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The Company is exposed to various market risks, including the effects of adverse changes in commodity prices and credit risk as described below.
−Removed: The Company continually monitors its market risk exposure, including the impact and developments related to the armed conflicts in Ukraine and Israel, increase in interest rate and inflation trend, which continued to have significant impact on volatility and uncertainties in the financial markets during the third quarter of 2023.
+Added: The Company continually monitors its market risk exposure, including the impact and developments related to the conflicts in Ukraine and Israel, increase in interest rate and inflation trend, which continued to have significant impact on volatility and uncertainties in the financial markets during the first quarter of 2024.
Commodity Price Risk
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Management regularly reviews the Company’s potential exposure to commodity price risk and may periodically enter into financial or physical arrangements intended to mitigate potential volatility.
−Removed: Refer to Note 12—Deriva tive s and Hedging Activities in the Notes to Condensed Consolidated Financial Statements in this Form 10-Q for additional discussion regarding our hedging strategies and objectives.
+Added: Refer to Note 11—Derivatives and Hedging Activities in the Notes to Condensed Consolidated Financial Statements in this Quarterly Report on Form 10-Q for additional discussion regarding our hedging strategies and objectives.
Interest Rate Risk
The market risk inherent in our financial instruments and our financial position represents the potential loss arising from adverse changes in interest rates.
−Removed: As of September 30, 2023, the Company had interest bearing debt, net of deferred financing costs, with principal amount of $3.61 billion.
+Added: As of March 31, 2024, the Company had interest bearing debt, net of deferred financing costs, with principal amount of $3.52 billion.
The interest rates for the Revolving Credit Facility and the Term Loan Credit Facility are variable, which exposes the Company to the risk of increased interest expense in the event of increases to short-term interest rates.
Accordingly, results of operations, cash flows, financial condition and the ability to make cash distributions could be adversely affected by significant increases in interest rates.
−Removed: As of September 30, 2023, $2.25 billion of floating rate debt (out of $2.63 billion) has been hedged until June 2025.
−Removed: If interest rates increase by 10.0%, the Company’s consolidated interest expense would have increased by approximately $194.1 million for the nine months ended September 30, 2023.
−Removed: The Company may periodically enter into interest rate derivatives to add stability to interest expense and to manage its exposure to interest rate movements.
−Removed: Refer to Note 12—Derivatives and Hedging Activities in the Notes to Condensed Consolidated Financial Statements in this Form 10-Q for additional discussion regarding our hedging strategies and objectives.
−Removed: The Company will realize 0.05% reductions to the effective interest rates of both the Revolving Credit Facility and the Term Loan Credit Facility during 2023 in relation to sustainability adjustment features embedded in these facilities.
−Removed: The rate reductions were dependent upon the Company meeting certain sustainability targets during 2022, which were subject to the completion of certain attestation procedures, which have been successfully completed as of September 30, 2023.
+Added: The Company has locked in the floating base rate on 97% of our floating rate debt with interest rate swaps with a $1.70 billion notional that are effective through May 31, 2025 swapping floating SOFR for a fixed swap rate between 4.38% and 4.48%.
+Added: Refer to Note 11—Derivatives and Hedging Activities in the Notes to Condensed Consolidated Financial Statements in this Quarterly Report on Form 10-Q for additional discussion regarding our hedging strategies and objectives.
+Added: In addition, the Company expects to realize 0.05% reductions to the effective interest rates of both the Revolving Credit Facility and the Term Loan Credit Facility during 2024 in relation to sustainability adjustment features embedded in these facilities.
+Added: The rate reductions depend upon the Company meeting certain sustainability targets during 2023, which were subject to the completion of certain attestation procedures.
The Company is subject to credit risk resulting from nonpayment or nonperformance by, or the insolvency or liquidation of, third-party customers.
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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.