filings.toolsItem 3. Quantitative and Qualitative Disclosures about Market Risk
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Item 3. Quantitative and Qualitative Disclosures about Market Risk
Interest rate and foreign currency sensitivity
There has been no material change in the nature of the Company's interest rate risks or foreign currency exchange risks from those described in Part II Item 7A of our Annual Report on Form 10-K for the year ended December 31, 2023.
The table below provides information about our financial instruments that are sensitive to changes in interest rates as of June 30, 2024. For further information on the components of the Company's long-term debt and their interest rates, see Note 7 to the condensed consolidated interim financial statements included in this Quarterly Report on Form 10-Q at Part I Item 1.
| Expected maturity date | Average interest rate | Fair value**(1)** | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 2024 | 2025 | 2026 | 2027 | 2028 | 2029 | Thereafter | Total | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| (dollars in millions) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Long-term debt: | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Fixed rate | $ | 409 | $ | 37 | $ | 48 | $ | 36 | $ | 32 | $ | 23 | $ | 4,369 | $ | 4,954 | 4.07 | % | $ | 4,229 | |||||||||||||||||||||||||||||||||||||||
| Variable rate | $ | 56 | $ | 110 | $ | 992 | $ | 99 | $ | 1,263 | $ | 18 | $ | 1,556 | $ | 4,094 | 4.64 | % | $ | 4,084 |
(1)Represents the fair value of the Company’s long-term debt excluding financing leases. See Note 7 to the condensed consolidated financial statements for further details.
The scheduled principal payments for all debt that bears a variable rate by its terms, including all of Term Loan B-1, Extended Term Loan B-1, Term Loan A-1 and the revolving line of credit, have been included on the variable rate line of the schedule of expected maturities above and have been included in the calculation of the average variable interest rate presented. Additionally, the Change Healthcare temporary funding assistance, which is interest-free, has been included in the fixed rate line of the schedule of expected maturities and the calculation of the average fixed interest rate presented above.
However, principal amounts of $950 million for Term Loan B-1, $1,640 million for Extended Term Loan B-1 and $910 million of Term Loan A-1 (the capped debt) were effectively hedged by our 2019 interest rate cap agreements through June 30, 2024, with additional caps from our 2023 and 2024 interest rate cap agreements extending for further periods. As of June 30, 2024, applicable SOFR rates were above the 2.00% threshold of our cap agreements making the interest rates on this capped debt "economically fixed". As a result, as of June 30, 2024, total fixed and economically fixed debt was $8,454 million, with an average interest rate of 4.13%, while total variable rate debt not subject to caps was $594 million with an average rate of 7.51%.
See Note 7 for further details on the Company’s interest rate cap agreements.
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