DTE Energy 2012 Annual Report Download - page 48

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Table of Contents
Trading Activities
We are exposed to credit risk through trading activities. Credit risk is the potential loss that may result if our trading counterparties fail to meet their
contractual obligations. We utilize both external and internal credit assessments when determining the credit quality of our trading counterparties. The
following table displays the credit quality of our trading counterparties as of December 31, 2012:








Investment Grade (a)
A− and Greater $88
$ —
$88
BBB+ and BBB 259
—
259
BBB− 84
—
84
Total Investment Grade 431
—
431
Non-investment grade (b) 2
—
2
Internally Rated — investment grade (c) 147
(3)
144
Internally Rated — non-investment grade (d) 26
(1)
25
Total $606
$(4)
$602
_______________________________________
(a) This category includes counterparties with minimum credit ratings of Baa3 assigned by Moody’s Investors Service (Moody’s) and BBB- assigned by Standard & Poor’s Rating
Group (Standard & Poor’s). The five largest counterparty exposures combined for this category represented approximately 39 percent of the total gross credit exposure.
(b) This category includes counterparties with credit ratings that are below investment grade. The five largest counterparty exposures combined for this category represented less than
one percent of the total gross credit exposure.
(c) This category includes counterparties that have not been rated by Moody’s or Standard & Poor’s, but are considered investment grade based on DTE Energy’s evaluation of the
counterparty’s creditworthiness. The five largest counterparty exposures combined for this category represented approximately 16 percent of the total gross credit exposure.
(d) This category includes counterparties that have not been rated by Moody’s or Standard & Poor’s, and are considered non-investment grade based on DTE Energy’s evaluation of
the counterparty’s creditworthiness. The five largest counterparty exposures combined for this category represented approximately three percent of the total gross credit exposure.

We are subject to interest rate risk in connection with the issuance of debt and preferred securities. In order to manage interest costs, we may use treasury
locks and interest rate swap agreements. Our exposure to interest rate risk arises primarily from changes in U.S. Treasury rates, commercial paper rates and
London Inter-Bank Offered Rates (LIBOR). As of December 31, 2012, we had a floating rate debt-to-total debt ratio of approximately 7 percent (excluding
securitized debt).

We have foreign currency exchange risk arising from market price fluctuations associated with fixed priced contracts. These contracts are denominated
in Canadian dollars and are primarily for the purchase and sale of gas and power as well as for long-term transportation capacity. To limit our exposure to
foreign currency exchange fluctuations, we have entered into a series of foreign currency exchange forward contracts through July 2016.

We performed a sensitivity analysis on the fair values of our commodity contracts, long-term debt obligations and foreign currency exchange forward
contracts. The commodity contracts and foreign currency exchange risk listed below principally relate to our energy marketing and trading activities. The
sensitivity analysis involved increasing and decreasing forward rates at December 31, 2012 and 2011 by a hypothetical 10% and calculating the resulting
change in the fair values.
46