Debt

6 Months Ended

Jun. 30, 2021

DEBT

Short-Term Debt

In June 2021, NW Natural entered into a $100.0 million 364-Day Term Loan Credit Agreement (Term Loan) and borrowed the full amount. All principal and unpaid interest under the Term Loan is due and payable in June 2022. The Term Loan requires NW Natural to maintain a consolidated indebtedness to total capitalization ratio of 70% or less. Failure to comply with this covenant would entitle the lenders to terminate their lending commitments and accelerate the maturity of all amounts outstanding. NW Natural was in compliance with this covenant at June 30, 2021, with a consolidated indebtedness to total capitalization ratio of 56.2%.

At June 30, 2021, NW Holdings and NW Natural had short-term debt outstanding of $240.0 million and $198.0 million, respectively. NW Holdings' short-term debt consisted of $42.0 million in revolving credit agreement loans at NW Holdings, $98.0 million of commercial paper outstanding at NW Natural, and the aforementioned $100.0 million Term Loan. The weighted average interest rate on the revolving credit agreement at June 30, 2021 was 1.1% at NW Holdings. The weighted average interest rate of commercial paper and the Term Loan outstanding at June 30, 2021 was 0.2% and 0.6%, respectively, at NW Natural. At June 30, 2021, NW Natural's commercial paper had a maximum remaining maturity of 29 days and an average remaining maturity of 15 days.

Long-Term Debt

At June 30, 2021, NW Holdings and NW Natural had long-term debt outstanding of $975.8 million and $917.4 million, respectively, which included $7.4 million and $7.3 million of unamortized debt issuance costs at NW Holdings and NW Natural, respectively. NW Natural's long-term debt consists of first mortgage bonds (FMBs) with maturity dates ranging from 2021 through 2050, interest rates ranging from 2.8% to 9.1%, and a weighted average interest rate of 4.6%.

In June 2019, NW Natural Water, a wholly-owned subsidiary of NW Holdings, entered into a two-year term loan agreement for $35.0 million. The loan was repaid in June 2021 upon its maturity date.

In June 2021, NW Natural Water entered into a five-year term loan credit agreement for $55.0 million and borrowed the full amount. The loan carried an interest rate of 0.9% at June 30, 2021, which is based upon the one-month LIBOR rate plus a spread. The loan is guaranteed by NW Holdings and requires NW Holdings to maintain a consolidated indebtedness to total capitalization ratio of 70% or less. Failure to comply with this covenant would entitle the lenders to terminate their lending commitments and accelerate the maturity of all amounts outstanding. NW Holdings was in compliance with this covenant at June 30, 2021, with a consolidated indebtedness to total capitalization ratio of 56.8%.

Fair Value of Long-Term Debt

NW Holdings' and NW Natural's outstanding debt does not trade in active markets. The fair value of long-term debt is estimated using the value of outstanding debt at natural gas distribution companies with similar credit ratings, terms, and remaining maturities to NW Holdings' and NW Natural's debt that actively trade in public markets. Substantially all outstanding debt at NW Holdings is comprised of NW Natural debt. These valuations are based on Level 2 inputs as defined in the fair value hierarchy. See Note 2 in the 2020 Form 10-K for a description of the fair value hierarchy.

The following table provides an estimate of the fair value of NW Holdings' long-term debt, including current maturities of long-term debt, using market prices in effect on the valuation date:


	NW Holdings
	June 30,				December 31,
In thousands	2021		2020		2020
Gross long-term debt	$	983,221	$	961,784	$	962,905
Unamortized debt issuance costs	(7,446)		(7,688)		(7,480)
Carrying amount	$	975,775	$	954,096	$	955,425
Estimated fair value(1)	$	1,104,230	$	1,135,349	$	1,136,311

(1) Estimated fair value does not include unamortized debt issuance costs.

The following table provides an estimate of the fair value of NW Natural's long-term debt, including current maturities of long-term debt, using market prices in effect on the valuation date:


	NW Natural
	June 30,				December 31,
In thousands	2021		2020		2020
Gross long-term debt	$	924,700	$	924,700	$	924,700
Unamortized debt issuance costs	(7,291)		(7,688)		(7,480)
Carrying amount	$	917,409	$	917,012	$	917,220
Estimated fair value(1)	$	1,043,696	$	1,097,188	$	1,097,348

(1) Estimated fair value does not include unamortized debt issuance costs.