ITEM NO. CA10

PUBLIC UTILITY COIVHVHSSION OF OREGONSTAFF REPORT

PUBLIC MEETING DATE: September 11, 2018

REGULAR CONSENT X EFFECTIVE DATE N/A

DATE: August 31, 2018

TO: Public Utility Certnmission-/:.,

FROIVI: Matt Muldoon and Sabrinna Soldavini<•'.

THROUGH: Jason Eisdorfer and John Crider

SUBJECT: NORTHWEST NATURAL: (Docket No. UF 4303) Requests authority toenter into a revolving credit agreement for a term of up to seven years, inan amount up to $450 million.

STAFF RECOMMENDATION:

Staff recommends the Commission approve Northwest Natural Gas Company's (NWNatural, NWN, or Company) application to enter into a Revolving Credit Agreementsubject to the following conditions and reporting requirements, as agreed to by theCompany:

1. Sum of borrowing principal and Letters of Credit (LC) under the Revolving CreditAgreement (Credit Agreement) will have an initial facility commitment of $300million. Maximum commitment inclusive of accordion features shall not exceed$450 million at any one time.

2. The term of the Credit Agreement initially will be five years, with up to two one-yearextensions.

3. Aggregate Administrative Agent and Co-Syndication Agent Banks' one-timearrangement and syndication fees may not exceed 15 basis points (bps) of theamount specified in Condition 1. Also, the administrative agent's (passed through)one-time out of pocket, counsel, and miscellaneous expenses may not exceed an

additional $250,000, and its annual administrative fee may not exceed $15,000 peryear.

4. Each participating bank's one-time upfront fee (not including arrangement and co-syndication agent fees) may not exceed 20 bps of that bank's initial commitmentamount, in addition to amounts shown in Condition 3 above. In addition, LCfronting fees shall not exceed 0.20 percent per annum of the amount of each LCissued and outstanding under the credit facility and additional LC fees shall not

Docket No. UF 4303August 31,2018Page 2

exceed $825,000 in aggregate annually. The Company will demonstrate that theresulting all-in cost of LCs (if any) is market competitive.

5. Each bank's annual facility fee, and interest rate spread (above the benchmarkvariable rate) for variable rate borrowing will not exceed the amounts and spreadsshown respectively in Attachment A.

6. Authority for the up to 400 million credit facility authorized in Docket No. UF 4274by Commission Order No. 13-069 (Prior Credit Facility), is terminated upon close ofthe new Credit Agreement, which is expected to be on or about the beginning ofOctober 2018 and the issuance of an authorizing Commission Order in this docket.

7. Under the Credit Agreement, the Company must maintain a consolidatedindebtedness to total consolidated capitalization ratio of 70 percent or less.

8. NWN will supplement its filing with the Commission within 30 days after executionof the Credit Agreement, with the executed Credit Agreement, a reportdemonstrating all fees, interest rates (showing spreads over benchmark securitieswhere applicable), and expenses are consistent with contemporaneous competitivemarket prices for such credit agreements.

Proceeds must be used for lawful utility purposes authorized by ORS 757.415.The Company will file a single annual report with the Commission with 60 calendardays after the end of each calendar year addressing NWN credit facilities and LCoutstanding under the Credit Agreement for any part of that calendar year.1 Eachreport will be accompanied by a single electronic MS Excel workbook, with all cellreferences and formulas intact and provided on a single memory storage device,and will include quarterly information for the prior year for each outstanding creditfacility.

This quarterly information will include: outstanding balances of revolving credit, LCsissued, total interest accrued, and fees paid. Reporting will continue as long asNWN has a credit facility outstanding for any portion of a given calendar year.

No annual filing is required in a year in which there was no drawing on the creditfacility and no Letters of Credit issued.

9. The Commission reserves judgment on the reasonableness for ratemakingpurposes of the Company's capital costs, capital structure, and expenses incurredfor security issuances. Northwest Natural has the burden of proof to demonstratethat the Company's financing activities; capital costs, including embeddedexpenses; and capital structure are just and reasonable.

1 A single annual report for calendar year 2018 will address all quarterly activity authorized by aCommission order issued pursuant to this docket, No. UF 4303.

Docket No. UF 4303August 31,2018Page3

DISCUSSION:

Issue

Whether the Commission should approve NW Natural's request to enter into a revolvingline of credit agreement for a term of up to five years, with the option to extend for twoadditional one year periods, in an amount up to $450 million, with an initial facilitycommitment in the amount of $300 million.

