Financing

Notes and debentures were composed of the following at year end (in millions):



	2012			2011
Commercial paper	$	—		$	—
Bank credit agreement, unsecured	—			39.5
Term credit agreement, unsecured	700.0			—
Other bank borrowings, unsecured	2.8			1.6
Mortgage notes payable, secured	48.3			10.1
5.80% Senior Notes due 2012, unsecured	—			800.0
Floating Rate Senior Notes due 2013, unsecured	250.0			—
3.00% Second Series Notes due 2014, unsecured	302.2			296.9
6.25% Senior Notes due 2014, unsecured	500.0			500.0
5.625% Senior Notes due 2014, unsecured	250.0			250.0
3.40% Senior Notes due 2016, unsecured	400.0			400.0
6.35% Senior Notes due 2017, unsecured	500.0			500.0
5.00% Senior Notes due 2019, unsecured	500.0			500.0
3.95% Senior Notes due 2020, unsecured	500.0			500.0
4.75% Senior Notes due 2021, unsecured	400.0			400.0
7.45% Senior Debentures due 2027, unsecured	150.0			150.0
7.25% Senior Debentures due 2031, unsecured	600.0			600.0
Other notes payable, unsecured	22.6			23.8
Interest rate swap fair value adjustment	—			4.4
	5,125.9			4,976.3
Less current maturities	(294.0		)	(811.3		)
Long-term portion	$	4,831.9		$	4,165.0

Commercial Paper The amount of commercial paper borrowings is limited to the unused borrowing capacity under the bank credit agreement, described in the following paragraph. Commercial paper is classified as long term because the Company intends to and has the ability to refinance these borrowings on a long-term basis through either continued commercial paper borrowings or utilization of the bank credit agreement, which matures in 2015. During 2012, the average commercial paper borrowing was $681.7 million and had a weighted-average interest rate of 0.86%. During 2011, the average commercial paper borrowing was $395.8 million which had a weighted-average interest rate of 0.39%.

Bank Credit Agreement The Company has a $1,500.0 million credit agreement with a syndicate of banks which has a termination date of June 1, 2015 and provides for two additional one-year extensions of the termination date. The credit agreement provides (i) to Safeway a $1,250.0 million revolving credit facility (the “Domestic Facility”), (ii) to Safeway and Canada Safeway Limited a Canadian facility of up to $250.0 million for U.S. Dollar and Canadian Dollar advances and (iii) to Safeway a $400.0 million sub-facility of the Domestic Facility for issuance of standby and commercial letters of credit. The credit agreement also provides for an increase in the credit facility commitments up to an additional $500.0 million, at the option of the lenders and subject to the satisfaction of certain conditions. The restrictive covenants of the credit agreement limit Safeway with respect to, among other things, creating liens upon its assets and disposing of material amounts of assets other than in the ordinary course of business. Additionally, the Company is required to maintain a minimum Adjusted EBITDA, as defined in the credit agreement, to interest expense ratio of 2.0 to 1 and is required to not exceed an Adjusted Debt (total consolidated debt less cash and cash equivalents in excess of $75.0 million) to Adjusted EBITDA ratio of 3.5 to 1. As of December 29, 2012, the Company was in compliance with these covenant requirements. As of December 29, 2012, there were no borrowings, and letters of credit totaled $43.6 million under the Credit Agreement. Total unused borrowing capacity under the credit agreement was $1,456.4 million as of December 29, 2012.

U.S. borrowings under the credit agreement carry interest at one of the following rates selected by the Company: (1) the prime rate; (2) a rate based on rates at which Eurodollar deposits are offered to first-class banks by the lenders in the bank credit agreement plus a pricing margin based on the Company’s debt rating or interest coverage ratio (the “Pricing Margin”); or (3) rates quoted at the discretion of the lenders. Canadian borrowings denominated in U.S. dollars carry interest at one of the following rates selected by the Company: (a) the Canadian base rate; or (b) the Canadian Eurodollar rate plus the Pricing Margin. Canadian borrowings denominated in Canadian dollars carry interest at one of the following rates selected by the Company: (1) the Canadian prime rate; or (2) the rate for Canadian bankers acceptances plus the Pricing Margin.

