Item 3. Quantitative and Qualitative Disclosures About Market Risk
ITEM 3 – QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Interest Rates
We are exposed to interest rate risk associated with fluctuations in interest rates on our floating-rate debt under our Senior Facilities, which includes our $375 million Revolving Credit Facility and $2,243 million outstanding under the Term Loan Facility. As of September 30, 2023, there was no out standing borrowings under the Revolving Credit Facility and therefore our only variable-rate debt outstanding was the $2,243 million outstanding under the Term Loan Facility. As of September 30, 2023, assuming the Revolving Credit Facility was fully drawn, each 0.125% change in assumed blended interest rates would res ult in a $3 million cha nge in annual interest expense on indebtedness under the Senior Facilities.
Our Term Loan Facility bears interest at an annual rate equal to an applicable margin plus one-month Term SOFR, subject to a 0.75% floor. Prior to the April 26, 2023 amendment to our First Lien Credit Agreement, three-month LIBOR was the benchmark rate for determining the applicable interest rate. As such, we have historically entered into interest rate swap agreements indexed to three-month LIBOR in order to manage our risk from fluctuations in three-month LIBOR above the 0.75% floor. During 2022, three of these swap agreements matured.
To continue to manage our exposure to interest rate risk associated with our Term Loan Facility, in May 2023 we amended our remaining swap agreement to change the index from three-month LIBOR (subject to a floor of 0.75%) to one-month Term SOFR (subject to a floor of 0.75%); consistent with the First Lien Credit Agreement amendment in April 2023. The fixed rate for this swap agreement is presented in the table below. As of September 30, 2023, the interest rate on the Term Loan Facility was 8.19%, equal to an applicable margin of 2.86% (including the credit spread adjustment of 0.11%) plus one-month Term SOFR for the interest period of 5.33%
The key terms of the swap outstanding as of September 30, 2023 are presented below:
Transaction Date Effective Date Notional Amount (in millions) Fixed Rate Paid Maturity Date
February 2021 February 9, 2021 $ 1,350.0 2.34150% February 9, 2026
See Item 1 of Part I, Financial Statements - Note 12, "Derivatives," for more information on interest rate swaps.
Foreign Currencies
We are subject to foreign currency translation risk due to the translation of the results of our subsidiaries from their respective functional currencies to the U.S. dollar, our functional currency. As a result, we discuss our revenue on a constant currency as well as actual basis, highlighting our sensitivity to changes in foreign exchange rates. See " Constant Currency Revenue ." While the majority of our customers are invoiced, and the majority of our expenses are paid, by us or our subsidiaries in their respective functional currencies, we also have exposure to foreign currency transaction gains and losses as the result of certain receivables due from our foreign subsidiaries. As such, the results of operations and cash flows of our foreign subsidiaries are subject to fluctuations in foreign currency exchange rates. In the nine months ended September 30, 2023, we recognized foreign currency transaction gains of $3 million wit hin "Other expense, net" in our Condensed Consolidated Statements of Comprehensive Loss. As we grow our international operations, our exposure to foreign currency translation and transaction risk could become more significant.
We have in the past and may in the future enter into foreign currency hedging instruments to limit our exposure to foreign currency risk.
Power Prices
We are a large consumer of power. In the nine months ended September 30, 2023, we expensed a pproximately $35 million for utility companies to power our data centers, representing approximately 2% of our revenue. Power costs vary by geography, the source of power generation and seasonal fluctuations and are subject to certain proposed legislation that may increase our exposure to increased power costs. We have power contracts for data centers in the Dallas-Fort Worth, San Jose, Somerset, New Jersey and London areas that allow us to procure power either on a fixed price or on a variable price basis.
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