Applicable Rule or LawThe Company filed its application pursuant to Oregon Revised Statute (ORS) 757.410and 757.415, and Oregon Administrative Rule (OAR) 860-027-0030.

Under ORS 757.415(1), a public utility may issue stocks and bonds, notes and otherevidences of indebtedness, certificates of beneficial interests in a trust and securities forthe following purposes:

(a) The acquisition of property, or the construction, completion, extension orimprovement of its facilities.

(b) The improvement or maintenance of its service.

(c) The discharge or lawful refunding of its obligations.

(d) The reimbursement of money actually expended from income or from anyother money in the treasury of the public utility not secured by or obtainedfrom the issue of stocks or bonds, notes or other evidences ofindebtedness, or securities of such public utility . . .

(e) The compliance with terms and conditions of options granted to itsemployees to purchase its stock, if the commission first finds that suchterms and conditions are reasonable and in the public interest.

(f) The finance or refinance of bondable conservation investment asdescribed in ORS 757.455 . ..."

However, an order of the Commission is required before a public utility may issuestocks and long-term bonds (of duration more than one year), notes or other evidencesof indebtedness, and any security. ORS 757.410. The Commission may grantpermission for the amount requested by the public utility, for a lesser amount, or fornone at all. Further, the Commission may include in its order such conditions toapproval that it deems reasonable and necessary. ORS 757.430.

Application requirements and a list of exhibits that must be attached to the public utility'sapplication are set forth in OAR 860-027-0030.

Docket No. UF 4303August 31, 2018Page 4

Analvsis

BackgroundOn August 21, 2018, NW Natural filed an application (Application) under OregonRevised Statutes (ORS) 757.400 et seq., and Oregon Administrative Rule(OAR) 860-027-0030 requesting authorization to enter into a new Credit Agreementhaving an initial term of up to five years in an amount up to $450 million, with up to twoone-year extensions.

The Company's request for a new Credit Agreement would replace NW Natural'sexisting credit agreement, dated December 20, 2012, which was authorized byCommission Order No. 13-069 and is stili in existence. NWN has no outstandingbalances and expects to incur no fees to terminate the current agreement which ends inlate 2019. The Company intends to terminate the existing credit agreementsimultaneously with entry into the new Credit Agreement. Achieving this with one yearremaining on a credit agreement is seen as a best financial practice by rating agencies.

Process Initial Size Accordion Feature

Docket No. UF 4303 $300 miliion - Expandable up to 450 million (Proposed)$300 million - Expandable up to 450 million (Approved;

Docket No. UF 42742 to be Replaced)No Change $300 million - Expandable up to 450 million

Securities Covered by This ApplicationNW Natural's Application proposes that Unsecured Notes may be issued with an Initialterm of five years (extendable for two additional one-year periods) up to an aggregateamount of $300 million initially, which may be increased by a maximum of $150 million(Accordion) for an aggregate amount of $450 million. Notes are not convertible andhave no voting privileges.

All borrowings accrue interest at floating rates. NW Natural may choose whetherborrowings accrue interest at the Alternate Base Rate (ABR) or the Eurodollar rate. TheCompany may prepay ABR loans in a minimum amount of $1 million without premiumor penalty at any time and may prepay EurodoHar loans in a minimum amount of $1million but "will have to pay breakage charges and costs if prepaid on a date other thanthe end of an interest period."

Letters of Credit may be issued in an aggregate amount up to $60 million outstanding atany one time. The Company represents in its Application that this lower than historicalceiling is adequate going forward.

2 Commission Order No. 13069, entered February 16, 2013, authorized the existing credit agreement.

Docket No. UF 4303August 31,2018Page 5

Swingline Loans are available on a same day basis in an aggregate amount notexceeding $15 million and in minimum amounts of one million. The Company mustrepay each swingiine loan within five business days.

Borrowing MixNW Natural's Application proposes that NW Natural may draw down on the CreditAgreement, subject to a minimum borrowing of $1 million and a maximum borrowing of$450 million. The Credit Agreement will be used primarily to back the Company'scommercial paper program.

