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SEC Filings

10-Q
TERRAFORM GLOBAL, INC. filed this Form 10-Q on 11/08/2017
Entire Document
 

10. FAIR VALUE OF FINANCIAL INSTRUMENTS
The fair value of assets and liabilities are determined using either unadjusted quoted prices in active markets (Level 1) or pricing inputs that are observable (Level 2) whenever that information is available and using unobservable inputs (Level 3) to estimate fair value only when relevant observable inputs are not available.
The Company uses valuation techniques that maximize the use of observable inputs. Assets and liabilities are classified in their entirety based on the lowest priority level of input that is significant to the fair value measurement. Where observable inputs are available for substantially the full term of the asset or liability, the instrument is categorized in Level 2. If the inputs into the valuation are not corroborated by market data, in such instances, the valuation for these contracts is established using techniques including extrapolation from or interpolation between actively traded contracts as well as the calculation of implied volatilities. When such inputs have a significant impact on the measurement of fair value, the instrument is categorized as Level 3. The Company regularly evaluates and validates the inputs used to determine fair value by using pricing services to support the underlying market price of interest rates and foreign currency exchange rates.
Recurring Fair Value Measurements
The following table summarizes the financial instruments measured at fair value on a recurring basis classified in the fair value hierarchy (Level 1, 2 or 3) based on the inputs used for valuation in the accompanying unaudited condensed consolidated balance sheets:
 
As of September 30, 2017
 
As of December 31, 2016
Assets (liabilities) in thousands
Level 1
 
Level 2
 
Level 3
 
Total
 
Level 1
 
Level 2
 
Level 3
 
Total
Interest rate swaps
$

 
$
(8,830
)
 
$

 
$
(8,830
)
 
$

 
$
(2,305
)
 
$

 
$
(2,305
)
Foreign currency forward contracts
(16,645
)
 

 

 
(16,645
)
 
(13,299
)
 

 

 
(13,299
)
Cross currency swaps

 
39,844

 

 
39,844

 

 
41,752

 

 
41,752

Total
$
(16,645
)
 
$
31,014

 
$

 
$
14,369

 
$
(13,299
)
 
$
39,447

 
$

 
$
26,148

The Company uses a discounted valuation technique to determine the fair value of its derivative assets and liabilities. The primary inputs into the valuation of interest rate swaps, cross currency swaps and foreign currency contracts are forward interest rates, foreign currency exchange rates, and to a lesser degree, credit spreads. The Company’s interest rate swaps and cross currency swaps are considered Level 2, since all significant inputs are corroborated by market observable data. There were no transfers into or out of Level 1, Level 2 or Level 3 during the periods ended September 30, 2017 or December 31, 2016.
Fair Value of Long-Term Debt
The following table presents the carrying amount and estimated fair value of the Company's outstanding short-term and long-term debt obligations as of September 30, 2017 and December 31, 2016, respectively:

As of September 30, 2017
 
As of December 31, 2016
(In thousands)
Carrying Amount
 
Fair Value
 
Carrying Amount
 
Fair Value
Long-term debt, including current portion
$
1,100,171

 
$
1,239,734

 
$
1,104,420

 
$
1,209,863

The fair value of the Company’s long-term debt was determined using inputs classified as Level 2 and a discounted cash flow approach using market rates for similar debt instruments.

11. STOCKHOLDERS’ EQUITY
Outstanding Equity Securities

31