Discover 2009 Annual Report Download - page 92

Additional Funding Sources
Secured Committed Credit Facilities. We have access to committed undrawn funding capacity through privately placed
asset-backed conduits to support credit card loan receivables funding requirements. At November 30, 2009, we had
used $2.7 billion of capacity under these conduits, with $1.5 billion remaining capacity available to us. The original
commitments of these facilities range from 364-day renewable agreements to multi-year extendable commitments.
Unsecured Committed Credit Facility. Our unsecured committed credit facility of $2.4 billion is available through May
2012. This facility serves to diversify our funding sources and enhance our liquidity. This facility is provided by a group of
major global banks, and is available to both Discover Financial Services and Discover Bank (Discover Financial Services
may borrow up to 30% and Discover Bank may borrow up to 100% of the total commitment). We anticipate that the
facility will support general liquidity needs and may be drawn to meet short-term funding needs from time to time. We
have no outstanding balances due under the facility.
Federal Reserve. Discover Bank has access to the Federal Reserve Bank of Philadelphia’s discount window. As of
November 30, 2009, Discover Bank had $4.8 billion of available capacity through the discount window, which includes
$2.4 billion capacity through the Term Auction Facility. Our Federal Reserve available capacity decreased in the fourth
quarter of 2009 due to the Federal Reserve decreasing the amount it will lend against certain loans pledged as collateral.
ECASLA. In May 2008, Congress passed the Ensuring Continued Access to Student Loans Act of 2008 (“ECASLA”).
ECASLA provides originators of Federal Family Education Loan Program (“FFELP”) loans with the ability to transfer
qualifying FFELP loans to the Department of Education through participation and loan sale programs and/or finance
FFELP loans through an asset-backed conduit program. ECASLA provides us with a potential source of funding and
liquidity with respect to qualifying FFELP loans originated by Discover Bank.
Credit Ratings
Our borrowing costs and capacity in certain funding markets, including securitizations and senior and subordinated
debt, may be affected by the credit ratings for Discover Financial Services, Discover Bank and the securitization trusts. A
credit rating is not a recommendation to buy, sell or hold securities, may be subject to revision or withdrawal at any time
by the assigning rating organization, and each rating should be evaluated independently of any other rating. The credit
ratings are summarized in the following table:
Discover
Financial
Services
Discover
Bank
Discover Card
Master Trust I(1)
Discover Card Execution
Note Trust(1)
Senior
Unsecured
Debt
Senior
Unsecured
Debt
Outlook for
Senior
Unsecured Debt Class A Class B Class A Class B Class C
Moody’s Investors Service ........................................... Ba1 Baa3 Negative Aaa A1 Aaa A1 Baa1
Standard & Poor’s ..................................................... BBB- BBB Stable AAA AA AAA AA A-
Fitch Ratings ............................................................. BBB BBB Negative AAA AA AAA AA- A-
(1) Ratings are for outstanding issuances of asset-backed securities issued by the trusts that mature after May 2010.
Liquidity
We seek to ensure that we have adequate liquidity to sustain business operations, fund asset growth and satisfy debt
obligations. We expect to be able to satisfy all maturing obligations and fund business activities in the short term and
long term through normal access to our funding sources, relying primarily on deposit issuance.
In the assessment of our liquidity needs, we also evaluate a range of stress events that would impact our access to
normal funding sources, cash needs and/or liquidity. We maintain contingent funding sources, including our liquidity
reserve, remaining asset-backed conduit capacity, committed credit facility capacity and Federal Reserve discount
window capacity, that we could utilize to satisfy liquidity needs during such stress events. In the event that access to
capital markets, including the securitization market, is unavailable during the next twelve months, we believe that we
would be able to satisfy all maturing obligations and fund business operations during that time by utilizing our deposit
channels and our contingent funding sources.
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