Long-term debt
Also known as: long-term borrowings, non-current debt
Long-term debt is the portion of a company's interest-bearing borrowings that is not due to be repaid within twelve months. It sits in the section of the and represents the core of the company's financial leverage and .
It takes many forms depending on how the company has chosen to finance itself. Syndicated term loans and revolving credit facilities arranged through banks. Publicly issued bonds and notes sold to . Convertible notes that carry the right to convert into equity under certain conditions. And finance lease liabilities capitalised under lease accounting rules.
The carrying value on the reflects the outstanding principal net of unamortised costs and original issue discount. This means the face value of the debt and the figure are not always identical and the notes are required to reconcile the two.
Long-term debt is the primary input in leverage analysis. , calculated as minus , divided by is the dominant leverage metric in credit analysis and . It expresses how many years of would be required to repay the burden, with ratios above four or five times typically considered aggressive in most industries outside of regulated utilities and real estate.
The maturity schedule of long-term debt, disclosed in the notes, is as important as the total outstanding balance. A company with a well-laddered maturity profile spread across many years faces very different refinancing risk than one with a concentrated wall of maturities in a single year that must be refinanced in whatever market conditions prevail at that time.
Interest rate exposure is the other critical dimension. Fixed rate debt locks in the cost of borrowing regardless of market movements. Floating rate debt, typically priced at a benchmark rate plus a credit spread, exposes the company to rising when rates increase. This distinction became acutely material during the rapid rate tightening cycles of 2022 and 2023.