Annual report pursuant to Section 13 and 15(d)

Debt

v3.22.0.1
Debt
 12 Months Ended
Dec. 31, 2021
Debt Disclosure [Abstract]  
Debt DEBT
 
As of December 31, 2021 and 2020, our debt consisted of the following (in millions): 
December 31,
2021 2020
SPL:
Senior Secured Notes:
6.25% due 2022
 $ —  $ 1,000 
5.625% due 2023
 1,500  1,500 
5.75% due 2024
 2,000  2,000 
5.625% due 2025
 2,000  2,000 
5.875% due 2026
 1,500  1,500 
5.00% due 2027
 1,500  1,500 
4.200% due 2028
 1,350  1,350 
4.500% due 2030
 2,000  2,000 
4.27% weighted average rate due 2037
 1,282  800 
Total SPL Senior Secured Notes 13,132  13,650 
$1.2 billion Working Capital Revolving Credit and Letter of Credit Reimbursement Agreement (the “2020 SPL Working Capital Facility”)
 —  — 
Total debt - SPL 13,132  13,650 
CQP:
Senior Notes:
5.250% due 2025
 —  1,500 
5.625% due 2026
 —  1,100 
4.500% due 2029
 1,500  1,500 
4.000% due 2031
 1,500  — 
3.25% due 2032
1,200  — 
Total CQP Senior Notes 4,200  4,100 
CQP Credit Facilities executed in 2019 (“2019 CQP Credit Facilities”) —  — 
Total debt - CQP 4,200  4,100 
CCH:
Senior Secured Notes:
7.000% due 2024
 1,250  1,250 
5.875% due 2025
 1,500  1,500 
5.125% due 2027
 1,500  1,500 
3.700% due 2029
 1,500  1,500 
3.72% weighted average rate due 2039
 2,721  1,971 
Total CCH Senior Secured Notes 8,471  7,721 
CCH Credit Facility (1) 1,728  2,627 
$1.2 billion CCH Working Capital Facility (“CCH Working Capital Facility”) (2)
 250  140 
Total debt - CCH 10,449  10,488 
Cheniere:
4.625% Senior Secured Notes due 2028 (“Cheniere Senior Secured Notes”)
 2,000  2,000 
4.875% Convertible Unsecured Notes due 2021 (“2021 Cheniere Convertible Unsecured Notes”) (1)
 —  476 
2045 Cheniere Convertible Senior Notes (3)
 625  625 
$1.25 billion Cheniere Revolving Credit Facility (“Cheniere Revolving Credit Facility”)
 —  — 
Cheniere’s term loan facility (“Cheniere Term Loan Facility”) —  148 
Total debt - Cheniere 2,625  3,249 
Cheniere Marketing: trade finance facilities and letter of credit facility (2)
—  — 
Total debt 30,406  31,487 
Current portion of long-term debt (117) (232)
Short-term debt (250) (140)
Unamortized premium, discount and debt issuance costs, net (590) (644)
Total long-term debt, net of premium, discount and debt issuance costs $ 29,449  $ 30,471 
(1)A portion of the outstanding balance that is due within one year is classified as current portion of long-term debt.
(2)These debt instruments are classified as short-term debt.
(3)The redemption of these notes was financed with borrowings under the Cheniere Revolving Credit Facility, which is a long-term debt instrument. Therefore, the 2045 Cheniere Convertible Senior Notes were classified as long-term debt as of December 31, 2021. See Convertible Notes section below for further discussion of the redemption.

Senior Notes

SPL Senior Secured Notes

The SPL Senior Secured Notes are senior secured obligations of SPL, ranking equally in right of payment with SPL’s other existing and future senior debt and secured by the same collateral and senior in right of payment to any of its future subordinated debt. Subject to permitted liens, the SPL Senior Secured Notes are secured on a pari passu first-priority basis by a security interest in all of the membership interests in SPL and substantially all of SPL’s assets. SPL may, at any time, redeem all or part of the SPL Senior Secured Notes at specified prices set forth in the respective indentures governing the SPL Senior Secured Notes, plus accrued and unpaid interest, if any, to the date of redemption. The series of SPL Senior Secured Notes due in 2037 are fully amortizing according to a fixed sculpted amortization schedule, as set forth in the respective indentures.

