Long-Term Debt

3 Months Ended

Mar. 31, 2019

Note 7 – Long-Term Debt

Carrying amounts of long-term debt and related estimated fair values as of March 31, 2019 and December 31, 2018 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, 2019					December 31, 2018
	Carrying Amount			Market Value		Carrying Amount			Market Value
(Thousands of dollars)
Southwest Gas Corporation:
Debentures:
Notes, 4.45%, due 2020	$	125,000		$	126,990	$	125,000		$	126,213
Notes, 6.1%, due 2041	125,000			154,294		125,000			150,728
Notes, 3.875%, due 2022	250,000			255,015		250,000			254,195
Notes, 4.875%, due 2043	250,000			277,683		250,000			268,985
Notes, 3.8%, due 2046	300,000			283,635		300,000			267,030
Notes, 3.7%, due 2028	300,000			306,465		300,000			298,926
8% Series, due 2026	75,000			95,128		75,000			93,827
Medium-term notes, 7.78% series, due 2022	25,000			27,715		25,000			27,497
Medium-term notes, 7.92% series, due 2027	25,000			30,824		25,000			30,016
Medium-term notes, 6.76% series, due 2027	7,500			8,845		7,500			8,651
Unamortized discount and debt issuance costs	(11,641		)			(11,807		)
	1,470,859					1,470,693
Revolving credit facility and commercial paper	150,000			150,000		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	(1,900		)			(2,024		)
	198,100					197,976
Less: current maturities	—					—
Long-term debt, less current maturities - Southwest Gas Corporation	$	1,818,959				$	1,818,669
Centuri:
Centuri term loan facility	$	254,534		$	257,579	$	255,959		$	260,135
Unamortized debt issuance costs	(1,343		)			(1,414		)
	253,191					254,545
Centuri secured revolving credit facility	6,361			6,363		—			—
Centuri other debt obligations	62,678			63,365		67,104			67,053
Less: current maturities	(34,915		)			(33,060		)
Long-term debt, less current maturities - Centuri	$	287,315				$	288,589
Consolidated Southwest Gas Holdings, Inc.:
Southwest Gas Corporation long-term debt	$	1,818,959				$	1,818,669
Centuri long-term debt	322,230					321,649
Less: current maturities	(34,915		)			(33,060		)
Long-term debt, less current maturities - Southwest Gas Holdings, Inc.	$	2,106,274				$	2,107,258

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, 2019, 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, 2019, $150 million was outstanding on the long-term portion (including the commercial paper program, discussed below) and $188 million was outstanding on the short-term portion of this credit facility (see Note 8 – Short-Term Debt).

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 under the credit facility. Borrowings under the commercial paper program are designated as long-term debt. Interest rates for the program are calculated at the then current commercial paper rate. At March 31, 2019, as noted above, $50 million was outstanding under the commercial paper program.

In November 2018, Centuri, in association with the acquisition of Linetec, amended and restated its senior secured revolving credit and term loan facility, increasing the capacity from $450 million to $590 million; the amended facility is scheduled to expire in November 2023. This facility includes a revolving credit facility and a term loan facility. The line of credit portion of the facility is $325 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 $265 million. The $590 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, 2019 totaled $1.1 billion. At March 31, 2019, $261 million in borrowings were outstanding under the Centuri facility.