Item 7A. Quantitative and Qualitative Disclosures About Market Risk
Item 7A. Quantitative and Qualitative Disclosures About Market Risk
Market risk is the risk of loss arising from adverse changes in market rates and prices, such as interest rates, foreign currency exchange rates and commodity prices. We are exposed to changes in interest rates primarily from variable rate long-term debt arrangements. We manage our interest rate risk by monitoring interest rates, including future projected rates, and adjusting our mix of fixed and variable rate borrowings.
Interest Rate Risk
As of December 31, 2024, the face value of long-term debt was $12.3 billion, including variable-rate long-term borrowings of $5.9 billion under the CEI Term Loans and the CVA Delayed Draw Term Loan. No amounts were outstanding under the CEI Revolving Credit Facility or the CVA Revolving Credit Facility.
The table below provides information as of December 31, 2024 about our fixed rate and variable rate financial instruments that are sensitive to changes in interest rates, including the cash flows associated with amortization and average interest rates. Principal amounts are used to calculate the payments to be exchanged under the related agreements and average variable rates are based on implied forward rates in the yield curve as of December 31, 2024 and should not be considered a predictor of actual future interest rates.
Expected Maturity Date
(Dollars in millions) 2025 2026 2027 2028 2029 Thereafter Total Fair Value
Liabilities
Long-term debt
Fixed rate $ 2 $ 2 $ 548 $ 2 $ 1,202 $ 4,634 $ 6,390 $ 6,329
Average interest rate 4.3 % 4.3 % 8.1 % 4.3 % 4.6 % 6.6 % 6.3 %
Variable rate $ 107 $ 107 $ 107 $ 637 $ 282 $ 4,664 $ 5,904 $ 5,938
Average interest rate 6.4 % 6.2 % 6.3 % 6.0 % 7.0 % 6.4 % 6.4 %
As of December 31, 2024, borrowings outstanding under our CEI credit agreement and the CVA Delayed Draw Term Loan were variable-rate borrowings. Assuming a 100 basis-point increase in Term SOFR, our annual interest cost would change by approximately $59 million based on gross amounts outstanding at December 31, 2024.
We do not purchase or hold any derivative financial instruments for trading purposes.
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