NOTES PAYABLE AND DEBT

12 Months Ended

Dec. 31, 2020

The Company had short-term and long-term debt outstanding as follows:


	December 31,
(in millions)	2020		2019
Short-term debt
Short-term borrowings	$	45	$	34

Long-term debt
4.625% Senior notes due 09/15/20 ($250 million par value)	—		251
1.800% Senior notes due 11/07/22 (€500 million par value)	609		558
3.375% Senior notes due 03/15/25 ($500 million par value)	498		497
5.000% Senior notes due 10/01/25 ($800 million par value)	912		—
2.650% Senior notes due 07/01/27 ($1,100 million par value)	1,088		—
7.125% Senior notes due 02/15/29 ($121 million par value)	119		119
4.375% Senior notes due 03/15/45 ($500 million par value)	494		494
Term loan facilities, finance leases and other	22		7
Total long-term debt	3,742		1,926
Less: current portion	4		252
Long-term debt, net of current portion	$	3,738	$	1,674

The Company may utilize uncommitted lines of credit for short-term working capital requirements. As of December 31, 2020 and 2019, the Company had $45 million and $34 million, respectively, in

borrowings under these facilities, which are reported in Notes payable and short-term debt on the Consolidated Balance Sheets.

The weighted average interest rate on short-term borrowings outstanding as of December 31, 2020 and 2019 was 1.7% and 2.5%, respectively. The weighted average interest rate on all borrowings outstanding, including the effects of outstanding swaps, as of December 31, 2020 and 2019 was 2.8%.

On October 5, 2020, the Company completed its offer to exchange approximately $800 million in aggregate principal amount of the outstanding 5.000% Senior Notes due 2025 (the “DT Notes”). Approximately $776 million in aggregate principal amount of outstanding DT Notes, representing 97% of the $800 million total outstanding principal amount of the DT Notes, were validly exchanged and cancelled for new BorgWarner notes. Following such cancellation, approximately $24 million in aggregate principal amount of the DT Notes remain outstanding. Since the majority of the DT Notes were exchanged, the Company was able to eliminate substantially all of the restrictive covenants and events of default not related to payment on the $800 million in outstanding senior notes of the Company. The DT Notes are reflected at their fair value as of the date of the acquisition. The fair value step-up was calculated based on observable market data and will be amortized as a reduction to interest expense over the remaining life of the instrument using the effective interest method. Refer to Note 2, “Acquisitions,” for additional information related to the Delphi Technologies acquisition.

On June 19, 2020, in anticipation of the acquisition of Delphi Technologies and to refinance the Company's $250 million in 4.625% senior notes due in September 2020, the Company issued $1.1 billion in 2.650% senior notes due July 2027. Interest is payable semi-annually in arrears on January 1 and July 1 of each year. These senior notes are not guaranteed by any of the Company’s subsidiaries.

Annual principal payments required as of December 31, 2020 are as follows:


(in millions)
2021	$	49
2022	615
2023	3
2024	3
2025	1,302
After 2025	1,726
Total payments	$	3,698
Add: unamortized premiums, net of discount	89
Total	$	3,787

The Company's long-term debt includes various covenants, none of which are expected to restrict future operations.

On March 13, 2020, the Company amended its multi-currency revolving credit facility, by increasing the size of the facility from $1.2 billion to $1.5 billion and by extending the maturity until March 13, 2025. The multi-currency revolving credit agreement automatically increased to $2.0 billion upon the closing of the acquisition of Delphi Technologies on October 1, 2020. Additionally, the agreement allows the Company the ability to increase the facility by $1.0 billion with bank group approval. The credit agreement contains customary events of default and one key financial covenant, which is a debt-to-EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) ratio. The Company was in compliance with the financial covenant at December 31, 2020. At December 31, 2020 and 2019, the Company had no outstanding borrowings under this facility.

The Company's commercial paper program allows the Company to issue $2.0 billion of short-term, unsecured commercial paper notes under the limits of its multi-currency revolving credit facility. The

commercial paper program automatically increased to $2.0 billion upon the closing of the acquisition of Delphi Technologies on October 1, 2020. Under this program, the Company may issue notes from time to time and use the proceeds for general corporate purposes. The Company had no outstanding borrowings under this program as of December 31, 2020 and 2019.

The total current combined borrowing capacity under the multi-currency revolving credit facility and commercial paper program cannot exceed $2.0 billion.

As of December 31, 2020 and 2019, the estimated fair values of the Company's senior unsecured notes totaled $4,052 million and $2,025 million, respectively. The estimated fair values were $332 million higher than carrying value at December 31, 2020 and $106 million higher than their carrying value at December 31, 2019. Fair market values of the senior unsecured notes are developed using observable values for similar debt instruments, which are considered Level 2 inputs as defined by ASC Topic 820. The carrying values of the Company's multi-currency revolving credit facility and commercial paper program approximate fair value. The fair value estimates do not necessarily reflect the values the Company could realize in the current markets.

The Company had outstanding letters of credit of $33 million and $28 million at December 31, 2020 and 2019, respectively. The letters of credit typically act as guarantees of payment to certain third parties in accordance with specified terms and conditions.