Debt

12 Months Ended

Dec. 31, 2019

Credit Facilities

At December 31, 2019, we have a $2.5 billion multi-currency revolving Credit Facility, expiring on July 31, 2021, uncommitted credit lines aggregating $1.3 billion and the ability to issue up to $2 billion of commercial paper. These facilities provide additional liquidity sources for working capital and general corporate purposes. At December 31, 2019, there were no outstanding commercial paper issuances or borrowings under the Credit Facility or the uncommitted credit lines.

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, 2019 we were in compliance with these covenants as our Leverage Ratio was 2.2 times and our Interest Coverage Ratio was 10.4 times. The Credit Facility does not limit our ability to declare or pay dividends or repurchase our common stock.

Short-Term Debt

At December 31, 2019 and 2018, short-term debt of $10.1 million and $8.1 million, respectively, represented bank overdrafts and short-term borrowings primarily of our international subsidiaries. The weighted average interest rate was 2.5% and 4.2%, respectively. Due to the short-term nature of this debt, carrying value approximates fair value.

Long-Term Debt

Long-term debt was (in millions):


	December 31,
	2019		2018
6.25% Senior Notes due 2019	$	—	$	500.0
4.45% Senior Notes due 2020	600.0		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		1,400.0
€500 Million 0.80% Senior Notes due 2027	561.4		—
€500 Million 1.40% Senior Notes due 2031	561.4		—

	5,122.8		4,900.0
Unamortized premium (discount), net	0.8		4.9
Unamortized debt issuance costs	(20.0)		(16.4)
Unamortized deferred gain from settlement of interest rate swaps	30.7		48.0
Fair value of interest rate swaps	—		(52.8)
	5,134.3		4,883.7
Current portion	(602.4)		(499.6)
Long-term debt	$	4,531.9	$	4,384.1

On July 15, 2019, our $500 million 6.25% Senior Notes due 2019, or 2019 Notes, matured and were retired. On July 8, 2019, Omnicom Finance Holdings plc, or OFHP, a U.K.-based wholly owned subsidiary of Omnicom, issued €500 million 0.80% Senior Notes due July 8, 2027 and €500 million 1.40% Senior Notes due July 8, 2031, collectively the Euro Notes. The U.S. Dollar equivalent of the net proceeds from the issuance of the Euro Notes, after deducting the underwriting discount and offering expenses, was $1.1 billion. The net proceeds were used to retire the outstanding 2019 Notes at maturity, to redeem $400 million of our outstanding $1 billion 4.45% Senior Notes due 2020, or the 2020 Notes, on August 1, 2019, and for general corporate purposes. In connection with the partial redemption of the 2020 Notes, we recorded a net extinguishment loss of $6.3 million in interest expense. At December 31, 2019, the remaining $600 million of the 2020 Notes were classified as current.

Omnicom and its wholly owned finance subsidiary, Omnicom Capital Inc., or OCI, are co-obligors under all our U.S. Dollar-denominated senior notes. The U.S. Dollar-denominated senior notes are a joint and several liability of Omnicom and OCI, and Omnicom unconditionally guarantees OCI’s obligations with respect to the notes. OCI provides funding for our operations by incurring debt and lending the proceeds to our operating subsidiaries. OCI’s assets primarily 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 Omnicom to obtain funds from our subsidiaries through dividends, loans or advances. The U.S. Dollar-denominated senior notes are senior unsecured obligations that rank equal in right of payment with all existing and future unsecured senior indebtedness.

Omnicom and OCI have, jointly and severally, fully and unconditionally guaranteed OFHP’s obligations with respect to the Euro Notes. OFHP’s assets consist of its investments in several wholly owned finance companies that function as treasury centers providing funding for various operating companies in Europe, Brazil, Australia and other countries in the Asia-Pacific region. The finance companies’ assets consist of cash and cash equivalents and intercompany loans that they make or have made to the operating companies in their respective regions and the related interest receivable. There are no restrictions on the ability of Omnicom, OCI or OFHP to obtain funds from their subsidiaries through dividends, loans or advances. The Euro Notes and the related guarantees are senior unsecured obligations that rank equal in right of payment with all existing and future unsecured senior indebtedness of OFHP and each of Omnicom and OCI, respectively.

At December 31, 2019, the maturities of our long-term debt were (in millions):


2020	$	600.0
2021	—
2022	1,250.0
2023	—
2024	750.0
Thereafter	2,522.8
Total principal payments	$	5,122.8

We may use 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 debt attributable to changes in the benchmark interest rate. In August 2019, we settled the outstanding $750 million fixed-to-floating interest rate swap on our 3.65% Senior Notes due 2024, or 2024 Notes, and the $500 million fixed-to-floating interest rate swap on our 3.60% Senior Notes due 2026, or 2026 Notes. On settlement, we realized a net gain of $3.3 million that is being amortized in interest expense over the remaining term of the 2024 Notes and 2026 Notes. As a result of the settlement, our long-term debt portfolio consists entirely of fixed rate debt. At December 31, 2018, we recorded a long-term liability of $21.8 million and $31.0 million representing the fair value of the swaps on the 2024 Notes and 2026 Notes, respectively.

Interest Expense

Interest expense is composed of (in millions):


	Year Ended December 31,
	2019		2018		2017
Long-term debt	$	194.6	$	201.6	$	201.6
Commercial paper	6.5		9.6		12.5
Interest rate swaps	6.1		5.2		(7.2)
Amortization of deferred gain on interest rate swaps	(14.8)		(12.9)		(12.9)
Fees	4.7		5.6		5.6


Pension and other interest	47.2		57.3		49.0
	$	244.3	$	266.4	$	248.6