DEBT

Amounts related to early debt extinguishment during the three months and nine months ended September 30, 2012 and 2011 were as follows:



	Three Months Ended September 30,				Nine Months Ended September 30,
In millions	2012		2011		2012		2011
Early debt reductions (a)	$	611	$	—	$	1,047	$	129
Pre-tax early debt extinguishment costs (b)	13		—		27		32


(a)	Reductions related to notes with interest rates ranging from 1.625% to 6.95% with original maturities from 2017 to 2023 for the three months ended September 30, 2012, and from 1.625% to 7.95% with original maturities from 2012 to 2023 and from 6.2% to 9.375% with original maturities from 2018 to 2025 for the nine months ended September 30, 2012 and 2011, respectively.


(b)	Amounts are included in Restructuring and Other Charges in the accompanying consolidated statements of operations.

In February 2012, International Paper issued a $1.2 billion term loan with an initial interest rate of LIBOR plus a margin of 138 basis points that varies depending on the credit rating of the Company and a $200 million term loan with an interest rate of LIBOR plus a margin of 175 basis points, both with maturity dates in 2017. The proceeds from these borrowings were used, along with available cash, to fund the acquisition of Temple-Inland. As of September 30, 2012, International Paper has repaid $1 billion on the $1.2 billion term loan. In October 2012, International Paper made a $200 million payment to fully repay the $1.2 billion term loan.

In June 2012, International Paper borrowed $225 million under the receivable securitization facility acquired from Temple-Inland with an interest rate of 0.224% plus a margin of 70 basis points. The borrowings under this receivable securitization facility were repaid in July 2012.

At September 30, 2012, the fair value of International Paper’s $10.5 billion of debt was approximately $12.5 billion. The fair value of the Company’s long-term debt is estimated based on the quoted market prices for the same or similar issues. International Paper’s long-term debt is classified as Level 2 within the fair value hierarchy, which is further defined in Note 13 in the Company’s Annual Report on Form 10-K for the year ended December 31, 2011.

Maintaining an investment-grade credit rating is an important element of International Paper’s financing strategy. At September 30, 2012, the Company held long-term credit ratings of BBB (stable outlook) and Baa3 (stable outlook) by S&P and Moody’s, respectively.