Long-Term Debt

Long-term debt is a financing category

Examples include:

• bonds
• senior notes
• term loans
• subordinated debt
• mortgage debt
• long-dated bank facilities

The accounting balance can differ from face amount because of:

• issuance costs
• premiums
• discounts
• fair-value adjustments

Current maturities are separated

Debt can be long-term when issued and later become current as maturity approaches.

A 2026 filing reported total debt of about:

$2.745 billion

then subtracted:

• current debt and short-term borrowings
• unamortized issuance costs

to report approximately:

$2.652 billion of long-term debt.^[2]

The company did not necessarily repay debt when a portion moved from long-term to current.

Classification changed because timing changed.

Maturity schedule matters more than one total

The same $5 billion of debt can be structured as:

Company A: - most maturities after 2035

Company B: - $3 billion due next year

The balance-sheet amount is identical.

Refinancing risk is not.

Debt analysis should always inspect maturities.

Interest rate matters

A low fixed-rate bond and a high floating-rate loan create different cash burdens.

Important terms include:

• coupon or stated rate
• fixed vs. floating
• benchmark spread
• hedging
• reset dates

Interest coverage can deteriorate even when principal stays flat if borrowing costs rise.

Secured vs. unsecured debt

Secured debt is backed by specified collateral or claims.

Unsecured debt relies on the issuer’s general credit.

Security affects:

• lender priority
• recovery expectations
• covenant structure
• refinancing flexibility

The debt balance alone does not show those differences.

Senior vs. subordinated debt

Senior debt ranks ahead of subordinated obligations under the relevant legal structure.

Subordination matters most when the issuer is distressed.

Two bonds issued by the same company can have different recovery risk even when they contribute equally to total debt.

Debt issuance costs

Companies can report debt net of unamortized issuance costs.

Those costs can include:

• underwriting
• legal
• financing fees

The carrying amount can therefore be lower than contractual principal.

For leverage analysis, analysts often focus on gross contractual debt or a clearly defined adjusted debt measure.

Long-term debt can fund productive assets

Borrowing is not automatically bad.

Debt can finance:

• factories
• acquisitions
• networks
• infrastructure

If the return on invested capital exceeds the financing cost with an adequate risk cushion, leverage can improve equity economics.

The danger is fixed obligations meeting volatile earnings.

Long-term debt can raise ROE

Debt financing can reduce the amount of equity needed.

If operating returns exceed borrowing cost:

ROE can rise.

That does not mean risk fell.

ROIStreet’s GLS-044 — Return on Equity and GLS-058 — Debt-to-Equity Ratio should be read together.

Cash should not automatically erase debt risk

Net-debt measures subtract cash.

That can be useful.

But restricted or operationally necessary cash may not be fully available to repay long-term debt.

Gross debt, net debt and liquidity should all be reviewed.

Covenants can matter before maturity

A company can face financial pressure without missing a payment if it violates:

• leverage limits
• interest-coverage requirements
• collateral tests
• other covenants

Covenant breach can restrict dividends, acquisitions or new borrowing and can trigger renegotiation.

Refinancing risk

Long-term debt can become a short-term problem as maturity approaches.

Refinancing depends on:

• market rates
• lender appetite
• company credit quality
• collateral
• market access

A business can be profitable and still face refinancing stress.

Real 2026 example

A 2026 SEC filing listed long-term debt across senior notes maturing from 2027 through 2054 and separately showed current maturities.^[3]

That table provides far more information than a single "long-term debt" line because it reveals:

• timing
• stated rates
• instrument structure

Common mistakes

"Long-term debt does not affect near-term risk."

It can through interest, covenants and approaching maturities.

"Long-term debt equals face value."

Carrying amount can reflect issuance costs, premiums or discounts.

"More long-term debt is always bad."

The return earned on borrowed capital and the risk structure matter.

"Cash should always be netted against debt."

Only when the cash is genuinely available for that purpose.

Debt maturity walls deserve separate attention

A company can have manageable average leverage and still face a concentrated refinancing problem.

Suppose $6 billion of debt matures over ten years, but:

$3 billion matures in one year.

The average maturity can look reasonable while the next refinancing event is large.

A useful debt review therefore maps:

• annual maturities
• available cash
• expected free cash flow
• committed credit facilities
• realistic capital-market access

Leverage ratios summarize debt size. The maturity schedule reveals when financing risk becomes operational.

Review contractual principal, carrying value, rates, fixed-versus-floating exposure, security, seniority, covenants and maturity schedule. Pair long-term debt with interest coverage, net debt-to-EBITDA, free cash flow and liquidity. The amount alone is the least informative part of the debt analysis.