v3.19.3.a.u2
Debt, Credit Facilities, and Commitments and Contingencies
 12 Months Ended
Dec. 31, 2019
Debt, Credit Facilities, and Commitments and Contingencies  
Debt, Credit Facilities, and Commitments and Contingencies Debt, Credit Facilities and Commitments and Contingencies
 
The following table summarizes long-term debt:
as of December 31 (dollars in millions)
Effective
interest rate
in 2019(a)
 
2019
 
Effective
interest rate
in 2018(a)
 
2018
Senior notes issued in 2012
 
 
 
 
 
 
 
2.90% notes due 2022
2.97
%
 
$
3,100

 
2.97
%
 
$
3,100

4.40% notes due 2042
4.46
%
 
2,600

 
4.46
%
 
2,600

Senior notes issued in 2015
 
 
 
 
 
 
 
2.50% notes due 2020
2.65
%
 
3,750

 
2.65
%
 
3,750

3.20% notes due 2022
3.28
%
 
1,000

 
3.28
%
 
1,000

3.60% notes due 2025
3.66
%
 
3,750

 
3.66
%
 
3,750

4.50% notes due 2035
4.58
%
 
2,500

 
4.58
%
 
2,500

4.70% notes due 2045
4.73
%
 
2,700

 
4.73
%
 
2,700

Senior notes issued in 2016
 
 
 
 
 
 
 
2.30% notes due 2021
2.40
%
 
1,800

 
2.40
%
 
1,800

2.85% notes due 2023
2.91
%
 
1,000

 
2.91
%
 
1,000

3.20% notes due 2026
3.28
%
 
2,000

 
3.28
%
 
2,000

4.30% notes due 2036
4.37
%
 
1,000

 
4.37
%
 
1,000

4.45% notes due 2046
4.50
%
 
2,000

 
4.50
%
 
2,000

Senior Euro notes issued in 2016
 
 
 
 
 
 
 
0.375% notes due 2019 (€1,400 principal)
0.55
%
 
—

 
0.55
%
 
1,604

1.375% notes due 2024 (€1,450 principal)
1.46
%
 
1,625

 
1.46
%
 
1,661

2.125% notes due 2028 (€750 principal)
2.18
%
 
840

 
2.18
%
 
859

Senior notes issued in 2018
 
 
 
 
 
 
 
3.375% notes due 2021
3.51
%
 
1,250

 
3.51
%
 
1,250

3.75% notes due 2023
3.84
%
 
1,250

 
3.84
%
 
1,250

4.25% notes due 2028
4.38
%
 
1,750

 
4.38
%
 
1,750

4.875% notes due 2048
4.94
%
 
1,750

 
4.94
%
 
1,750

Senior Euro notes issued in 2019
 
 
 
 
 
 
 
0.75% notes due 2027 (€750 principal)
0.86
%
 
840

 
—

 
—

1.25% notes due 2031 (€650 principal)
1.30
%
 
728

 
—

 
—

Senior notes issued in 2019
 
 
 
 
 
 
 
Floating rate notes due May 2021
2.08
%
 
750

 
—

 
—

Floating rate notes due November 2021
2.12
%
 
750

 
—

 
—

Floating rate notes due 2022
2.29
%
 
750

 
—

 
—

2.15% notes due 2021
2.23
%
 
1,750

 
—

 
—

2.30% notes due 2022
2.42
%
 
3,000

 
—

 
—

2.60% notes due 2024
2.69
%
 
3,750

 
—

 
—

2.95% notes due 2026
3.02
%
 
4,000

 
—

 
—

3.20% notes due 2029
3.25
%
 
5,500

 
—

 
—

4.05% notes due 2039
4.11
%
 
4,000

 
—

 
—

4.25% notes due 2049
4.29
%
 
5,750

 
—

 
—

Other


 
27

 


 
36

Fair value hedges
 
 
(48
)
 
 
 
(466
)
Unamortized bond discounts
 
 
(161
)
 
 
 
(120
)
Unamortized deferred financing costs
 
 
(323
)
 
 
 
(163
)
Total long-term debt and finance lease obligations
 
 
66,728

 
 
 
36,611

Current portion
 
 
3,753

 
 
 
1,609

Noncurrent portion
 
 
$
62,975

 
 
