Item 7A. Quantitative and Qualitative Disclosures About Market Risk
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
In the normal course of business, we are subject to risks from adverse fluctuations in interest rates and commodity prices. Our objective in managing our exposure to market risk is to limit the impact on earnings and cash flow.
Interest Rate Risk
We had significant variable rate debt commitments outstanding as of December 31, 2025, which accrue interest at the SOFR rate plus an applicable margin of 1.75%. These on-balance sheet financial instruments expose us to interest rate risk.
We have entered into a series of interest rate swaps to fix the SOFR of our External Debt Facilities.
The aggregate notional amount of the interest rate swaps in effect as of December 31, 2025 and 2024 was $1,000 million and $1,150 million, respectively. The SOFR of the swaps in effect is fixed at an annual rate of 2.66% to 3.40% (for an annual effective interest rate of 4.41% to 5.15%, including margin). These interest rate swaps that are in effect have maturity dates of less than one year, and a weighted average effective rate of 4.71%.
Furthermore, during the year ended December 31, 2025, we entered into additional interest rate swaps with forward start dates beginning in February 2026, that had an aggregate notional value of $900 million, which fixes the SOFR to an annual rate of 3.33% to 3.41% (for an annual effective interest rate of 5.08% to 5.16%, including margin). These interest rate swaps with forward start dates have maturity dates between March 2028 and March 2031, and a weighted average effective rate of 5.12%. The fair value of our interest rate swaps included on our consolidated balance sheets as of December 31, 2025 was $1 million. Refer to Note 8 – Financial Instruments for further detail.
Maturity date Pay fixed / receive variable notional (in millions) Average pay rate (1)
2026 1,000 4.7 %
Total interest rate swaps in effect as of December 31, 2025 1,000
2027 — — %
2028 500 5.1 %
2029 — — %
2030 — — %
2031 400 5.2 %
Total interest rate swaps with forward start dates $ 900
(1) Includes 1.75% applicable margin on the one-month SOFR.
Based on the unhedged outstanding borrowings under the Term Loan Facility as of December 31, 2025, a 100-basis point increase (decrease) in the interest rates under the Term Loan Facility would result in a $6 million increase (decrease) in interest expense, per annum, on our borrowings.
Commodity Risk
We are exposed to commodity and other price risk principally from the purchase of resin, aluminum, natural gas, electricity, carton board and diesel. In some instances, we use contracts of varying durations along with strategic pricing mechanisms to manage volatility for a portion of our commodity costs, but derivative instruments are not currently being used to manage these risks.
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