CQP Senior Notes

The CQP Senior Notes are jointly and severally guaranteed by each of CQP’s subsidiaries other than SPL and, subject to certain conditions governing its guarantee, Sabine Pass LP (each a “Guarantor” and collectively, the “CQP Guarantors”). The CQP Senior Notes are senior obligations of CQP, ranking equally in right of payment with CQP’s other existing and future unsubordinated debt and senior to any of its future subordinated debt. In the event that the aggregate amount of CQP’s secured indebtedness and the secured indebtedness of the CQP Guarantors (other than the CQP Senior Notes or any other series of notes issued under the CQP Base Indenture) outstanding at any one time exceeds the greater of (1) $1.5 billion and (2) 10% of net tangible assets, the CQP Senior Notes will be secured to the same extent as such obligations under the 2019 CQP Credit Facilities. The obligations under the 2019 CQP Credit Facilities are unconditionally guaranteed and secured by a first-priority lien (subject to permitted encumbrances) on substantially all the existing and future tangible and intangible assets and rights of CQP and the CQP Guarantors and equity interests in the CQP Guarantors (except, in each case, for certain excluded properties set forth in the 2019 CQP Credit Facilities). The liens securing the CQP Senior Notes, if applicable, will be shared equally and ratably (subject to permitted liens) with the holders of other senior secured obligations, which include the 2019 CQP Credit Facilities obligations and any future additional senior secured debt obligations. CQP may, at any time, redeem all or part of the CQP Senior Notes at specified prices set forth in the respective indentures governing the CQP Senior Notes, plus accrued and unpaid interest, if any, to the date of redemption.

CCH Senior Secured Notes

The CCH Senior Secured Notes are jointly and severally guaranteed by CCH’s subsidiaries, CCL, CCP and Corpus Christi Pipeline GP, LLC (each a “CCH Guarantor” and collectively, the “CCH Guarantors”). The CCH Senior Secured Notes are senior secured obligations of CCH, ranking senior in right of payment to any and all of CCH’s future indebtedness that is subordinated to the CCH Senior Secured Notes and equal in right of payment with CCH’s other existing and future indebtedness that is senior and secured by the same collateral securing the CCH Senior Secured Notes. The CCH Senior Secured Notes are secured by a first-priority security interest in substantially all of CCH’s and the CCH Guarantors’ assets. CCH may, at any time, redeem all or part of the CCH Senior Secured Notes at specified prices set forth in the respective indentures governing the CCH Senior Secured Notes, plus accrued and unpaid interest, if any, to the date of redemption.

Cheniere Senior Secured Notes

The Cheniere Senior Secured Notes are our general senior obligations and rank senior in right of payment to all of our future obligations that are, by their terms, expressly subordinated in right of payment to the Cheniere Senior Secured Notes and equally in right of payment with all of our other existing and future unsubordinated indebtedness. The Cheniere Senior Secured Notes became unsecured in June 2021 concurrent with the repayment of all outstanding obligations under the Cheniere Term Loan Facility and may, in certain instances become secured in the future in connection with the incurrence of additional secured indebtedness by us. When required, the Cheniere Senior Secured Notes will be secured on a first-priority basis by a lien on substantially all of our assets and equity interests in our direct subsidiaries (other than certain excluded subsidiaries), which liens rank pari passu with the liens securing the Cheniere Revolving Credit Facility. As of December 31, 2021, the Cheniere Senior Secured Notes are not guaranteed by any of our subsidiaries. In the future, the Cheniere Senior Secured Notes will be
guaranteed by our subsidiaries who guarantee our other material indebtedness. We may, at any time, redeem all or part of the Cheniere Senior Secured Notes at specified prices set forth in the indenture governing the Cheniere Senior Secured Notes, plus accrued and unpaid interest, if any, to the date of redemption.
Below is a schedule of future principal payments that we are obligated to make on our outstanding debt at December 31, 2021 (in millions):
Years Ending December 31, Principal Payments
2022 (1) $ 992 
2023 1,567 
2024 4,794 
2025 3,537 
2026 1,579 
Thereafter 17,937 
Total $ 30,406 
(1)Includes $625 million aggregate principal amount outstanding of the 2045 Cheniere Convertible Senior Notes as we issued a notice of redemption on December 6, 2021 for all amounts outstanding. As discussed above, the balance is classified as long-term debt in our Consolidated Balance Sheets as the redemption was financed with long-term borrowings subsequent to the balance sheet date. See Convertible Notes section below for further discussion of the redemption.