 
$
35,002

(a)
Excludes the effect of any related interest rate swaps.
Allergan-Related Financing
In connection with the proposed acquisition of Allergan, in November 2019, the company issued $30.0 billion aggregate principal amount of unsecured senior notes, consisting of $750 million aggregate principal amount of floating rate senior notes due May 2021, $750 million aggregate principal amount of floating rate senior notes due November 2021, $750 million aggregate principal amount of floating rate senior notes due 2022, $1.75 billion aggregate principal amount of 2.15% senior notes due 2021, $3.0 billion aggregate principal amount of 2.30% senior notes due 2022, $3.75 billion aggregate principal amount of 2.60% senior notes due 2024, $4.0 billion aggregate principal amount of 2.95% senior notes due 2026, $5.5 billion aggregate principal amount of 3.20% senior notes due 2029, $4.0 billion aggregate principal amount of 4.05% senior notes due 2039 and $5.75 billion aggregate principal amount of 4.25% senior notes due 2049. These senior notes rank equally with all other unsecured and unsubordinated indebtedness of the company. AbbVie may redeem the fixed-rate senior notes prior to maturity at a redemption price equal to the greater of the principal amount or the sum of present values of the remaining scheduled payments of principal and interest on the fixed-rate senior notes to be redeemed plus a make-whole premium. With exception of the fixed-rate notes due 2021 and 2022, AbbVie may also redeem the fixed-rate senior notes at par between one and six months prior to maturity. In connection with the offering, debt issuance costs incurred totaled $173 million and debt discounts totaled $52 million, which are being amortized over the respective terms of the notes to interest expense, net in the consolidated statements of earnings. AbbVie expects to use the net proceeds to fund a portion of the aggregate cash consideration due to Allergan shareholders in connection with the proposed acquisition described in Note 5 and to pay related fees and expenses. Pending the consummation of the proposed Allergan acquisition, the net proceeds from the offering are permitted to be invested temporarily in short-term investments. All of the notes are subject to special mandatory redemption at a redemption price equal to 101% of the aggregate principal amount of the notes plus accrued and unpaid interest if the proposed acquisition of Allergan is not completed by January 30, 2021 or the company notifies the trustee in respect of the notes that it will not pursue the consummation of the proposed Allergan acquisition.
On June 25, 2019, AbbVie entered into a $38.0 billion 364-day bridge credit agreement. On July 12, 2019, AbbVie entered into a term loan credit agreement with an aggregate principal amount of $6.0 billion consisting of a $1.5 billion 364-day term loan tranche, a $2.5 billion three-year term loan tranche and a $2.0 billion five-year term loan tranche. In connection with the agreements, debt issuance costs incurred totaled $242 million and were recorded to interest expense, net in the consolidated statements of earnings. Upon commencement of the $6.0 billion term loan credit agreement and upon issuance of the $30.0 billion aggregate principal amount of senior notes, commitments under the bridge credit agreement were reduced to $2.0 billion. No amounts were drawn under the bridge credit agreement or term loan credit agreement at December 31, 2019. In February 2020, the remaining commitments under the bridge credit agreement were reduced to $0 as a result of cash on hand at AbbVie. AbbVie subsequently terminated the bridge credit agreement in its entirety as permitted under its terms.
On October 25, 2019, AbbVie commenced offers to exchange any and all outstanding notes of certain series issued by Allergan for up to $15.5 billion aggregate principal amount and €3.7 billion aggregate principal amount of new notes to be issued by AbbVie and cash, subject to conditions including the closing of the pending acquisition of Allergan. Concurrently with the offers to exchange the Allergan notes for AbbVie notes, the company solicited consents to adopt certain proposed amendments to each of the indentures governing the Allergan notes to, among other things, eliminate substantially all of the restrictive covenants in such indentures. In November 2019, the company announced that the requisite number of consents had been received to adopt the proposed amendments with respect to all Allergan notes and that Allergan executed a supplemental indenture with respect to each Allergan indenture implementing the amendments, which will become operative only upon settlement of the exchange offers. The expiration of the exchange offers is expected to occur on or about the closing date of AbbVie’s acquisition of Allergan.
Other Long-Term Debt
In September 2019, the company issued €1.4 billion aggregate principal amount of unsecured senior Euro notes, consisting of €750 million aggregate principal amount of 0.75% senior notes due 2027 and €650 million aggregate principal amount of 1.25% senior notes due 2031. These senior notes rank equally with all other unsecured and unsubordinated indebtedness of the company. AbbVie may redeem the senior notes prior to maturity at a redemption price equal to the principal amount of the senior notes redeemed plus a make-whole premium and may redeem the senior notes at par between one and three months prior to maturity. In connection with the offering, debt issuance costs incurred totaled $9 million and debt discounts totaled $5 million and are being amortized over the respective terms of the notes to interest expense, net in the consolidated statements of earnings. In October 2019, the company used the proceeds to redeem €1.4 billion aggregate principal amount of 0.375% senior Euro notes that were due to mature in November 2019.
