Goldman Sachs 2015 Annual Report Download - page 185

THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
The tables below present unsecured long-term borrowings,
after giving effect to hedging activities that converted a
majority of the amount of fixed-rate obligations to floating-
rate obligations.
As of December 2015
$ in millions Group Inc. Subsidiaries Total
Fixed-rate obligations
At fair value $— $21$21
At amortized cost 152,448 2,569 55,017
Floating-rate obligations
At fair value 16,194 6,058 22,252
At amortized cost 196,039 2,093 98,132
Total $164,681 $10,741 $175,422
As of December 2014
$ in millions Group Inc. Subsidiaries Total
Fixed-rate obligations
At fair value $ — $ 861 $ 861
At amortized cost 131,232 2,440 33,672
Floating-rate obligations
At fair value 11,662 3,482 15,144
At amortized cost 1115,417 2,208 117,625
Total $158,311 $ 8,991 $167,302
1. The weighted average interest rates on the aggregate amounts were 2.73%
(4.33% related to fixed-rate obligations and 1.84% related to floating-rate
obligations) and 2.68% (5.09% related to fixed-rate obligations and 2.01%
related to floating-rate obligations) as of December 2015 and
December 2014, respectively. These rates exclude financial instruments
accounted for at fair value under the fair value option.
Subordinated Borrowings
Unsecured long-term borrowings include subordinated debt
and junior subordinated debt. Junior subordinated debt is
junior in right of payment to other subordinated borrowings,
which are junior to senior borrowings. As of December 2015
and December 2014, subordinated debt had maturities
ranging from 2017 to 2045, and 2017 to 2038, respectively.
The tables below present subordinated borrowings.
As of December 2015
$ in millions
Par
Amount
Carrying
Amount Rate 1
Subordinated debt 2$18,004 $20,784 3.79%
Junior subordinated debt 1,359 1,817 5.77%
Total subordinated borrowings $19,363 $22,601 3.93%
As of December 2014
$ in millions
Par
Amount
Carrying
Amount Rate 1
Subordinated debt 2$14,254 $17,236 3.77%
Junior subordinated debt 1,582 2,121 6.21%
Total subordinated borrowings $15,836 $19,357 4.02%
1. Weighted average interest rates after giving effect to fair value hedges used
to convert these fixed-rate obligations into floating-rate obligations. See
Note 7 for further information about hedging activities. See below for
information about interest rates on junior subordinated debt.
2. Par amount and carrying amount of subordinated debt issued by Group Inc.
were $17.47 billion and $20.25 billion, respectively, as of December 2015,
and $13.68 billion and $16.67 billion, respectively, as of December 2014.
Junior Subordinated Debt
Junior Subordinated Debt Held by 2012 Trusts. In
2012, the Vesey Street Investment Trust I and the Murray
Street Investment Trust I (together, the 2012 Trusts) issued
an aggregate of $2.25 billion of senior guaranteed trust
securities to third parties. The proceeds of that offering
were used to purchase $1.75 billion of junior subordinated
debt issued by Group Inc. that pays interest semi-annually
at a fixed annual rate of 4.647% and matures on
March 9, 2017, and $500 million of junior subordinated
debt issued by Group Inc. that pays interest semi-annually
at a fixed annual rate of 4.404% and matures on
September 1, 2016. During 2014, the firm exchanged
$175 million of the senior guaranteed trust securities held
by the firm for $175 million of junior subordinated debt
held by the Murray Street Investment Trust I. Following the
exchange, these senior guaranteed trust securities and
junior subordinated debt were extinguished.
The 2012 Trusts purchased the junior subordinated debt
from Goldman Sachs Capital II and Goldman Sachs Capital
III (APEX Trusts). The APEX Trusts used the proceeds
from such sales to purchase shares of Group Inc.’s
Perpetual Non-Cumulative Preferred Stock, Series E
(Series E Preferred Stock) and Perpetual Non-Cumulative
Preferred Stock, Series F (Series F Preferred Stock). See
Note 19 for more information about the Series E and
Series F Preferred Stock.
The 2012 Trusts are required to pay distributions on their
senior guaranteed trust securities in the same amounts and
on the same dates that they are scheduled to receive interest
on the junior subordinated debt they hold, and are required
to redeem their respective senior guaranteed trust securities
upon the maturity or earlier redemption of the junior
subordinated debt they hold.
The firm has the right to defer payments on the junior
subordinated debt, subject to limitations. During any such
deferral period, the firm will not be permitted to, among
other things, pay dividends on or make certain repurchases
of its common or preferred stock. However, as Group Inc.
fully and unconditionally guarantees the payment of the
distribution and redemption amounts when due on a senior
basis on the senior guaranteed trust securities issued by the
2012 Trusts, if the 2012 Trusts are unable to make
scheduled distributions to the holders of the senior
guaranteed trust securities, under the guarantee, Group Inc.
would be obligated to make those payments. As such, the
$1.58 billion and the $500 million of junior subordinated
debt held by the 2012 Trusts for the benefit of investors,
included in “Unsecured long-term borrowings” and
“Unsecured short-term borrowings,” respectively, in the
consolidated statements of financial condition, is not
classified as subordinated borrowings.
Goldman Sachs 2015 Form 10-K 173