7. Debt

The following table summarizes the major components of debt at each balance sheet date (in millions) and provides the maturities and interest rate ranges of each major category as of December 31, 2015:


	2015		2014
U.S. revolving credit facility, maturing July 2020	$	20	$	—
Letter of credit facilities, maturing through December 2018		—		—
Canadian credit facility and term loan, maturing November 2017 (weighted average effective interest rate of 2.2% at December 31, 2015 and 2.6% at December 31, 2014)		84		232
Senior notes maturing through 2045, interest rates ranging from 2.60% to 7.75% (weighted average interest rate of 4.7% at December 31, 2015 and 5.7% at December 31, 2014)		6,082		6,273
Tax-exempt bonds maturing through 2045, fixed and variable interest rates ranging from 0.02% to 5.7% (weighted average interest rate of 1.9% at December 31, 2015 and 2.2% at December 31, 2014)		2,467		2,541
Capital leases and other, maturing through 2055, interest rates up to 12%		328		389

	$	8,981	$	9,435
Current portion of long-term debt		253		1,090

	$	8,728	$	8,345

Debt Classification

As of December 31, 2015, we had $732 million of debt maturing within the next 12 months, including (i) $500 million of 2.6% senior notes that mature in September 2016; (ii) $146 million of tax-exempt bonds and (iii) $20 million of borrowings outstanding under our long-term U.S. revolving credit facility (“$2.25 billion revolving credit facility”). In addition, $316 million of tax-exempt bonds have term interest rate periods subject to repricing within the next 12 months, which is prior to their scheduled maturities. We have classified the $20 million of borrowings outstanding under our $2.25 billion revolving credit facility as long-term because we intend and have the ability to refinance or maintain these borrowings on a long-term basis. Based on our intent and ability to refinance other portions of our current obligations on a long-term basis as of December 31, 2015, including through use of forecasted available capacity under our $2.25 billion revolving credit facility, we have classified an additional $775 million of debt as long-term. The remaining $253 million is classified as current obligations.

As of December 31, 2015, we also had $491 million of variable-rate tax-exempt bonds that are supported by letters of credit. The interest rates on these bonds are reset on either a daily or weekly basis through a remarketing process. All recent remarketings have successfully placed Company bonds with investors at reasonable, market-driven rates and we currently expect future remarketings to be successful. However, if the remarketing agent is unable to remarket our bonds, the remarketing agent can put the bonds to us. In the event of a failed remarketing, we have the intent and ability to use availability under our $2.25 billion revolving credit facility to fund the debt obligations until they can be remarketed successfully. Accordingly, we classified these borrowings as long-term in our Consolidated Balance Sheet at December 31, 2015.

Access to and Utilization of Credit Facilities

$2.25 Billion Revolving Credit Facility — In July 2015, we amended and restated our $2.25 billion revolving credit facility, extending the term through July 2020. This facility provides us with credit capacity to be used for either cash borrowings or to support letters of credit. The rates we pay for outstanding loans are generally based on LIBOR plus a spread depending on the Company’s debt rating assigned by Moody’s Investors Service and Standard and Poor’s. The spread above LIBOR ranges from 0.805% to 1.30%. At December 31, 2015, we had $20 million of outstanding borrowings and $831 million of letters of credit issued and supported by the facility, leaving unused and available credit capacity of $1,399 million.

Letter of Credit Facilities — As of December 31, 2015, we had an aggregate committed capacity of $150 million under letter of credit facilities with terms extending through December 2018. This letter of credit capacity was fully utilized as of December 31, 2015. The financial assurance needs of our business are extensive so we supplement the letter of credit capacity we have through these committed facilities with stand-alone letters of credit with various banking partners.

Canadian Credit Facility and Term Loan — Waste Management of Canada Corporation and WM Quebec Inc., wholly-owned subsidiaries of WM, are borrowers under a Canadian credit agreement that provides C$150 million of revolving credit capacity and initially provided C$500 million of term credit. The credit agreement matures in November 2017. WM and WM Holdings guarantee all subsidiary obligations outstanding under the credit agreement. The rates we pay for outstanding loans under the Canadian credit agreement are generally based on the applicable Canadian Dealer Offered Rate (CDOR) plus a spread depending on the Company’s debt rating assigned by Moody’s Investors Service and Standard and Poor’s. The spread above CDOR ranges from 1.125% to 2.15%.

We have the ability to issue up to C$50 million of letters of credit under the Canadian revolving credit facility, which if utilized, reduces the amount of credit capacity available for borrowings. As of December 31, 2015 and 2014, we had no borrowings and no letters of credit outstanding under the facility.

The C$500 million of term credit was established specifically to fund the acquisition of substantially all of the assets of RCI and was fully drawn in July 2013. The term loan is a non-revolving loan and principal amounts repaid may not be re-borrowed. Through December 31, 2015, we had repaid C$383 million of the term loan with available cash, reducing the outstanding balance to C$117 million, or $84 million. For additional information related to borrowings and principal repayments under the term loan, see below.

