Long-term Debt

Debt Issuances. During the six months ended June 30, 2017, Houston Electric issued the following general mortgage bonds:



Issuance Date	Aggregate Principal Amount		Interest Rate	Maturity Date
	(in millions)
January 2017	$	300	3.00%	2027

The proceeds from the issuance of these bonds were used to repay short-term debt and for general limited liability company purposes.

Revolving Credit Facility. In June 2017, Houston Electric entered into an amendment to its revolving credit facility to extend the termination date thereof from March 3, 2021 to March 3, 2022 and to terminate the swingline loan subfacility thereunder. No changes were made to the aggregate commitments under the revolving credit facility.

As of June 30, 2017 and December 31, 2016, Houston Electric had the following revolving credit facility and utilization of such facility:



		June 30, 2017				December 31, 2016
Size of Facility		Loans		Letters of Credit		Loans		Letters of Credit
(in millions)
$	300	$	—	$	4	$	—	$	4

Execution Date

Size of

Facility

Draw Rate of LIBOR plus (1)

Financial Covenant Limit on Debt for Borrowed Money to Capital Ratio (2)

Debt for Borrowed Money to Capital

Ratio as of

June 30, 2017 (3)

Termination Date (4)

(in millions)

March 3, 2016

300

1.125%

65%

49.7%

March 3, 2022


(1)	Based on current credit ratings.

(2)

The financial covenant limit will temporarily increase from 65% to 70% if Houston Electric experiences damage from a natural disaster in its service territory and Houston Electric certifies to the administrative agent that Houston Electric has incurred system restoration costs reasonably likely to exceed $100 million in a consecutive twelve-month period, all or part of which Houston Electric intends to seek to recover through securitization financing. Such temporary increase in the financial covenant would be in effect from the date Houston Electric delivers its certification until the earliest to occur of (i) the completion of the securitization financing, (ii) the first anniversary of Houston Electric’s certification or (iii) the revocation of such certification.


(3)	As defined in the revolving credit facility agreement, excluding Securitization Bonds.


(4)	Amended on June 16, 2017 to extend the termination date as noted above.

Houston Electric was in compliance with all financial debt covenants as of June 30, 2017.

Hedging of Interest Expense for Future Debt Issuances. In January 2017, Houston Electric entered into forward interest rate agreements with several counterparties, having an aggregate notional amount of $150 million. These agreements were executed to hedge, in part, volatility in the 10-year U.S. treasury rate by reducing Houston Electric’s exposure to variability in cash flows related to interest payments of Houston Electric’s $300 million issuance of fixed rate debt in January 2017. These forward interest rate agreements were designated as cash flow hedges. Accordingly, the effective portion of realized losses associated with the agreements, which totaled approximately $0.5 million, is a component of accumulated other comprehensive income in 2017 and will be amortized over the life of the bonds.

Other. As of both June 30, 2017 and December 31, 2016, Houston Electric had issued $118 million of general mortgage bonds as collateral for long-term debt of CenterPoint Energy. These bonds are not reflected in the consolidated financial statements because of the contingent nature of the obligations.