Note 7 – Long-Term Debt

Carrying amounts of long-term debt and related estimated fair values as of March 31, 2018 and December 31, 2017 are disclosed in the following table. Southwest’s revolving credit facility (including commercial paper) and the variable-rate Industrial Development Revenue Bonds (“IDRBs”) approximate their carrying values, as they are repaid quickly (in the case of credit facility borrowings) and have interest rates that reset frequently. These are categorized as Level 1 due to Southwest’s ability to access similar debt arrangements at measurement dates with comparable terms, including variable/market rates. The fair values of Southwest’s debentures, senior notes, and fixed-rate IDRBs were determined utilizing a market-based valuation approach, where fair values are determined based on evaluated pricing data, such as broker quotes and yields for similar securities adjusted for observable differences. Significant inputs used in the valuation generally include benchmark yield curves, credit ratings and issuer spreads. The external credit rating, coupon rate, and maturity of each security are considered in the valuation, as applicable. The fair values of debentures and fixed-rate IDRBs are categorized as Level 2 (observable market inputs based on market prices of similar securities). The Centuri secured revolving credit and term loan facility and Centuri other debt obligations (not actively traded) are categorized as Level 3, based on significant unobservable inputs to their fair values. Because Centuri’s debt is not publicly traded, fair values for the secured revolving credit and term loan facility and other debt obligations were based on a conventional discounted cash flow methodology and utilized current market pricing yield curves, across Centuri’s debt maturity spectrum, of other industrial bonds with an assumed credit rating comparable to the Company’s.


	March 31, 2018					December 31, 2017
	Carrying			Fair		Carrying			Fair
	Amount			Value		Amount			Value
(Thousands of dollars)
Southwest Gas Corporation:
Debentures:
Notes, 4.45%, due 2020	$	125,000		$	127,630	$	125,000		$	129,273
Notes, 6.1%, due 2041		125,000			155,349		125,000			158,304
Notes, 3.875%, due 2022		250,000			252,270		250,000			256,163
Notes, 4.875%, due 2043		250,000			284,998		250,000			283,243
Notes, 3.8%, due 2046		300,000			291,945		300,000			302,970
Notes, 3.7%, due 2028		300,000			302,520		—			—
8% Series, due 2026		75,000			95,542		75,000			96,063
Medium-term notes, 7.78% series, due 2022		25,000			28,147		25,000			28,714
Medium-term notes, 7.92% series, due 2027		25,000			30,810		25,000			31,542
Medium-term notes, 6.76% series, due 2027		7,500			8,811		7,500			8,882
Unamortized discount and debt issuance costs		(12,480	)				(9,350	)

		1,470,020					1,173,150

Revolving credit facility and commercial paper		39,000			39,000		150,000			150,000

Industrial development revenue bonds:
Variable-rate bonds:
Tax-exempt Series A, due 2028		50,000			50,000		50,000			50,000
2003 Series A, due 2038		50,000			50,000		50,000			50,000
2008 Series A, due 2038		50,000			50,000		50,000			50,000
2009 Series A, due 2039		50,000			50,000		50,000			50,000
Unamortized discount and debt issuance costs		(2,026	)				(2,119	)

		197,974					197,881

Less: current maturities		—					—

Long-term debt, less current maturities - Southwest Gas Corporation	$	1,706,994				$	1,521,031

Centuri:
Centuri term loan facility	$	194,357			195,757	$	199,578			207,588
Unamortized debt issuance costs		(1,056	)				(1,111	)

		193,301					198,467
Centuri secured revolving credit facility		79,227			79,261		56,472			56,525
Centuri other debt obligations		43,472			43,256		47,952			48,183
Less: current maturities		(24,867	)				(25,346	)

Long-term debt, less current maturities - Centuri	$	291,133				$	277,545

Consolidated Southwest Gas Holdings, Inc.:
Southwest Gas Corporation long-term debt	$	1,706,994				$	1,521,031
Centuri long-term debt		316,000					302,891
Less: current maturities		(24,867	)				(25,346	)

Long-term debt, less current maturities - Southwest Gas Holdings, Inc.	$	1,998,127				$	1,798,576

Southwest has a $400 million credit facility that is scheduled to expire in March 2022. Southwest designates $150 million of capacity related to the facility as long-term debt and has designated the remaining $250 million for working capital purposes. Interest rates for the credit facility are calculated at either the London Interbank Offered Rate (“LIBOR”) or an “alternate base rate,” plus in each case an applicable margin that is determined based on Southwest’s senior unsecured debt rating. At March 31, 2018, the applicable margin is 1% for loans bearing interest with reference to LIBOR and 0% for loans bearing interest with reference to the alternative base rate. At March 31, 2018, $19 million was outstanding on the long-term portion (not including the commercial paper program, discussed below) and no borrowings were outstanding on the short-term portion of this credit facility.

Southwest has a $50 million commercial paper program. Any issuance under the commercial paper program is supported by Southwest’s current revolving credit facility and, therefore, does not represent additional borrowing capacity. Any borrowing under the commercial paper program will be designated as long-term debt. Interest rates for the program are calculated at the then current commercial paper rate. At March 31, 2018, $20 million was outstanding under the commercial paper program.

In March 2018, Southwest issued $300 million in 3.7% Senior Notes at a discount of 0.185%. The notes will mature in April 2028. A portion of the proceeds were used to repay amounts then outstanding under the revolving portion of the credit facility and the remainder to repay amounts then outstanding under the commercial paper program.

Centuri has a $450 million senior secured revolving credit and term loan facility that is scheduled to expire in November 2022. This facility includes a revolving credit facility and a term loan facility. The line of credit portion of the facility is $250 million; amounts borrowed and repaid under the revolving credit facility are available to be re-borrowed. The term loan facility portion, has a limit of approximately $200 million. The limit on the term loan facility was reached in November 2017. No further borrowing is permitted under the term loan facility. The $450 million revolving credit and term loan facility is secured by substantially all of Centuri’s assets except those explicitly excluded under the terms of the agreement (including owned real estate and certain certificated vehicles). Centuri assets securing the facility at March 31, 2018 totaled $592 million. At March 31, 2018, $274 million in borrowings were outstanding under the Centuri facility.