Extensions Authorized Beyond an initial Five Year TermAn Order granting authority as described in the caption of this report will authorize theCompany to enter into a revolving credit agreement for a term of up to five years, withup to two one-year extensions. This Credit Agreement may be extended twice, for oneadditional year at no additional upfront cost other than a de minimus cost for legaldocumentation. Two examples (of many options) illustrating how extension of theCredit Agreement works are:

Example 1: NW Natural does not extend the Credit Agreement at the end of thefirst year. The Credit Agreement becomes a four-year revolvingcredit facility.

Example 2: Credit Agreement is extended twice, in both the second and fourthyears. The Credit Agreement continues to have a three-year term inyear four.

The maximum aggregate term of the Credit Agreement with application of both of theone-year extension options is seven years.

Credit RatingsThe actual ratings have not changed over the last 6 years, but the negative outlook isnew, as discussed herein.

S&P Moody's

TypeCredit Rating

Outlook

Senior Secured

AA-

Stable

Senior Unsecured

A3Negative

Because the requested Credit Agreement provides a majority of the Company's primaryfinancial liquidity, authorization to borrow under the Credit Agreement is not terminatedsolely based on any particular credit rating. The Credit Agreement will not require aspecified minimum credit rating. NW Natural's senior unsecured long-term debt ratingsor senior secured debt rating, as applicable, from Moody's Rating Services (Moody's)and Standard and Poor's (S&P), will affect both bank annual commitment fees and

Docket No. UF 4303August 31,2018Page 6

borrowing spreads, each of which is capped for the applicabie credit rating as shown inAttachment A. When a given rating agency provides no senior unsecured long-termdebt credit rating for the Company, that rating agency's senior, secured long-term debtrating reduced one grade wil! apply. When Moody's and S&P do not provide the samecomparable rating, but disagree by only one grade, the higher credit rating will apply.When such disagreement is more than one grade, the higher rating reduced one gradewill apply.

Changes Since the Last Commission Authorization

Credit RatingsOf concern to Staff is the negative outlook from Moody's based in part changes in cashflow metrics following the Tax Reform and Jobs Act of 2017. Timely refreshment of thiscredit facility whiie Northwest Natural is under no heavy time or market pressure isconsistent with provision for ongoing liquidity in support: of current credit ratings. Whileapproval of this Application does not by itself remedy the negative Moody's outlook, theproposed replacement credit facility is consistent with prudent financial management bythe Company and will likely be seen as credit positive by Standard and Poor's andMoody's. As the spreads over benchmark interest rates applicable to Northwest Naturaldepend on the level of the Company's credit ratings, this will be an area for theCommission to continue to monitor.

Reduced Support for Letters of Credit (LC)Investment Banks are no longer treating LCs as loss leaders.3 This is because ofinternal collateral holding requirements. While Staff notes that the maximum aggregatesupport for letters of credit is reduced to $60 million, the Company represents this asadequate for liquidity purposes. Staff recommends that the Commission view NWNatural as in iess need of LCs in support of activities like guarantees of land restorationand environmental remediation after the end of useful lives of new facilities than anelectric utility in the middle of a heavy build cycle.

Decline of the London Interbank Offering Rate (LIBOR)LIBOR appears to be set for elimination by the end of 2021 as announced by Britishregulators on July 27, 2018. This is in response to scandal surrounding the actualmanagement of information flows between pertinent investment banks. Staffrecommends the Commission be hesitant to presume a given winner in the contestbetween contending benchmarks seeking to be the LIBOR replacement (that are nowbeing built into contracts for everything from adjustable rate loans to credit card and

A loss ieader is a product or service that is offered at a price that is not profitable, but is sold oroffered in order to attract new customers or to sell additional products and services to thosecustomers. While this was common practice at Investment Banks a decade ago, it has become rarerof late.

Docket No. UF 4303August 31, 2018Page 7

revolving credit facility agreements). Staff recommends flexibility in benchmarks,provided there is no incremental increase in cost to the Company or its utilityratepayers.

