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LONG-TERM DEBT AND REVOLVING CREDIT AGREEMENTS
 9 Months Ended
Sep. 30, 2023
Debt Disclosure [Abstract]  
LONG-TERM DEBT AND REVOLVING CREDIT AGREEMENTS LONG-TERM DEBT AND REVOLVING CREDIT AGREEMENTS
The following table summarizes our senior notes payable at September 30, 2023 and December 31, 2022:
(Dollars in millions)Annual contractual interest rateEffective interest ratePrincipal amountDeferred issuance costsLess: current portionLong-term debt, noncurrent
September 30, 2023
December 31, 2022
2029 Notes3.50 %3.67 %$500 $(4)$— $496 $496 
2031 Notes7.125 %7.290 %$400 $(5)$— $395 $— 
In March 2023, as a precaution to ensure we maintained liquidity during the uncertainty of the banking crisis that followed the failure of Silicon Valley Bank, we drew down the available $495 million of capacity under our 2021 Revolver. As concerns about market liquidity subsided, we repaid $200 million in March and the remaining $295 million in April. In September of 2023, we drew down $200 million of this revolver to partially fund our third quarter of 2023 share repurchases.
In February 2021, we issued $500 million aggregate principal of 3.50% senior unsecured notes maturing in March 2029 (our 2029 Notes). In August 2023, we issued $400 million aggregate principal of 7.125% senior unsecured notes maturing in August 2031 (our 2031 Notes). Interest payments on the 2031 Notes are due semi-annually in arrears on February 15 and August 15, beginning on February 15, 2024. We used the net proceeds to fund an equity tender offer and a private share repurchase, each of which were executed in the third quarter of 2023 (including the related fees and expenses).
We may voluntarily redeem all or a part of the 2031 Notes on or after August 15, 2026, on any one or more occasions, at the redemption prices set forth in the indenture governing the 2031 Notes, plus, in each case, accrued and unpaid interest thereon, if any, to, but excluding, the applicable redemption date. In addition, at any time prior to August 15, 2026, we may on any one or more occasions redeem up to 40% of the aggregate principal amount of the 2031 Notes outstanding under the indenture governing the 2031 Notes with the net cash proceeds of one or more equity offerings at a redemption price equal to 107.125% of the principal amount of the 2031 Notes then outstanding, plus accrued and unpaid interest thereon, if any, to, but excluding the applicable redemption date. At any time prior to August 15, 2026, we may also redeem all or a part of the 2031 Notes at a redemption price equal to 100% of the principal amount of the 2031 Notes redeemed plus a “make-whole” premium as of, and accrued and unpaid interest, if any, to, but excluding, the applicable redemption date.
In August 2023, concurrently with the issuance of the 2031 Notes, we amended certain provisions of our credit agreement, dated February 26, 2021, as amended, to, among other things (1) increasing the aggregate capacity under our 2021 Revolver from $500 million to $700 million and (2) extending the maturity date of our 2021 Revolver to August 16, 2028.
The annual interest rate for borrowings under our 2021 Revolver was previously calculated based on an applicable LIBOR tenor of our choosing, plus a margin of 1.25% to 2.00%, or, at our option, the alternative base rate (ABR), plus a margin of 0.25% to 1.00%. In the second quarter of 2023, we replaced the interest rate based on LIBOR and related LIBOR-based mechanics with an interest rate based on the forward-looking Secured Overnight Financing Rate (Term SOFR). Term SOFR loans will be charged interest at the Term SOFR rate (subject to a 0.00% floor), plus a margin between 1.25% and 2.00%, depending on the borrower’s total net leverage ratio, plus a credit adjustment spread of 10 basis points for all tenors (such Term SOFR rate plus the credit adjustment spread, the "Adjusted Term SOFR Rate"). The applicable Term SOFR or ABR margin is based on our Total Leverage Ratio, as defined in the 2021 Credit Agreement. The ABR is the highest of (a) the applicable Federal Reserve Bank of New York rate in effect on such day (which rate is the greater of the Federal funds Effective Rate in effect on such day and the Overnight Bank Funding Rate in effect on such day), as defined in our 2021 Credit Agreement plus 0.50% (b) the prime rate in effect on such day, and (c) the Adjusted Term SOFR Rate for a one month interest period, as published by two U.S. Government Securities Business Days prior to such day daily plus 1.00%. The interest rate for 2023 borrowings under our 2021 Revolver was 7.875% - 8.125%.
In the event TriNet Group, Inc. receives a Corporate Issuer Credit Rating that is one level below investment grade rating or higher from at least two Nationally Recognized Statistical Rating Organizations, then rating based pricing applies and, for so long as rating-based pricing applies, irrespective of the Total Leverage Ratio, the Term SOFR margin will be 1.125% and the ABR margin will be 0.125%.
The indenture governing our 2029 Notes and 2031 Notes each includes restrictive covenants limiting our ability to: (i) create liens on certain assets to secure debt; (ii) grant a subsidiary guarantee of certain debt without also providing a guarantee of the 2029 Notes or 2031 Notes, as applicable; and (iii) consolidate or merge with or into, or sell or otherwise dispose of all or substantially all of our assets to, another person, subject, in each case, to certain customary exceptions.
The 2021 Credit Agreement includes negative covenants that limit our ability to incur indebtedness and liens, sell assets and make restricted payments, including dividends and investments, subject to certain exceptions. In addition, the 2021 Credit Agreement also contains other customary affirmative and negative covenants and customary events of default. The 2021 Credit Agreement also contains a financial covenant that requires the Company to maintain certain maximum total net leverage ratios. We were in compliance with all financial covenants under the 2021 Credit Agreement, 2029 Notes and 2031 Notes at September 30, 2023.