During 2012, the Company paid facility fees ranging from 0.125% to 0.15% on the total amount of the credit facility.

Term Credit Agreement In December 2011, Safeway entered into a $700.0 million term credit agreement with a syndicate of banks which matures on March 19, 2015. The term credit agreement provided an up to $700.0 million three-year and three-month senior term credit facility available to Safeway as a delayed draw term credit facility in two draws (each of which was required to be in minimum amounts of $100.0 million and increments of $25.0 million) from the closing date through, on or prior to, April 19, 2012. Loans under the term credit agreement carry interest, at Safeway’s option, at either a Base Rate (as defined in the term credit agreement) plus a pricing margin or a Eurodollar Rate (as defined in the term credit agreement) plus a pricing margin. Semi-annual principal payments equal to 5.50% of the aggregate principal amount of the term loans are required beginning on June 30, 2013, with any remaining principal balances due at the maturity of the term credit agreement. The term credit agreement covenants are substantially similar to the covenants contained in Safeway's existing bank credit agreement dated as of June 1, 2011, as previously disclosed under the caption "Bank Credit Agreement." As of December 29, 2012, the Company was in compliance with these covenant requirements. As of December 29, 2012, there were $700 million of borrowings under the term credit agreement with an interest rate of 1.46% and no unused borrowing capacity under the term credit agreement.

During the availability period in 2012, the Company paid commitment fees of 0.175% on the total amount available to be drawn under the term credit agreement.

Shelf Registration On October 24, 2011, the Company filed a shelf registration statement (the “Shelf”) with the SEC which enables Safeway to issue an unlimited amount of debt securities and/or common stock. The Shelf expires on October 24, 2014. The Safeway Board of Directors authorized issuance of up to $3.0 billion of securities under the Shelf. As of December 29, 2012, $1.95 billion of securities were available for issuance under the board’s authorization.

Senior Unsecured Indebtedness Safeway issued $250.0 million of Floating Rate Notes on June 14, 2012, which mature on December 12, 2013. The interest rate on these notes at year-end 2012 was 1.81%.

Canada Safeway Limited, an indirect, wholly-owned subsidiary of Safeway, issued CAD300.0 million of 3.00% Second Series Notes on March 31, 2011, which mature on March 31, 2014. On December 5, 2011, Safeway issued $400.0 million of 3.40% Senior Notes and $400.0 million of 4.75% Senior Notes which mature on December 1, 2016 and December 1, 2021, respectively.

These Senior Notes are subject to limited covenants, including limitations on liens and limitations on sale and leaseback transactions

Mortgage Notes Payable Mortgage notes payable at year-end 2012 have remaining terms ranging from less than three years to nine years, had a weighted-average interest rate during 2012 of 5.59% and are secured by properties with a net book value of approximately $92.2 million.

Other Notes Payable Other notes payable at year-end 2012 have remaining terms ranging from two years to 23 years and had a weighted average interest rate of 6.77% during 2012.

Annual Debt Maturities As of year-end 2012, annual debt maturities (principal payments only) were as follows (in millions):



2013	$	294.0
2014	1,170.5
2015	588.2
2016	401.9
2017	501.9
Thereafter	2,169.4
	$	5,125.9

Letters of Credit The Company had letters of credit of $50.9 million outstanding at year-end 2012, of which $43.6 million were issued under the credit agreement. The letters of credit are maintained primarily to support performance, payment, deposit or surety obligations of the Company. The Company pays commissions ranging from 0.15% to 1.10% on the face amount of the letters of credit.

Fair Value At year-end 2012 and year-end 2011, the estimated fair value of debt, including current maturities, was $5,408.2 million and $5,371.3 million, respectively.