Increase in Arrangement FeesArrangement fees have increased in the last five to six years. Essentially the primarycoordinating banks have successfully insisted on somewhat more compensation thanbanks that participate but are not responsible for developing the framework andanchoring the revolving credit facility that other banks or financial institutions may alsoparticipate often at a lower level of commitment. In general, as certain investment bankactivities are on less profitable trajectories than in the past, banks are looking for highersyndication arrangement fees.4

Staff benchmarked the confidential materials provided by the Company in Exhibit BB ofits application against Bloomberg and investment bank indicative information regardingcurrent and near projected trends. While the majority of banks Staff examined areheadquartered in the U.S. and Canada, Staff also considered Japanese, English, Swiss,and French alternatives, each with an active presence in New York City. Staff wasunable to obtain definitive independent timely information regarding Deutsche Bank andso did not consider indicative information for a German bank in this instance in itsreview of comparable revolver transactions applicable to like sized-, rated- and situated-companies. Staff finds no concerns with the Company's appiication except asdiscussed herein. It is important to note that these cost increases are unavoidable, butin aggregate, have only approximately a 12 basis point, or about 0.1 percent, impact onaggregate annual cost of the proposed credit line. Essentially, the larger banks haveincreased fees, but those increases are not sufficiently high to cause markets to enablecompetitive alternatives.

Other Analysis

Use of ProceedsNW Natural's Application proposes that, if requested, NW Natural may issue notes tobanks participating in the Credit Agreement for amounts equal to the individual bank'scommitment level. The Company may also use the Credit Agreement for any utilitypurpose authorized by ORS 757.415; e.g., the low cost credit and liquidity enhancementof:

1. NWN construction, operations and maintenance (O&M), and other contracts;

Arrangement fees can be considered very literaliy as fees for coordinating and structuring a creditfacility so that potential members of a financial syndicate see a structure ready for them to participatein.

Docket No. UF 4303August 31,2018Page 8

2. Issuance of commercial paper and other short-term Debt;

3. Low cost trading collateral in lieu of maintaining cash deposits or balances;and

4. Replacement of other financing vehicies in adverse market conditions.

Use of this credit facility bolsters access to markets, reduces financing costs, andavoids cash deposits which could be at risk in the event of counterparty bankruptcy.However, the primary purpose of this Credit Agreement is to provide liquidity backup toNW Natural's commercial paper program, allowing the Company to borrow at lowershort-term rates. These commercial paper rates are lower cost than using the revolvingcredit facility at the rate below, which vary based on the Company's credit ratings.

AH-in Drawn Spread Above Benchmark Rate for EurodoHar Loans:(Including Facility and Utilization Fees)

S&P

AA-

<-75

M

Aa3

-Obps

S&P

A+

87.5

Applicable Margin

M

A1

bps

S&P M

A A2

100.0bps

S&P

A-

112.'

for Eurodollar

M

A3

5 bps

S&P

BBB+

125.0

Loans

M

Baa 1

bps

S&PBBBorBeiow

150.0 bps

MBaa2 orBelow

->

<- Also applies for higher credit ratings -> Also applies for lower credit ratings

Estimated ExpensesNW Natural represents in its Application that fees and expenses incurred will be marketbased costs typical for this type of facility. The Company is not required to subject theCredit Agreement or related LCs to competitive bidding. However, NW Natural muststili demonstrate in reporting and in subsequent general rate cases that fees andexpenses incurred reflect competitive contemporaneous market conditions.

Note that the upfrontfees are paid at the onset of the initial five-year period. In contrast,the commitment fees are paid quarterly, but shown for simplicity as an aggregate$300,000 per year. The average annual cost of the credit line is approximately 12 bps(0.118 percent) which is slightly higher than the average cost of NW Natural's currentsyndicated credit faciHty. Although the upfront fees have risen over the past six yearsfrom $483,750 to $525,000, that approximately 8.5 percent increase is reflective ofmarket conditions.

Staff recommends that the Commission view the Company's continued use ofinvestment banks that are capable, well-situated, geographically and institutionaliydiversified, and familiar with NW Natural's business and regulatory environment as inthe public interest in lieu of seeking lower prices through banks not well-known to theCompany's trading counterparties. Through the use of clearinghouse investment

Docket No. UF 4303August 31, 2018Page 9

banks, NW Natural is perceived to have certain liquidity, whereas use of unfamiliarfinancial institutions can require additional guarantees such as additional letters of credit

(LC).

The Company's approach has controlled the need for LCs and reduced the aggregatecost thereof to the benefit of ratepayers. Further, in a time of market stress, the creditquality and reputation of the clearinghouse investment banks ensures the Company'sliquidity and avoids unpleasant financial shocks for ratepayers. The estimated fees forthe five-year facility are provided in the following table.