Debt Borrowings and Repayments

Canadian Credit Facility — We borrowed and repaid C$15 million, or $11 million, under the Canadian credit facility during the year ended December 31, 2015.

Canadian Term Loan — We repaid C$153 million, or $119 million, of the advances under our Canadian term loan during the year ended December 31, 2015 with available cash. The remaining decline in the carrying value of borrowings outstanding under our Canadian term loan is due to foreign currency translation.

Senior Notes — During 2015, we refinanced a significant portion of our high-coupon senior notes. Details related to each component of the refinancing follow:

Make-Whole Redemption — In January 2015, we repaid $947 million of WM senior notes, which comprised all of the outstanding senior notes maturing in 2015, 2017 and 2019. The repayment of these debt balances was achieved by exercising the optional redemption provisions of the notes, which required that we pay the outstanding principal plus a make-whole premium. The “Loss on early extinguishment of debt” reflected in our Consolidated Statement of Operations for the year ended December 31, 2015 includes $122 million of charges related to these redemptions.

Tender Offers — During 2015, WM and WM Holdings made cash tender offers to purchase any and all of certain outstanding senior notes. The series of notes targeted in the tenders and the amounts tendered of each series are summarized below:

•

$449 million of WM Holdings 7.10% senior notes due 2026, of which $145 million were tendered;

•

$577 million of WM 7.00% senior notes due 2028, of which $182 million were tendered;

•

$223 million of WM 7.375% senior notes due 2029, of which $84 million were tendered;

•

$496 million of WM 7.75% senior notes due 2032, of which $286 million were tendered; and

•

$600 million of WM 6.125% senior notes due 2039, of which $326 million were tendered.

The “Loss on early extinguishment of debt” reflected in our Consolidated Statement of Operations for the year ended December 31, 2015 includes $430 million of charges related to these tender offers.

New Issuance – In February 2015, WM issued $1.8 billion of new senior notes consisting of:

•

$600 million of 3.125% senior notes due March 1, 2025;

•

$450 million of 3.90% senior notes due March 1, 2035; and

•

$750 million of 4.10% senior notes due March 1, 2045.

The net proceeds from these debt issuances were $1.78 billion. The Company used the proceeds from the 2025 notes for general corporate purposes. The proceeds from the 2035 notes and the 2045 notes were used to pay the purchase price and accrued interest for the notes redeemed through the tender offers discussed above and for general corporate purposes.

Also affecting the change in the carrying value of our senior notes from December 31, 2014 to December 31, 2015 were decreases due to the amortization and write-off associated with fair value hedge accounting for previously terminated interest rate swap contracts, as discussed in Note 8, offset primarily by underwriting discounts related to the issuance of new senior notes in February 2015.

Tax-Exempt Bonds — During the year ended December 31, 2015, we repaid $79 million of our tax-exempt bonds with available cash. Additionally, we elected to refund and reissue $262 million of tax-exempt bonds and finance the related debt issuance costs and premiums totaling $5 million. The “Loss on early extinguishment of debt” reflected in our Consolidated Statement of Operations for the year ended December 31, 2015 includes $3 million of charges related to these refundings.

Capital Leases and Other — The decrease in our capital leases and other debt obligations is primarily related to the net repayment of various borrowings at their scheduled maturities, including a $20 million guaranteed payment related to the acquisition of Greenstar, LLC (“Greenstar”), which is discussed further in Note 19.

Scheduled Debt Payments — Principal payments of our debt and capital leases for the next five years, based on scheduled maturities are as follows: $730 million in 2016, $221 million in 2017, $792 million in 2018, $175 million in 2019, and $740 million in 2020. Our recorded debt and capital lease obligations include non-cash adjustments associated with discounts, premiums and fair value adjustments for interest rate hedging activities, which have been excluded from these amounts because they will not result in cash payments.

Secured Debt

Our debt balances are generally unsecured, except for capital leases and the note payable associated with our investment in low-income housing properties.

Debt Covenants

Our $2.25 billion revolving credit facility, our Canadian credit agreement and certain other financing agreements contain financial covenants. The following table summarizes the most restrictive requirements of these financial covenants (all terms used to measure these ratios are defined by the facilities):


Interest coverage ratio			> 2.75 to 1
Total debt to EBITDA			< 3.50 to 1

Our credit facilities and senior notes also contain certain restrictions intended to monitor our level of subsidiary indebtedness, types of investments and net worth. We monitor our compliance with these restrictions, but do not believe that they significantly impact our ability to enter into investing or financing arrangements typical for our business. As of December 31, 2015 and 2014, we were in compliance with the covenants and restrictions under all of our debt agreements that may have a material effect on our Consolidated Financial Statements.