Commercial Paper and Long-Term Debt

Commercial paper and senior unsecured long-term debt consisted of the following:



	June 30, 2015						December 31, 2014
(in millions, except percentages)	Par Value		Carrying Value		Fair Value		Par Value		Carrying Value		Fair Value
Commercial paper	$	1,407	$	1,407	$	1,407	$	321	$	321	$	321
4.875% notes due March 2015 (a)	—		—		—		416		419		419
0.850% notes due October 2015 (a)	625		625		625		625		625		627
5.375% notes due March 2016 (a)	601		614		620		601		623		634
1.875% notes due November 2016 (a)	400		399		405		400		397		406
5.360% notes due November 2016	95		95		101		95		95		103
6.000% notes due June 2017 (a)	441		463		480		441		466		489
1.400% notes due October 2017 (a)	625		621		626		625		616		624
6.000% notes due November 2017 (a)	156		163		174		156		164		175
1.400% notes due December 2017 (a)	750		750		749		750		745		749
6.000% notes due February 2018 (a)	1,100		1,111		1,223		1,100		1,106		1,238
1.625% notes due March 2019 (a)	500		499		494		500		496		493
2.300% notes due December 2019 (a)	500		499		501		500		496		502
3.875% notes due October 2020 (a)	450		451		481		450		450		477
4.700% notes due February 2021 (a)	400		413		441		400		413		450
3.375% notes due November 2021 (a)	500		495		514		500		496		519
2.875% notes due December 2021 (a)	750		747		750		750		748		759
2.875% notes due March 2022 (a)	1,100		1,043		1,068		1,100		1,042		1,104
0.000% notes due November 2022	15		10		11		15		10		11
2.750% notes due February 2023 (a)	625		602		598		625		604		613
2.875% notes due March 2023 (a)	750		771		722		750		777		745
5.800% notes due March 2036	850		845		988		850		845		1,052
6.500% notes due June 2037	500		495		631		500		495		670
6.625% notes due November 2037	650		646		833		650		646		888
6.875% notes due February 2038	1,100		1,085		1,447		1,100		1,085		1,544
5.700% notes due October 2040	300		298		351		300		298		378
5.950% notes due February 2041	350		348		417		350		348		455
4.625% notes due November 2041	600		593		599		600		593		646
4.375% notes due March 2042	502		486		487		502		486		536
3.950% notes due October 2042	625		612		565		625		611		621
4.250% notes due March 2043	750		740		709		750		740		786
Total commercial paper and long-term debt	$	18,017	$	17,926	$	19,017	$	17,347	$	17,256	$	19,034


(a)	Fixed-rate debt instruments hedged with interest rate swap contracts. See below for more information on the Company’s interest rate swaps.

The Company’s long-term debt obligations also included $145 million and $150 million of other financing obligations, of which $47 million and $34 million were current as of June 30, 2015 and December 31, 2014, respectively.

Commercial Paper and Bank Credit Facilities

Commercial paper consists of short-duration, senior unsecured debt privately placed on a discount basis through broker-dealers. As of June 30, 2015, the Company’s outstanding commercial paper had a weighted-average annual interest rate of 0.3%.

The Company has $3.0 billion five-year and $1.0 billion 364-day revolving bank credit facilities with 23 banks, which mature in November 2019 and November 2015, respectively. The Company also has a $2.0 billion 364-day revolving bank credit facility with 22 banks maturing in April 2016. These facilities provide liquidity support for the Company’s commercial paper program and are available for general corporate purposes. In addition, the Company has a $1.5 billion delayed draw term loan to fund the Catamaran acquisition. As of June 30, 2015, no amounts had been drawn on any of the bank credit facilities or the term loan. The annual interest rates, which are variable based on term, are calculated based on the London Interbank Offered Rate (LIBOR) plus a credit spread based on the Company’s senior unsecured credit ratings. If amounts had been drawn on the bank credit facilities and the term loan as of June 30, 2015, annual interest rates would have ranged from 1.0% to 1.3%.

July 2015 Debt Issuance

In July 2015, the Company issued commercial paper and senior unsecured notes and drew on its delayed draw term loan. The proceeds of these debt issuances were used to fund the Catamaran acquisition. For more detail on the Catamaran acquisition see Note 1 of the Notes to the Condensed Consolidated Financial Statements.



(in millions, except percentages)	Par Value
Floating rate notes due January 2017	$	750
1.450% notes due July 2017	750
1.900% notes due July 2018	1,500
2.700% notes due July 2020	1,500
3.350% notes due July 2022	1,000
3.750% notes due July 2025	2,000
4.625% notes due July 2035	1,000
4.750% notes due July 2045	2,000
Total July 2015 Issuance	$	10,500
Delayed draw term loan	$	1,500
Commercial paper	$	2,400

Debt Covenants

The Company’s bank credit facilities contain various covenants including requiring the Company to maintain a debt to debt-plus-equity ratio of not more than 50%. The Company was in compliance with its debt covenants as of June 30, 2015.

Interest Rate Swap Contracts

The Company uses interest rate swap contracts to convert a portion of its interest rate exposure from fixed rates to floating rates to more closely align interest expense with interest income received on its variable rate financial assets. The floating rates are benchmarked to LIBOR. The swaps are designated as fair value hedges on the Company’s fixed-rate debt. Since the critical terms of the swaps match those of the debt being hedged, they are considered to be highly effective hedges and all changes in the fair values of the swaps are recorded as adjustments to the carrying value of the related debt with no net impact recorded on the Condensed Consolidated Statements of Operations. Both the hedge fair value changes and the offsetting debt adjustments are recorded in interest expense on the Condensed Consolidated Statements of Operations. The following table summarizes the location and fair value of the interest rate swap fair value hedges on the Company’s Condensed Consolidated Balance Sheet:



Type of Fair Value Hedge	Notional Amount		Fair Value		Balance Sheet Location
	(in billions)		(in millions)
June 30, 2015
Interest rate swap contracts	$	10.3	54		Other assets
			33		Other liabilities

December 31, 2014
Interest rate swap contracts	$	10.7	$	62	Other assets
			55		Other liabilities

The following table provides a summary of the effect of changes in fair value of fair value hedges on the Company’s Condensed Consolidated Statements of Operations:



	Three Months Ended June 30,						Six Months Ended June 30,
(in millions)	2015			2014			2015			2014
Hedge - interest rate swap (loss) gain recognized in interest expense	$	(208	)	$	67		$	14		$	133
Hedged item - long-term debt gain (loss) recognized in interest expense	208			(67		)	(14		)	(133		)
Net impact on the Company’s Condensed Consolidated Statements of Operations	$	—		$	—		$	—		$	—