Item 7A. Quantitative and Qualitative Disclosures About Market Risk
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The following table provides information as of December 31, 2021 about our market risk exposure associated with changing interest rates. For long-term debt obligations, the table presents principal cash flows by maturity date and average interest rates related to outstanding obligations. For interest rate swaps, the table presents notional principal amounts and weighted-average interest rates (in millions, except percentages). For more information, see Item 7 of this Annual Report under the caption “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources” and note 8 to our consolidated financial statements included in this Annual Report.
Long-Term Debt 2022 2023 2024 2025 2026 Thereafter Total Fair Value
Fixed Rate Debt (a) $ 968.7 $ 2,312.7 $ 2,152.8 $ 3,746.1 $ 3,370.1 $ 17,410.5 $ 29,960.9 $ 30,545.1
Weighted-Average Interest Rate (a) 4.07 % 3.28 % 3.49 % 2.67 % 2.58 % 2.36 %
Variable Rate Debt (b) $ 3,600.0 $ 2,200.0 $ 938.2 $ 4,388.4 $ — $ 2,410.0 $ 13,536.6 $ 13,556.9
Weighted-Average Interest Rate (b)(c) 1.42 % 1.81 % 1.13 % 1.21 % — % 1.23 %
Interest Rate Swaps
Hedged Fixed-Rate Notional Amount $ 600.0 $ 500.0 $ — $ — $ — $ — $ 1,100.0 $ 11.0 (d)
Variable Rate Debt Rate (e) 1.19 %
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(a) Fixed rate debt consisted of: Securities issued in the Trust Securitizations; Securities issued in the 2015-2 Securitization; the CoreSite senior unsecured notes, which were subsequently repaid in full on January 7, 2022; our senior unsecured notes (see note 8 to our consolidated financial statements included in this Annual Report for a detailed description of all such senior unsecured notes); the Kenya Debt; the U.S. Subsidiary Debt; and other debt including finance leases.
(b) Variable rate debt consisted of: the 2021 Multicurrency Credit Facility, which matures on June 30, 2025; the 2021 Credit Facility, which matures on January 31, 2027; the 2021 Term Loan, which matures on January 31, 2027; the 2021 EUR Three Year Delayed Draw Term Loan, which matures on May 28, 2024; the 2021 USD 364-Day Year Delayed Draw Term Loan, which matures on December 28, 2022; and the 2021 USD Two Year Delayed Draw Term Loan, which matures on December 28, 2023.
(c) Based on rates effective as of December 31, 2021.
(d) As of December 31, 2021, the interest rate swap agreements in the United States were included in Other non-current assets on the consolidated balance sheet.
(e) Represents the weighted average variable rate of interest based on contractual notional amount as a percentage of total notional amounts.
Interest Rate Risk
As of December 31, 2021, we had three interest rate swap agreements related to the 2.250% Notes. These swaps were designated as fair value hedges, had an aggregate notional amount of $600.0 million, had an interest rate of one-month LIBOR plus applicable spreads and expired in January 2022. The 2.250% Notes were subsequently repaid in full on January 14, 2022. In addition, we have three interest rate swap agreements related to a portion of our 3.000% senior unsecured notes due 2023 (the “3.000% Notes”). These swaps have been designated as fair value hedges, have an aggregate notional amount of $500.0 million, have an interest rate of one-month LIBOR plus applicable spreads and expire in June 2023.
Changes in interest rates can cause interest charges to fluctuate on our variable rate debt. Variable rate debt as of December 31, 2021 consisted of $4.4 billion under the 2021 Multicurrency Credit Facility, $1.4 billion under the 2021 Credit Facility, $1.0 billion under the 2021 Term Loan, $938.2 million under the 2021 EUR Three Year Delayed Draw Term Loan, $3.0 billion under the 2021 USD 364-Day Delayed Draw Term Loan, $1.5 billion under the 2021 USD Two Year Delayed Draw Term Loan, $600.0 million under the interest rate swap agreements related to the 2.250% Notes and $500.0 million under the interest rate swap agreements related to the 3.000% Notes. A 10% increase in current interest rates would result in an additional $16.3 million of interest expense for the year ended December 31, 2021.
Foreign Currency Risk
We are exposed to market risk from changes in foreign currency exchange rates primarily in connection with our foreign subsidiaries and joint ventures internationally. Any transaction denominated in a currency other than the U.S. Dollar is reported in U.S. Dollars at the applicable exchange rate. All assets and liabilities are translated into U.S. Dollars at exchange rates in effect at the end of the applicable fiscal reporting period and all revenues and expenses are translated at average rates for the period. The cumulative translation effect is included in equity as a component of Accumulated other comprehensive loss. We may enter into additional foreign currency financial instruments in anticipation of future transactions to minimize the impact of foreign currency fluctuations. For the year ended December 31, 2021, 44% of our revenues and 52% of our total operating expenses were denominated in foreign currencies.
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Table of Conten ts
As of December 31, 2021, we have incurred intercompany debt that is not considered to be permanently reinvested, and similar unaffiliated balances that were denominated in a currency other than the functional currency of the subsidiary in which it is recorded. As this debt had not been designated as being a long-term investment in nature, any changes in the foreign currency exchange rates will result in unrealized gains or losses, which will be included in our determination of net income. An adverse change of 10% in the underlying exchange rates of our unsettled intercompany debt and similar unaffiliated balances would result in $66.7 million of unrealized losses that would be included in Other expense in our consolidated statements of operations for the year ended December 31, 2021. As of December 31, 2021, we have 7.3 billion EUR (approximately $8.3 billion) denominated debt outstanding. An adverse change of 10% in the underlying exchange rates of our outstanding EUR debt would result in $0.9 billion of foreign currency losses that would be included in Other expense in our consolidated statements of operations for the year ended December 31, 2021.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
See Item 15 (a).
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
None.