Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Our primary exposure to market risk relates to unfavorable changes with respect to interest rates and currency exchange rates. For a discussion about our concentration of credit risk; cash and cash equivalents; and investments in COLI assets, refer to Notes 6, 15, 16 and 17 of the Notes to consolidated financial statements in Item 8. Financial Statements and Supplementary Data for additional information.

Interest Rate Risk**.** We are exposed to interest rate risk with respect to our fixed-rate and variable-rate debt. Fluctuations in interest rates impact the fair value of fixed-rate debt and expose us to the risk that we may need to refinance debt at higher rates at each instrument’s respective maturity date. Fluctuations in interest rates impact interest expense from our variable-rate debt. At December 31, 2022, 69% of our debt portfolio, on a gross basis, incurred interest at a fixed-rate and the remaining 31% of the portfolio incurred interest at a variable-rate.

As of December 31, 2022, our fixed-rate debt was $2.57 billion, which consisted primarily of our senior notes outstanding. The fair value of Quanta’s senior notes was $2.00 billion at December 31, 2022. We estimate that a 10% change in the market price would cause a change in fair value of $199.7 million.

As of December 31, 2022, our variable-rate debt consisted of $786.9 million outstanding under our senior credit facility and $373.0 million outstanding under our commercial paper program. The weighted average interest rate on our borrowings under our senior credit facility for the year ended December 31, 2022 was 3.0%, and the weighted average interest rate on borrowings under our commercial paper program, which we entered into during the second half of 2022, was 4.5%. Based on these borrowings outstanding as of December 31, 2022, we estimate that a 50 basis point increase or decrease in interest rates would impact interest expense by approximately $5.8 million.

For additional information about our debt obligations, refer to Note 10 of the Notes to consolidated financial statements in Item 8. Financial Statements and Supplementary Data.

Foreign Currency Risk. We perform our services in some foreign countries, primarily Canada and Australia, and as a result, are exposed to changes in foreign currency exchange rates. Our reporting currency is the U.S. dollar. Our foreign entities typically use the local currency as their functional currency. Translation adjustments are deferred in accumulated other comprehensive income.

Some of our consolidated entities enter into transactions that are not denominated in their functional currency. This results in exposure to foreign currency risk for financial instruments, including, but not limited to, third-party and intercompany receivables and payables and intercompany loans.

Our policy is to maintain a balanced position in foreign currencies to minimize exchange gains and losses arising from changes in exchange rates. We maintain risk management control practices to monitor the foreign currency risk attributable to our intercompany and third-party outstanding foreign currency balances. These practices involve the centralization of our exposure to underlying currencies that are not subject to central bank and/or country specific restrictions. By centralizing most of our foreign currency exposure into one subsidiary, we are able to take advantage of natural offsets thereby reducing the overall impact of changes in foreign currency rates on our earnings.

Historically, we have not had significant exposure to foreign currency risk. Other (expense) income, net, in the consolidated statements of income in Item 8. Financial Statements and Supplementary Data reflects net foreign currency gains of $0.7 million and $5.1 million in the years ended December 31, 2022 and 2021.