December 31, 2016 and 2015 was $28.7 million and $5.2 million, respectively. The debt represents bank overdrafts and short-term borrowings of our international subsidiaries and the weighted average interest rate was 9.8% and 3.7%, respectively. Due to the short-term nature of this debt, carrying value approximates fair value.

Long-Term Debt

Long-term debt at December 31, 2016 and 2015 was (in millions):



	2016			2015
5.9% Senior Notes due 2016	$	—		$	1,000.0
6.25% Senior Notes due 2019	500.0			500.0
4.45% Senior Notes due 2020	1,000.0			1,000.0
3.625% Senior Notes due 2022	1,250.0			1,250.0
3.65% Senior Notes due 2024	750.0			750.0
3.60% Senior Notes due 2026	1,400.0			—
Other debt	0.1			0.3
	4,900.1			4,500.3
Unamortized premium (discount), net	7.6			10.1
Unamortized debt issuance costs	(24.2		)	(16.9		)
Unamortized deferred gain from settlement of interest rate swaps	84.7			49.9
Fair value adjustment attributed to interest rate swaps	(47.6		)	22.2
	4,920.6			4,565.6
Current portion	(0.1		)	(1,001.4		)
Long-term debt	$	4,920.5		$	3,564.2

Omnicom and its wholly owned finance subsidiary, Omnicom Capital Inc. (“OCI”), are co-obligors under all the senior notes. The senior notes are a joint and several liability of us and OCI and we unconditionally guarantee OCI’s obligations with respect to the senior notes. OCI provides funding for our operations by incurring debt and lending the proceeds to our operating subsidiaries. OCI’s assets consist of cash and cash equivalents and intercompany loans made to our operating subsidiaries and the related interest receivable. There are no restrictions on the ability of OCI or us to obtain funds from our subsidiaries through dividends, loans or advances. Our senior notes are senior unsecured obligations that rank equal in right of payment with all existing and future unsecured senior indebtedness.

The contractual maturities of our long-term debt at December 31, 2016 are (in millions):



2017	$	0.1
2018	—
2019	500.0
2020	1,000.0
2021	—
Thereafter	3,400.0
	$	4,900.1

We use fixed-to-floating interest rate swaps to manage our interest cost and structure our long-term debt portfolio to achieve a mix of fixed rate and floating rate debt. Interest rate swaps hedge the risk of changes in fair value of the underlying senior notes attributable to changes in the benchmark LIBOR interest rate. The interest rate swaps qualify and are designated as fair value hedges on the underlying senior notes and have the economic effect of converting the underlying senior notes from fixed rate obligations to floating rate obligations. We receive fixed interest rate payments equal to the coupon interest rate on the underlying senior notes and pay a variable interest rate equal to three-month LIBOR, plus a spread. Gains and losses attributed to changes in the fair value of the swaps substantially offset changes in the fair value of the underlying senior notes attributed to changes in the benchmark interest rate. Accordingly, any hedge ineffectiveness is not material to our results of operations.

At January 1, 2015, we had a $1.25 billion fixed-to-floating interest rate swap on our 3.625% Senior Notes due 2022 (“2022 Notes”) and a $1.0 billion fixed-to-floating interest rate swap on our 4.45% Senior Notes due 2020 (“2020 Notes”). In October 2015, we settled the swap on the 2020 Notes, realizing a gain of $36.9 million, and reduced the amount of the swap on the 2022 Notes to $1.0 billion, realizing a gain of $13.5 million. On January 19, 2016, we settled the $1.0 billion swap on the 2022 Notes, realizing a gain of $54.2 million. The gains are being amortized in interest expense over the remaining term of the 2020 Notes and the 2022 Notes.

In October 2015, we entered into a $750 million interest rate swap on our 3.65% Senior Notes due 2024 (“2024 Notes”). The spread over the three-month LIBOR interest rate on the 2024 Notes is 1.72%.

We may use forward-starting interest rate swaps to lock in the interest rate of future debt issuances. Forward-starting interest rate swaps qualify and are designated as cash flow hedges on the future debt issuances. On March 26, 2015, in anticipation of refinancing our 5.9% Senior Notes due April 15, 2016 (“2016 Notes”), we entered into a $1.0 billion forward-starting interest rate swap. At December 31, 2015, we recorded a current liability of $5.6 million representing the fair value of the forward-starting interest rate swap. The related unrealized loss of $3.3 million, net of income taxes of $2.3 million, was recorded in accumulated other comprehensive income and almost no hedge ineffectiveness was recorded. As discussed below, the forward-starting interest rate swap was settled in March 2016.

On April 6, 2016, we issued $1.4 billion principal amount of 3.60% Senior Notes due April 15, 2026 (“2026 Notes”). The net proceeds, after deducting the underwriting discount and offering expenses, were $1.387 billion. A portion of the proceeds were used to retire the 2016 Notes at maturity. On March 28, 2016, we settled the outstanding forward-starting interest rate swap for a payment of $54.5 million. The payment is being amortized in interest expense over the term of the 2026 Notes and resulted in an effective interest rate on the 2026 Notes of approximately 4.1%. Concurrent with the issuance of the 2026 Notes, we entered into a $500 million fixed-to-floating interest rate swap on the 2026 Notes. We receive the coupon rate and pay a variable interest rate equal to three-month LIBOR interest rate, plus a spread of 1.982%.

At December 31, 2016, we recorded long-term liabilities of $17.1 million and $30.5 million representing the fair value of the swaps on the 2024 Notes and 2026 Notes, respectively, that was substantially offset by the change in the fair value of the notes. The total principal amount of our fixed rate senior notes at December 31, 2016, was $4.9 billion and the total amount of the fixed-to-floating interest rate swaps was $1.25 billion. The interest rate swaps have the economic effect of converting our debt portfolio to approximately 75% fixed rate obligations and 25% floating rate obligations.

At December 31, 2015, we recorded a long-term receivable of $32.2 million on the swap of the 2022 Notes and a long-term liability of $10.0 million on the swap of 2024 Notes. The receivable and liability represent the fair value of the swaps that are substantially offset by the change in the fair value of the notes.

Convertible Debt

In July 2014, we redeemed the outstanding Convertible Notes due July 31, 2032 ("2032 Notes") for $252.7 million in cash. Prior to redemption, the noteholders converted their notes into 1,217,112 shares of our common stock. There was no convertible debt outstanding at December 31, 2016 and 2015.

Interest Expense

Interest expense for the three years ended December 31, 2016 is composed of (in millions):



	2016			2015			2014
Long-term debt	$	205.5		$	210.2		$	192.7
Interest rate swaps	(13.1		)	(44.1		)	(30.5		)
Amortization of deferred gain on interest rate swaps	(15.4		)	(9.2		)	(7.2		)
Commercial paper	6.8			4.8			2.9
Fees	5.6			5.7			6.2
Other	20.3			13.7			13.1
	$	209.7		$	181.1		$	177.2