Credit Facilities

Below is a summary of our committed credit facilities outstanding as of December 31, 2021 (in millions):
2020 SPL Working Capital Facility (1)
2019 CQP Credit Facilities (2)
CCH Credit Facility (3)
CCH Working Capital Facility (4)
Cheniere Revolving Credit Facility (5)
Original facility size $ 1,200  $ 1,500  $ 8,404  $ 350  $ 750 
Incremental commitments —  —  1,566  850  500 
Less:
Outstanding balance —  —  1,729  250  — 
Commitments prepaid or terminated —  750  8,241  —  — 
Letters of credit issued 395  —  —  361  — 
Available commitment $ 805  $ 750  $ —  $ 589  $ 1,250 
Priority ranking Senior secured Senior secured Senior secured Senior secured Senior secured
Interest rate on available balance
LIBOR plus 1.125% - 1.750% or base rate plus 0.125% - 0.750%
LIBOR plus 1.25% - 2.125% or base rate plus 0.25% - 1.125%
LIBOR plus 1.75% or base rate plus 0.75% (6)
LIBOR plus 1.25% - 1.75% or base rate plus 0.25% - 0.75% (6)
LIBOR plus 1.250% - 2.375% or base rate plus 0.250% - 1.375% (6)
Weighted average interest rate of outstanding balance n/a n/a 1.85% 3.50% n/a
Commitment fees on undrawn balance 0.20% 0.49% n/a 0.50% 0.25%
Maturity date March 19, 2025 May 29, 2024 June 30, 2024 June 29, 2023 October 28, 2026
(1)The obligations of SPL under the 2020 SPL Working Capital Facility are secured by substantially all of the assets of SPL as well as a pledge of all of the membership interests in SPL and certain future subsidiaries of SPL on a pari passu basis by a first priority lien with the SPL Senior Secured Notes. The 2020 SPL Working Capital Facility contains customary conditions precedent for extensions
(2)See CQP Senior Notes section above for discussion of the rights and privileges of the 2019 CQP Credit Facilities.
(3)The obligations of CCH under the CCH Credit Facility are secured by a first priority lien on substantially all of the assets of CCH and its subsidiaries and by a pledge by Cheniere CCH Holdco I of its limited liability company interests in CCH.
(4)The obligations of CCH under the CCH Working Capital Facility are secured by substantially all of the assets of CCH and the CCH Guarantors as well as all of the membership interests in CCH and each of the CCH Guarantors on a pari passu basis with the CCH Senior Secured Notes and the CCH Credit Facility.
(5)The Cheniere Revolving Credit Facility is secured by a first priority security interest (subject to permitted liens and other customary exceptions) in substantially all of our assets, including our interests in our direct subsidiaries (other than certain excluded subsidiaries). The Cheniere Revolving Credit Facility contains a financial covenant requiring us to maintain a non-consolidated leverage ratio not to exceed 5.50:1.00 as of the end of any fiscal quarter if (i) as of the last day of such fiscal quarter the aggregate principal amount of outstanding loans plus drawn and unreimbursed letters of credit is greater than 35% of the aggregate commitments under the Cheniere Revolving Credit Facility (a “Covenant Trigger Event”) or (ii) a Covenant Trigger Event had occurred and been continuing as of the last day of the immediately preceding fiscal quarter and as of the last day of such ending fiscal quarter such Covenant Trigger Event had not ceased for a period of at least thirty consecutive days.
(6)These facilities were amended in 2021 to establish a SOFR-indexed replacement rate for LIBOR.
Convertible Notes

