Transocean Ltd. 10-K

Item 7A. Quantitative and Qualitative Disclosures About Market Risk Interest rate risk —We are exposed to interest rate risk, primarily associated with our long-term debt, including current maturities. The following table presents the nominal amounts, including the principal and other installments, and related weighted-average interest rates of our long-term debt instruments by contractual maturity date (in millions, except interest rate percentages): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Years ending December 31, ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2021 ​ 2022 ​ 2023 ​ 2024 ​ 2025 ​ Thereafter ​ Total Fair value Debt ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Fixed rate (USD) $ 516 ​ $ 524 ​ $ 1,131 ​ $ 930 ​ $ 775 ​ $ 3,990 ​ $ 7,866 ​ $ 4,820 ​ Average interest rate ​ ​ 5.59 % ​ 5.49 % ​ 3.42 % ​ 6.00 % ​ 6.27 % ​ 5.70 % ​ ​ ​ ​ ​ ​ At December 31, 2020 and 2019, the fair value of our outstanding debt was $4.8 billion and $8.9 billion, respectively. During the year ended December 31, 2020, the fair value of our debt decreased by $4.1 billion due to the following: (a) a decrease of $1.7 billion due to changes in market prices for our outstanding debt, (b) a decrease of $1.3 billion due to debt retired early as a result of the redemption of the 9.00% Senior Notes and repurchases of certain notes in cash tender offers and open market repurchases, (c) a decrease of $929 million due to debt restructured in exchange offers and private exchanges and (d) a decrease of $539 million due to debt repaid at scheduled maturities, partially offset by (f) an increase of $297 million due to the issuance of the 8.00% Guaranteed Notes. See Notes to Consolidated Financial Statements—Note 9—Debt. The majority of our cash equivalents is subject to variable interest rates or short-term interest rates and such cash equivalents would earn commensurately higher rates of return if interest rates increase. Currency exchange rate risk —We are exposed to currency exchange rate risk primarily associated with our international operations. Our primary risk management strategy for currency exchange rate risk involves structuring customer contracts to provide for apportioning payment for our services in U.S. dollars, which is our functional currency, and local currency. The portion denominated in local currency is based on our anticipated local currency needs over the contract term. Due to various factors, including customer contract terms, local banking laws, other statutory requirements, local currency convertibility and the impact of inflation on local costs, actual local currency needs may vary, resulting in exposure to currency exchange rate risk. We may occasionally enter into forward exchange contracts to satisfy anticipated local currency needs. The effect of fluctuations in currency exchange rates caused by our international operations generally has not had a material impact on our overall operating results. See Notes to Consolidated Financial Statements—Note 19—Risk Concentration. - 40 - Table of Contents