General Motors 2013 Annual Report Download - page 93

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GENERAL MOTORS COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
Securitization Notes Payable
Securitization notes payable represents debt issued by GM Financial through securitization transactions. Debt issuance costs are
amortized over the expected term of the securitizations on an effective yield basis. As a result of GM Financial’s acquisition of the
Ally Financial international operations, GM Financial recorded a purchase accounting discount of $69 million that will amortize to
interest expense over the expected term of the notes. At December 31, 2013 the remaining purchase accounting discount of $47
million is included in Total secured debt.
At the time of securitization of finance receivables, GM Financial is required to pledge assets equal to a specified percentage of the
securitization pool to support the securitization transaction. The assets pledged consist of cash deposited to a restricted account and
additional receivables delivered to the trust, which create overcollateralization. The securitization transactions require the percentage
of assets pledged to support the transaction to increase until a specified level is attained. Excess cash flows generated by the trusts are
added to the restricted cash account or used to pay down outstanding debt in the trusts, creating overcollateralization until the targeted
percentage level of assets is reached. Once the targeted percentage level of assets is reached and maintained, excess cash flows
generated by the trusts are released to GM Financial as distributions from trusts. As the balance of the securitization pool declines, the
amount of pledged assets needed to maintain the required percentage level is reduced. Assets in excess of the required percentage are
also released to GM Financial as distributions from trusts.
In the year ended December 31, 2013 GM Financial issued securitization notes payable of $6.8 billion with a weighted-average
interest rate of 1.7% maturing on various dates through 2021. At December 31, 2013 securitization notes payable of $2.3 billion
resulted from the acquisition of the Ally Financial international operations.
Unsecured
Senior Notes
In May 2013 GM Financial issued $2.5 billion in aggregate principal amount of senior notes due in 2016 through 2023 with interest
rates that range from 2.75% to 4.25%. In August 2012 GM Financial issued 4.75% senior notes of $1.0 billion which are due in
August 2017 with interest payable semiannually. Senior notes outstanding at December 31, 2013 are due beginning in 2016 through
2023 and have interest rates that range from 2.75% to 6.75%. The notes are guaranteed by GM Financial’s principal operating
subsidiary.
Bank Lines and Other Unsecured Debt
The maturity dates of bank lines and other unsecured debt, which was assumed in the acquisition of the Ally Financial international
operations, range up to five years. If not renewed, any balance outstanding under these bank lines is either immediately due in full or
will amortize over a defined period. Interest rates on bank lines and other unsecured debt ranged from 1.1% to 12.9% at December 31,
2013.
Consolidated
Interest Expense
The following table summarizes interest expense (dollars in millions):
Years Ended December 31,
2013 2012 2011
Automotive ........................................................................ $ 334 $ 489 $ 540
Automotive Financing — GM Financial .................................................. 715 283 204
Total interest expense ................................................................ $ 1,049 $ 772 $ 744
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