Note 17: Borrowings
Short-term borrowings
| 2007 | 2006 | |||
|---|---|---|---|---|
| December 31 (Dollars in millions) | Amount | Average rate(a) | Amount | Average rate(a) |
|
(a) Based on year-end balances and year-end local currency interest rates. Current portion of long-term debt included the effects of related interest rate and currency swaps, if any, directly associated with the original debt issuance. (b) Entirely obligations of consolidated, liquidating securitization entities. See note 12. (c) Included $1,106 million of asset-backed, liquidating securitization entities at December 31, 2007 and none at December 31, 2006. (d) Included $10,789 million and $9,731 million of deposits in non-U.S. banks at December 31, 2007 and 2006, respectively. (e) Entirely variable denomination floating rate demand notes. |
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| GE | ||||
| Commercial paper | ||||
| U.S. | $ 1,798 | 4.73% | $ 1,097 | 5.35% |
| Non-U.S. | 1 | 4.00 | 1 | 3.74 |
| Payable to banks | 189 | 5.07 | 184 | 5.61 |
| Current portion of long-term debt | 1,547 | 5.36 | 32 | 5.32 |
| Other | 571 | 762 | ||
| 4,106 | 2,076 | |||
| GECS | ||||
| Commercial paper | ||||
| U.S. | ||||
| Unsecured | 72,392 | 4.69 | 67,423 | 5.37 |
| Asset-backed(b) | 4,775 | 4.94 | 6,430 | 5.35 |
| Non-U.S. | 28,711 | 4.99 | 26,328 | 4.38 |
| Current portion of long-term debt(c) | 56,302 | 5.01 | 44,550 | 4.86 |
| Bank deposits(d) | 11,486 | 3.04 | 9,731 | 3.50 |
| GE Interest Plus notes(e) | 9,590 | 5.23 | 9,161 | 5.43 |
| Other | 9,165 | 9,690 | ||
| 192,421 | 173,313 | |||
| ELIMINATIONS | (1,426) | (3,376) | ||
| Total | $ 195,101 | $ 172,013 | ||
LONG-TERM BORROWINGS
| December 31 (Dollars in millions) | 2007 Average rate(a) | Maturities | 2007 | 2006 |
|---|---|---|---|---|
|
(a) Based on year-end balances and year-end local currency interest rates, including the effects of related interest rate and currency swaps, if any, directly associated with the original debt issuance. (b) A variety of obligations having various interest rates and maturities, including certain borrowings by parent operating components and affiliates. (c) Included $3,410 million and $4,684 million of asset-backed senior notes, issued by consolidated, liquidating securitization entities at December 31, 2007 and 2006, respectively. See note 12. (d) Included $750 million of subordinated notes guaranteed by GE at December 31, 2007 and 2006. (e) Included $8,064 million and $2,019 million of subordinated debentures receiving rating agency equity credit at December 31, 2007 and 2006, respectively. |
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| GE | ||||
| Senior notes | 5.11% | 2013 – 2017 | $ 8,957 | $ 6,488 |
| Industrial development/pollution control bonds | 3.69 | 2011 – 2027 | 266 | 265 |
| Payable to banks, principally U.S. | 5.90 | 2009 – 2023 | 1,988 | 1,836 |
| Other(b) | 445 | 454 | ||
| 11,656 | 9,043 | |||
| GECS | ||||
| Senior notes | ||||
| Unsecured | 5.23 | 2009 – 2055 | 283,099 | 235,942 |
| Asset-backed(c) | 5.13 | 2009 – 2035 | 5,528 | 5,810 |
| Extendible notes | 5.10 | 2009 – 2012 | 8,500 | 6,000 |
| Subordinated notes(d)(e) | 6.08 | 2009 – 2067 | 11,377 | 5,201 |
| 308,504 | 252,953 | |||
| ELIMINATIONS | (1,145) | (1,244) | ||
| Total | $ 319,015 | $ 260,752 | ||
Our borrowings are addressed below from the perspectives of liquidity, interest rate and currency risk management. Additional information about borrowings and associated swaps can be found in note 26.
Liquidity is affected by debt maturities and our ability to repay or refinance such debt. Long-term debt maturities over the next five years follow.
| (In millions) | 2008 | 2009 | 2010 | 2011 | 2012 |
|---|---|---|---|---|---|
|
(a) Fixed and floating rate notes of $793 million contain put options with exercise dates in 2008, and which have final maturity dates in 2009 ($100 million) and beyond 2012 ($693 million). (b) Floating rate extendible notes of $6,500 million are due in 2009, but are extendible at the option of the investors to a final maturity in 2011 ($4,000 million) and 2012 ($2,500 million). |
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| GE | $ 1,557 | $ 1,713 | $ 35 | $ 58 | $ 25 |
| GECS | 56,298(a) | 63,371(b) | 54,255 | 32,028 | 39,240 |
Committed credit lines totaling $64.8 billion had been extended to us by 72 banks at year-end 2007. Availability of these lines is shared between GE and GECS with $15.0 billion and $64.8 billion available to GE and GECS, respectively. The GECS lines include $37.2 billion of revolving credit agreements under which we can borrow funds for periods exceeding one year. The remaining $27.6 billion are 364-day lines that contain a term-out feature that allows GE or GECS to extend the borrowings for one year from the date of expiration of the lending agreement. We pay banks for credit facilities, but amounts were insignificant in each of the past three years.
Interest rate and currency risk is managed through the direct issuance of debt or use of derivatives. We take positions in view of anticipated behavior of assets, including prepayment behavior. We use a variety of instruments, including interest rate and currency swaps and currency forwards, to achieve our interest rate objectives.
The following table provides additional information about derivatives designated as hedges of borrowings in accordance with SFAS 133, Accounting for Derivative Instruments and Hedging Activities, as amended.
Derivative fair values by activity/instrument
| December 31 (In millions) | 2007 | 2006 |
|---|---|---|
| Cash flow hedges | $ 497 | $ 763 |
| Fair value hedges | (75) | (147) |
| Total | $ 422 | $ 616 |
| Interest rate swaps | $ (1,559) | $ (860) |
| Currency swaps | 1,981 | 1,476 |
| Total | $ 422 | $ 616 |
We regularly assess the effectiveness of all hedge positions where required using a variety of techniques, including cumulative dollar offset and regression analysis, depending on which method was selected at inception of the respective hedge. Adjustments related to fair value hedges decreased the carrying amount of debt outstanding at December 31, 2007, by $33 million. At December 31, 2007, the maximum term of derivative instruments that hedge forecasted transactions was 28 years and related to hedges of long-term, non-U.S. dollar denominated fixed rate debt. See note 26.