Fees

Commitment Fees (Facility Fees)

Administrative Agent Fee

Upfront Fees

Arrangement Fees

Out-of-pocket Legal and AdministrativeCosts to Agent

Printing and Engraving Expenses

Counsel Fees

Miscellaneous Expenses(e.g. freight, postages, travel)

Total Fees and Expenses

EstimatedCost

$1,500,000

$75,000

$525,000

$450,000

$50,000

None

$50,000

$2,000

$2,652,000

Percent of Total (Initial$300 million)

0.500%

0.025%

0.175%

0.150%

0.017%

0.000%

0.017%

0.001%

0.884%

Timing of Replacement Credit FacilityThe time to refresh or update a revolving credit facility is when the market is stable, theCompany's credit position and financial condition are strong, and NW Natural is underno pressure in negotiations to quickly agree to any particular arrangement. Staffsupports the Company's timing of its replacement credit facility and suggests that theCommission view now as a good time to refresh the Company's revolving credit facility.Retaining one contingency year on a credit facility is expected by rating agencies as thetype of prudent fiscal management necessary to sustain the Company's ratings.

Reasoning behind Two One- Year Extensions.

Docket No. UF 4303August 31,2018Page 10

Both Moody's and Standard and Poor's, as well as Staff, particularly iike the inclusion oftwo one-year optionaf extensions to the Company's proposed replacement credit facility.These extensions serve three purposes. First, they act like alarm clocks reminding theCompany that necessary activity on the credit faciiities is approaching. Second, theysignal to rating agencies and financial markets alike that NW Natural has flexibility intiming the replacement and will not likeiy be forced into an untimeiy decision underadverse market conditions. As a mental exercise, imagine one forced to refresh a creditfacility in 2008 as opposed to one with the flexibility to wait until 2010 to finalize that setof negotiations. This flexibility sheds enormous potential risk for both the Company andits ratepayers. And third, rating agencies see this feature as an indicator that theCompany financial management is fiscally sound and credit positive.

Accordion FeatureStaff suggests that the Commission view the accordion feature as an excellent andcost-effective control. Rather than pay for the maximum size of credit facility theCompany might conceivably need over the next five to seven years, this feature allowsNW Natural to size the facility based on current operations, but build in the flexibility toscaie up the Company's liquidity to meet future opportunities or challenges. Thisapproach allows the Company and its ratepayers to pay for Just what they need. Theflexibility ensures that liquidity is available should it be needed, but in the meantime,costs are contained.

Proactive Financial ManagementStaff's review and comments may correctly be seen as supportive in this Staff Report.The features and cost controls are not found universally across a!l utiiities that Staffbenchmarks. In general, an absence of the kind of proactive financial managementdisplayed here by NW Natural increases potential risk in any future adverse marketconditions. Some utilities pay for more credit facility than they need, increasing costs totheir ratepayers. Also, if one presumes that bull markets eventually become bearmarkets, then some utilities will not have the flexibility that is built into the proposedfacility described herein and will have to refresh their credit facilities in adverse markets.These cost controls and flexibilities proposed by NW Natural are low-cost insurance forboth investors and ratepayers when times are good. In a financial crisis, these featureswould be cost prohibitive or simply not availabie.

ControlsStaff's recommended conditions are like those applicable to other Jurisdlctional utilities.

Cost Trends and Commercial Paper ProgramThe Company's prior credit facility was entered into over five years ago. Now that NWNatural is ready to replace its Credit Agreement, the Company cannot avoid costincreases entirely. However, NW Natural tries not to maintain drawn balances on its

Docket No. UF 4303August 31, 2018Page 11

Credit Agreement. The Company uses its Credit Agreement to provide credit supportfor NW Natural's commercial paper program, rather than directly drawing down on theCredit Agreement, thus avoiding higher Alf-ln Drawn revolving credit facility costs.

Commercial Paper is a short-term debt instrument issued by a corporation, in this caseby NW Natural. In conjunction with the proposed revolving credit facility to guaranteeadequate liquidity to cover any contingencies, commercial paper is a lower cost optionthan other types of financing for accounts receivables, inventories and meeting short-term liabilities. Because the maturities of this commercial paper are usually no morethan 270 days, these amounts are not recorded in Oregon as Long-Term (LT) Debt andare not considered in determination of capital structure in general rate cases.5 Again,the presence of the revolving credit facility affords the Company and its ratepayers thelower cost financing option of commercial paper, in turn, having a commercial paperprogram means that NW Natural does not have to regularly draw down on its revolvingcredit facility, further controlling costs.