As of December 31, 2021, we had $625 million aggregate principal amount of the 2045 Cheniere Convertible Senior Notes outstanding, of which $321 million was recorded as debt, net of discount and debt issuance costs of $304 million, and $194 million was recorded as equity. The effective interest rate as of December 31, 2021 was 9.4%, which was the rate to accrete the discounted carrying value of the notes to the face value over the remaining contractual amortization period. Subject to various limitations and conditions under the indenture, the notes were convertible by us or by the holders to 7.2265 shares of our common stock per $1,000 principal amount. Additionally, we had the right, at our option, to redeem all or any part of the 2045 Cheniere Convertible Senior Notes at a redemption price equal to the accreted amount of the notes to be redeemed, plus accrued and unpaid interest, if any, to such redemption date. On December 6, 2021, we issued a notice of redemption for all $625 million aggregate principal amount outstanding of the 2045 Cheniere Convertible Senior Notes. The notice of redemption allowed holders to elect to convert their notes at any time prior to a specified deadline on December 31, 2021, with settlement of such converted notes in cash, as elected by the Company, on January 5, 2022. The impact of holders electing conversion was immaterial to the financial statements. The 2045 Cheniere Convertible Senior Notes not converted were redeemed on January 5, 2022 with borrowings under the Cheniere Revolving Credit Facility.

Restrictive Debt Covenants

The indentures governing our senior notes and other agreements underlying our debt contain customary terms and events of default and certain covenants that, among other things, may limit us, our subsidiaries’ and its restricted subsidiaries’ ability to make certain investments or pay dividends or distributions. SPL, CQP and CCH are restricted from making distributions under agreements governing their respective indebtedness generally until, among other requirements, deposits are made into any required debt service reserve accounts and a historical debt service coverage ratio and projected debt service coverage ratio of at least 1.25:1.00 is satisfied. At December 31, 2021, our restricted net assets of consolidated subsidiaries were approximately $1.5 billion.

As of December 31, 2021, each of our issuers was in compliance with all covenants related to their respective debt agreements.
Interest Expense

Total interest expense, net of capitalized interest, including interest expense related to our convertible notes, consisted of the following (in millions):
  Year Ended December 31,
2021 2020 2019
Interest cost on convertible notes:
Interest per contractual rate $ 36  $ 152  $ 256 
Amortization of debt discount 10  45  40 
Amortization of debt issuance costs —  8  12 
Total interest cost related to convertible notes 46  205  308 
Interest cost on debt and finance leases excluding convertible notes 1,558  1,568  1,538 
Total interest cost 1,604  1,773  1,846 
Capitalized interest (166) (248) (414)
Total interest expense, net of capitalized interest $ 1,438  $ 1,525  $ 1,432 

Fair Value Disclosures

The following table shows the carrying amount and estimated fair value of our debt (in millions):
  December 31, 2021 December 31, 2020
  Carrying
Amount		 Estimated
Fair Value		 Carrying
Amount		 Estimated
Fair Value
Senior notes — Level 2 (1)
$ 24,550  $ 26,725  $ 24,700  $ 27,897 
Senior notes — Level 3 (2)
3,253  3,693  2,771  3,423 
Credit facilities — Level 3 (3) 1,978  1,978  2,915  2,915 
2021 Cheniere Convertible Unsecured Notes — Level 3 (2) —  —  476  480 
2045 Cheniere Convertible Senior Notes — Level 1 (4) 625  526  625  496 
(1)The Level 2 estimated fair value was based on quotes obtained from broker-dealers or market makers of these senior notes and other similar instruments.
(2)The Level 3 estimated fair value was calculated based on inputs that are observable in the market or that could be derived from, or corroborated with, observable market data, including our stock price and interest rates based on debt issued by parties with comparable credit ratings to us and inputs that are not observable in the market. 
(3)The Level 3 estimated fair value approximates the principal amount because the interest rates are variable and reflective of market rates and the debt may be repaid, in full or in part, at any time without penalty.
(4)The Level 1 estimated fair value was based on unadjusted quoted prices in active markets for identical liabilities that we had the ability to access at the measurement date.