General Motors 2012 Annual Report Download - page 69

GENERAL MOTORS COMPANY AND SUBSIDIARIES
Automotive Financing — GM Financial
Fluctuations in market interest rates affect GM Financial’s credit facilities and securitization transactions. GM Financial’s gross
interest rate spread, which is the difference between interest earned on finance receivables and interest paid, is affected by changes in
interest rates as a result of GM Financial’s dependence upon the issuance of variable rate securities and the incurrence of variable rate
debt to fund purchases of finance receivables.
Credit Facilities
Fixed interest rate receivables purchased by GM Financial are pledged to secure borrowings under its credit facilities. Amounts
borrowed under these credit facilities bear interest at variable rates that are subject to frequent adjustments to reflect prevailing market
interest rates. To protect the interest rate spread within each credit facility, GM Financial is contractually required to enter into interest
rate cap agreements in connection with borrowings under its credit facilities.
Securitizations
In GM Financial’s securitization transactions, it can transfer fixed rate finance receivables to securitization trusts that, in turn, sell
either fixed rate or floating rate securities to investors. Derivative financial instruments, such as interest rate swaps and caps, are used
to manage the gross interest rate spread on the floating rate transactions.
Derivatives
GM Financial had interest rate swaps and caps in asset positions with notional amounts of $775 million and $2.0 billion at
December 31, 2012 and 2011. GM Financial had interest rate swaps and caps in liability positions with notional amounts of
$775 million and $2.0 billion at December 31, 2012 and 2011. The fair value of these derivative financial instruments was
insignificant.
The following table summarizes GM Financial’s interest rate sensitive assets and liabilities, excluding derivatives, by year of
expected maturity and the fair value of those assets and liabilities at December 31, 2012 (dollars in millions):
Years Ending December 31, December 31, 2012
Fair Value2013 2014 2015 2016 2017 Thereafter
Assets
Consumer finance receivables
Principal amounts .......................... $4,108 $2,860 $1,895 $1,209 $ 673 $ 315 $10,759
Weighted-average annual percentage rate ....... 14.54% 14.39% 14.25% 14.10% 13.95% 13.84%
Commercial finance receivables
Principal amounts .......................... $ 507 $ 6 $ 3 $ 3 $ 35 $ 6 $ 554
Weighted-average annual percentage rate ....... 3.78% 3.80% 3.76% 3.78% 3.47% 4.53%
Liabilities
Credit facilities
Principal amounts .......................... $ 354 $ — $ — $ — $ — $ — $ 354
Weighted-average interest rate ............... 0.64% —% —% —% —% —%
Securitization notes
Principal amounts .......................... $3,406 $2,324 $1,772 $1,073 $ 438 $ — $ 9,171
Weighted-average interest rate ............... 2.33% 2.70% 3.03% 3.05% 2.99% —%
Senior notes
Principal amounts .......................... $ —%$ —%$ —% $ —%$1,000 $ 500 $ 1,620
Weighted-average interest rate ............... —% —% —% —% 4.75% 6.75%
General Motors Company 2012 ANNUAL REPORT66