13. Debt

Debt with contractual terms less than one year is generally classified as short-term debt and consisted of the following as of December 31 (in thousands):


	2011		2010
Unsecured commercial paper	$	838,486	$	480,472

Debt with a contractual term greater than one year is generally classified as long-term debt and consisted of the following as of December 31 (in thousands):


	2011			2010
Unsecured commercial paper	$	35,800		$	102,100
Bank borrowings
Credit facilities		159,794			213,772
Secured debt
Term asset-backed securitization debt		2,087,346			2,755,234
Unsecured notes
5.25% Medium-term notes due in 2012 ($400.0 million par value)		399,916			399,825
5.75% Medium-term notes due in 2014 ($500.0 million par value)		499,544			499,383
3.75% Medium-term notes due in 2016 ($450.0 million par value)		449,775			—
6.80% Medium-term notes due in 2018 ($950.1 million par value)		948,958			998,570
15.00% senior unsecured notes due in 2014 ($600.0 million par value)		303,000			303,000

Gross long-term debt		4,884,133			5,271,884
Less: current portion of long-term debt		(1,040,247	)		(751,293	)

Long-term debt	$	3,843,886		$	4,520,591

The Company has classified $195.6 million and $315.9 million related to its unsecured commercial paper and its Global Credit Facilities as long-term debt as of December 31, 2011 and 2010, respectively. This amount has been excluded from current liabilities because it is supported by the Global Credit Facilities and is expected to remain outstanding for an uninterrupted period extending beyond one year from the balance sheet date.

Commercial paper maturities may range up to 365 days from the issuance date. The weighted-average interest rate of outstanding commercial paper balances was 1.05% and 1.38% at December 31, 2011 and 2010, respectively. The December 31, 2011 and 2010 weighted-average interest rates include the impact of interest rate swap agreements.

On April 28, 2011, the Company and HDFS entered into a new $675.0 million four-year credit facility to refinance and replace a $675.0 million 364-day credit facility that matured in April 2011. The new four-year credit facility matures in April 2015. The Company and HDFS also have a $675.0 million three-year credit facility which matures in April 2013. The new-four year credit facility and the three-year credit facility agreement (together, the Global Credit Facilities) bear interest at various variable interest rates, which may be adjusted upward or downward depending on certain criteria, such as credit ratings. The Global Credit Facilities also require the Company to pay a fee based upon the average daily unused portion of the aggregate commitments under the Global Credit Facilities. The Global Credit Facilities are committed facilities and primarily used to support HDFS' unsecured commercial paper program.

On September 9, 2011, the Company amended and restated its revolving asset-backed conduit facility which provides for a total aggregate commitment of $600.0 million. At December 31, 2011 and 2010, HDFS had no outstanding borrowings under the conduit facility. Refer to Note 7 for further discussion on the asset backed conduit facility.

As discussed in Note 7, during 2011, the Company issued $1.09 billion of secured notes through two term asset-backed securitization transactions. During 2010, the Company issued $600.0 million of secured notes through one term asset-backed securitization transaction. The term-asset backed securitization transactions are further discussed in Note 7.

HDFS' medium-term notes (collectively the Notes) provide for semi-annual interest payments and principal due at maturity. During 2011, HDFS repurchased an aggregate $49.9 million of its $1.0 billion, 6.8% medium-term notes which mature in June 2018. As a result, HDFS recognized in financial services interest expense a $9.6 million loss on extinguishment of debt, which included unamortized discounts and fees. During December 2010, the $200.0 million, 5.00% medium-term note matured, and the principal and accrued interest was paid in full. Unamortized discounts on the Notes reduced the balance by $1.9 million and $2.2 million at December 31, 2011 and 2010, respectively.

In February 2009, the Company issued $600.0 million of senior unsecured notes in an underwritten offering. The senior unsecured notes provide for semi-annual interest payments and principal due at maturity. The senior unsecured notes mature in February 2014 and have an annual interest rate of 15%. During the fourth quarter of 2010, the Company repurchased $297.0 million of the $600.0 million senior unsecured notes at a price of $380.8 million. As a result of the transaction, the Company incurred a loss on debt extinguishment of $85.2 million which also includes $1.4 million of capitalized debt issuance costs that were written-off. The Company used cash on hand for the repurchase and the repurchased notes were cancelled.

HDFS has a revolving credit line with the Company whereby HDFS may borrow up to $210.0 million at market rates of interest. As of December 31, 2011 and 2010, HDFS had no borrowings owed to the Company under the revolving credit agreement.

HDFS and the Company are subject to various operating and financial covenants related to the Global Credit Facilities and various operating covenants under the Notes and the asset-backed commercial paper conduit facility. The more significant covenants are described below.

The covenants limit the Company's and HDFS' ability to:

•

incur certain additional indebtedness;

•

assume or incur certain liens;

•

participate in a merger, consolidation, liquidation or dissolution; and

•

purchase or hold margin stock.

Under the financial covenants of the Global Credit Facilities, the consolidated debt to equity ratio of HDFS cannot exceed 10.0 to 1.0. In addition, the Company must maintain a minimum interest coverage ratio of 2.25 to 1.0 for each fiscal quarter ended through June 2013 and 2.5 to 1.0 for each fiscal quarter thereafter. No financial covenants are required under the Notes, asset-backed commercial paper conduit facility or the Company's senior unsecured notes.

At December 31, 2011 and 2010, HDFS and the Company remained in compliance with all of these covenants.