XPO, Inc. 10-Q

Item 3. Quantitative and Qualitative Disclosures about Market Risk. We are exposed to market risk related to changes in interest rates, foreign currency exchange rates and commodity prices. As a result of the debt transactions that occurred during the second quarter, exposure to changes in interest rates on our term loan facility and fixed rate debt are as follows: Term Loan Facility. As of June 30, 2023, we had an aggregate principal amount outstanding of $700 million on our term loan facility. The interest rate fluctuates based on SOFR or a Base Rate, as defined in the agreement, plus an applicable margin. Assuming an average annual aggregate principal amount outstanding of $700 million, a hypothetical 1% increase in the interest rate would have increased our annual interest expense by $7 million. Additionally, we utilize short-term interest rate swaps to mitigate variability in forecasted interest payments on our term loan facility. The interest rate swaps convert floating-rate interest payments into fixed rate interest payments. Fixed Rate Debt. As of June 30, 2023, we had $1.7 billion of fair value of indebtedness (excluding finance leases and asset financings) that bears interest at fixed rates. A 1% decrease in market interest rates as of June 30, 2023 would increase the fair value of our fixed-rate indebtedness by approximately 5%. For additional information concerning our debt, see Note 7—Debt to our Condensed Consolidated Financial Statements. There have been no other material changes to our quantitative and qualitative disclosures about market risk related to our continuing operations during the six months ended June 30, 2023, as compared with the quantitative and qualitative disclosures about market risk described in our 2022 Form 10-K.