Individual Borrowings Under the FacilityIndividual borrowing capability allows further certainty that NW Natural can arrange forthe construction of the Company's facilities, address maturing LT Debt obligations andensure adequate working capita! is available to ensure reliable utility service tocustomers. Staff observes that the ability to borrow at controlled costs with certainty inthe future can make a utility more desirable to do business with than other companiesbecause many contingencies could be readily and inexpensively handled.

Staff Review SummaryAfter review of NW Natural's Application, Staff finds the terms reasonable and beneficialto ratepayers. The Company in its Application represents that funds obtained under thisreplacement Credit Agreement will be used solely for lawful utiiity purposes, which aredelineated in applicable statues. Provisions of the new Credit Agreement are largelyunchanged and will do no harm. NW Natural wili continue to negotiate favorable marketfees and to control expenses.

Sizing of the Credit Agreement is consistent with NW Natural's prior similar revolvingcredit facilities and with the Company's demonstrated financing needs, and does notindicate any acceleration of or unplanned capital spending. Further, NW Natural built inreasonable cost controls and flexibilities into the replacement credit facility.

Finally, the Company will submit a consoiidated annual report in a MS Excel workbookshowing quarterly activity for the proposed revolving credit facility.

See ORS 757.410 and ORS 757.415 (3) for the determination of LT Debt in Oregon.

Docket No. UF 4303August 31,2018Page 12

Conclusion

Based on its review of this application, Staff concludes:

1. The terms of NW Natural's Application are reasonable and are expected tobenefit ratepayers.

2. Sizing of the Credit Agreement is consistent with NW Natural's prior similarrevolving credit facilities and with the Company's demonstrated financingneeds, and does not indicate any acceleration of or unplanned capita!spending.

PROPOSED COMMISSION MOTION:

Approve NW Natural's Revolving Credit Agreement as proposed in Its Application for amaximum term of up to seven years in a maximum amount of up to $450 million, subjectto Staff's recommended conditions and reporting requirements listed in this StaffReport.

UF 4303

Docket No. UF 4303August 31,2018Page 13

Attachment AAnnual Facility Fees: A bank's annual facility fee may not exceed the following bps ofaverage commitment amounts based on Standard and Poor's (S&P) and Moody's (M)rating on Northwest Natural's unsecured debt in effect in the relevant period:

S&P

AA-

<-7.00

IVI

Aa3

bps

S&P

A+

8.00

M

A1

bps

S&P

A

10.00

M

A2

bps

Facility Fees

S&P M

A- A3

12.50bps

S&P

BBB+

17.50

M

Baa1

bps

S&P

BBBorBelow

22.50

MBaa2 orBelow

bps->

<- Also applies for higher credit ratings -> Also applies for lower credit ratings

Adjustable Base Rate Borrowing: The Adjustable Base Rate (ABR) associated withfloating rate borrowing under the Credit Agreement will not exceed the highest of thefollowing:

a) NYFRB Rate plus 50 bps,

b) Prime Rate, or

c) The Eurodoilar Rate for a one-month interest period beginning on such day plus

100bps,

plus the spread applicable to the company's prevailing S&P and Moody's unsecureddebt rating:

S&P

AA-

^0.00

M

Aa3

bps

S&P

A+

0.00

M

A1

bps

Applicable Margin for ABR Loans

S&P M

A A2

0.00 bps

S&P M

A- A3

0.00 bps

S&P M

BBB+ Baa 1

7.50 bps

S&PBBBorBeiow

27.50

M

Baa2 orBelow

bps->

<- Also applies for higher credit ratings -> Also applies for lower credit ratings

Eurodollar Rate Borrowing: The rate associated with fixed-rate borrowing under theCredit Agreement will not exceed the applicable 1-, 2-, 3-, or6-month maturityEurodoilar Rate plus the following spread based on S&P or Moody's rating on NWNatural's unsecured debt or secured debt, as applicable, in effect on the day ofborrowing.

S&P

AA-

^-68

M

Aa3

.Obps

S&P

A+

79.5

Applicable IVIargin 1

M

A1

bps

S&P

A

90.01

M

A2

bps

S&P

A-

100.0

For Eurodollar

M

A3

bps

S&P

BBB+

107.5

Loans

M

Baa 1

bps

S&PBBB orBelow

127 .5 bps

MBaa2 orBelow

->

<- Also applies for higher credit ratings -> Also applies for lower credit ratings