In September 2018, the company issued $6.0 billion aggregate principal amount of unsecured senior notes, consisting of $1.25 billion aggregate principal amount of 3.375% senior notes due 2021, $1.25 billion aggregate principal amount of 3.75%
senior notes due 2023, $1.75 billion aggregate principal amount of 4.25% senior notes due 2028 and $1.75 billion aggregate principal amount of 4.875% senior notes due 2048. These senior notes rank equally with all other unsecured and unsubordinated indebtedness of the company. AbbVie may redeem the senior notes prior to maturity at a redemption price equal to the principal amount of the senior notes redeemed plus a make-whole premium, and except for the 3.375% notes due 2021, AbbVie may redeem the senior notes at par between one and six months prior to maturity. In connection with the offering, debt issuance costs incurred totaled $37 million and debt discounts totaled $37 million and are being amortized over the respective terms of the senior notes to interest expense, net in the consolidated statements of earnings. Of the $5.9 billion net proceeds, $2.0 billion was used to repay the company's outstanding three-year term loan credit agreement in September 2018 and $1.0 billion was used to repay the aggregate principal amount of 2.00% senior notes at maturity in November 2018. The company used the remaining proceeds to repay term loan obligations in 2019 as they became due.
In May 2018, the company also repaid $3.0 billion aggregate principal amount of 1.80% senior notes at maturity.
AbbVie has outstanding €2.2 billion aggregate principal amount of unsecured senior Euro notes which were issued in 2016. AbbVie may redeem the senior notes prior to maturity at a redemption price equal to the principal amount of the senior notes redeemed plus a make-whole premium and AbbVie may redeem the senior notes at par between one and three months prior to maturity.
AbbVie has outstanding $7.8 billion aggregate principal amount of unsecured senior notes which were issued in 2016 and $13.7 billion aggregate principal amount of unsecured senior notes which were issued in 2015. AbbVie may redeem the senior notes, at any time, prior to maturity at a redemption price equal to the principal amount of the senior notes redeemed plus a make-whole premium and AbbVie may redeem the senior notes at par between one and six months prior to maturity.
AbbVie has outstanding $5.7 billion aggregate principal amount of unsecured senior notes which were issued in 2012. AbbVie may redeem all of the senior notes of each series, at any time, or some of the senior notes of each series, from time to time, at a redemption price equal to the principal amount of the senior notes redeemed plus a make-whole premium.
At December 31, 2019, the company was in compliance with its senior note covenants and term loan covenants.
Short-Term Borrowings
Short-term borrowings included commercial paper borrowings of $699 million as of December 31, 2018. There were no commercial paper borrowings as of December 31, 2019. The weighted-average interest rate on commercial paper borrowings was 2.5% in 2019, 2.0% in 2018 and 1.3% in 2017.
In August 2019, AbbVie entered into an amended and restated $4.0 billion five-year revolving credit facility that matures in August 2024. This amended facility enables the company to borrow funds on an unsecured basis at variable interest rates and contains various covenants, all of which the company was in compliance with as of December 31, 2019. Commitment fees under AbbVie's revolving credit facilities were insignificant in 2019, 2018 and 2017. No amounts were outstanding under the company's credit facilities as of December 31, 2019 and December 31, 2018.
In March 2019, AbbVie repaid a $3.0 billion 364-day term loan credit agreement that was drawn on in June 2018 and was scheduled to mature in June 2019.
Maturities of Long-Term Debt
The following table summarizes AbbVie's debt maturities as of December 31, 2019:
as of and for the years ending December 31 (in millions)
 
2020
$
3,750

2021
6,300

2022
7,850

2023
2,250

2024
5,375

Thereafter
41,708

Total obligations and commitments
67,233

Fair value hedges, unamortized bond discounts, deferred financing costs and finance lease obligations
(505
)
Total long-term debt and finance lease obligations
$
66,728

Contingencies and Guarantees
In connection with the separation, AbbVie has indemnified Abbott for all liabilities resulting from the operation of AbbVie's business other than income tax liabilities with respect to periods prior to the distribution date and other liabilities as agreed to by AbbVie and Abbott. AbbVie has no material exposures to off-balance sheet arrangements and no special-purpose entities. In the ordinary course of business, AbbVie has periodically entered into third-party agreements, such as the assignment of product rights, which have resulted in AbbVie becoming secondarily liable for obligations for which AbbVie had previously been primarily liable. Based upon past experience, the likelihood of payments under these agreements is remote.