Long-Term Debt

The following table summarizes the Company’s long-term debt (amounts in millions):



	Date of				September 30, 2016			December 31, 2015
	Issuance/Amendment	Maturity	Interest Payments	Interest Rate	Amount			Amount
Senior Secured Term Loans:
Borrowed by Level 3 Financing, Inc.
Tranche B-III 2019 Term Loan ⁽¹⁾⁽⁴⁾	Aug 2013	Aug 2019	Quarterly	LIBOR +3.00%	$	815		$	815
Tranche B 2020 Term Loan ⁽¹⁾⁽⁴⁾	Oct 2013	Jan 2020	Quarterly	LIBOR +3.00%	1,796			1,796
Tranche B-II 2022 Term Loan⁽¹⁾⁽⁴⁾	May 2015	May 2022	Quarterly	LIBOR +2.75%	2,000			2,000
Senior Notes:
Issued by Level 3 Financing, Inc.
Floating Rate Senior Notes due 2018 ⁽²⁾⁽⁴⁾	Nov 2013	Jan 2018	May/Nov	6-Month LIBOR +3.50%	300			300
7% Senior Notes due 2020 ⁽²⁾	Aug 2012	Jun 2020	Jun/Dec	7.000%	—			775
6.125% Senior Notes due 2021 ⁽²⁾	Nov 2013	Jan 2021	Apr/Oct	6.125%	640			640
5.375% Senior Notes due 2022⁽²⁾	Aug 2014	Aug 2022	May/Nov	5.375%	1,000			1,000
5.625% Senior Notes due 2023 ⁽²⁾	Jan 2015	Feb 2023	Jun/Dec	5.625%	500			500
5.125% Senior Notes due 2023⁽²⁾	Apr 2015	May 2023	Mar/Sept	5.125%	700			700
5.375% Senior Notes due 2025 ⁽²⁾	Apr 2015	May 2025	Mar/Sept	5.375%	800			800
5.375% Senior Notes due 2024 ⁽²⁾	Nov 2015	Jan 2024	Jan/Jul	5.375%	900			900
5.25% Senior Notes due 2026 ⁽²⁾	Mar 2016	Mar 2026	Apr/Oct	5.250%	775			—
Issued by Level 3 Communications, Inc.
5.75% Senior Notes due 2022⁽³⁾	Dec 2014	Dec 2022	Mar/Sept	5.750%	600			600
Capital Leases					187			199
Total Debt Obligations					11,013			11,025
Unamortized discounts					(14		)	(16		)
Unamortized debt issuance costs					(117		)	(128		)
Current portion of long-term debt					(7		)	(15		)
Total Long-Term Debt					$	10,875		$	10,866

⁽¹⁾ The term loans are secured obligations and guaranteed by Level 3 Communications, Inc. and Level 3 Communications, LLC and certain other subsidiaries.

⁽²⁾ The notes are fully and unconditionally guaranteed on an unsubordinated unsecured basis by Level 3 Communications, Inc. and Level 3 Communications, LLC.

⁽³⁾The notes were not guaranteed by any of Level 3 Communications, Inc.'s subsidiaries.

⁽⁴⁾The Tranche B-III 2019 Term Loan and the Tranche B 2020 Term Loan each had an interest rate of 4.000% as of September 30, 2016 and December 31, 2015. The Tranche B-II 2022 Term Loan had an interest rate of 3.500% as of September 30, 2016 and December 31, 2015. The Floating Rate Senior Notes due 2018 had an interest rate of 4.407% as of September 30, 2016 and 4.101% as of December 31, 2015. The interest rate on the Tranche B-III 2019 Term Loan, and the Tranche B 2020 Term Loan are set with a minimum LIBOR of 1.00%, and the Tranche B-II 2022 Term Loan is set with a minimum LIBOR of 0.75%.

Senior Secured Term Loans

As of September 30, 2016, Level 3 Financing, Inc., Level 3 Communications, Inc.'s direct wholly owned subsidiary ("Level 3 Financing") had a senior secured credit facility consisting of $815 million Tranche B-III Term Loan due 2019, $1.796 billion Tranche B Term Loan due 2020 and $2 billion Tranche B-II Term Loan due 2022.

Senior Notes

All of the notes pay interest semiannually, and allow for the redemption of the notes at the option of the issuer upon not less than 30 or more than 60 days’ prior notice by paying the greater of 101% of the principal amount or a “make-whole” amount, plus accrued interest. In addition, the notes also have a provision that allows for an additional right of optional redemption using cash proceeds received from the sale of equity securities. For specific details of these features and requirements, including the applicable premiums and timing, refer to the indentures for the respective senior notes in connection with the original issuances.

7% Senior Notes due 2020 and 5.25% Senior Notes due 2026

On March 22, 2016, Level 3 Financing issued $775 million in aggregate principal amount of its 5.25% Senior Notes due 2026 (the “5.25% Senior Notes due 2026”). The 5.25% Senior Notes due 2026 are fully and unconditionally guaranteed on an unsubordinated unsecured basis by Level 3 Communications, Inc. and now Level 3 Communications, LLC as of September 30, 2016.

The 5.25% Senior Notes due 2026 were not originally registered under the Securities Act of 1933, as amended. A registration rights agreement with respect to these notes became effective as of March 22, 2016.

On April 21, 2016, all of the outstanding principal amount of the 7% Senior Notes Due 2020 was redeemed at a redemption price equal to 104.138% of the principal amount, along with accrued and unpaid interest to but excluding the redemption date. To fund the redemption of these notes, Level 3 Financing used the net proceeds, along with cash on hand, from the March 22, 2016 issuance of its 5.25% Senior Notes due 2026. The Company recognized a loss on modification and extinguishment of debt of approximately $40 million in Other Expense in the second quarter of 2016 as a result of the redemption of the 7% Senior Notes due 2020.

Capital Leases

As of September 30, 2016, the Company had $187 million of capital leases. The Company leases property, equipment, certain dark fiber facilities and metro fiber under non-cancelable IRU agreements that are accounted for as capital leases. The average interest rate on these capital leases approximated 5.8% as of September 30, 2016.

Covenant Compliance

At September 30, 2016 and December 31, 2015, the Company was in compliance with the financial covenants on all outstanding debt issuances.

Long-Term Debt Maturities

Aggregate future contractual maturities of long-term debt and capital leases (excluding discounts and debt issuance costs) were as follows as of September 30, 2016 (dollars in millions):



2016 (remaining three months)	$	2
2017	7
2018	307
2019	822
2020	1,804
2021	650
Thereafter	7,421
	$	11,013