JP Morgan Chase 2009 Annual Report Download - page 231

JPMorgan Chase & Co./2009 Annual Report 229
The weighted-average contractual interest rates for total long-term
debt were 3.52% and 4.25% as of December 31, 2009 and 2008,
respectively. In order to modify exposure to interest rate and currency
exchange rate movements, JPMorgan Chase utilizes derivative instru-
ments, primarily interest rate and cross-currency interest rate swaps, in
conjunction with some of its debt issues. The use of these instruments
modifies the Firm’s interest expense on the associated debt. The
modified weighted-average interest rates for total long-term debt,
including the effects of related derivative instruments, were 1.86% and
3.70% as of December 31, 2009 and 2008, respectively.
On December 4, 2008, the Firm elected to participate in the TLG
Program, which was available to, among others, all U.S. depository
institutions insured by the FDIC and all U.S. bank holding
companies, unless they opted out of the TLG Program or the FDIC
terminated their participation. Under the TLG Program, the FDIC
guaranteed through the earlier of maturity or June 30, 2012,
certain senior unsecured debt issued though October 31, 2009, in
return for a fee to be paid based on the amount and maturity of
the debt. Under the TLG Program, the FDIC would pay the unpaid
principal and interest on an FDIC-guaranteed debt instrument
upon the failure of the participating entity to make a timely
payment of principal or interest in accordance with the terms of
the instrument.
JPMorgan Chase & Co. (Parent Company) has guaranteed certain
debt of its subsidiaries, including both long-term debt and structured
notes sold as part of the Firm’s market-making activities. These
guarantees rank on a parity with all of the Firm’s other unsecured
and unsubordinated indebtedness. Guaranteed liabilities totaled
$4.5 billion and $4.8 billion at December 31, 2009 and 2008,
respectively. For additional information, see Note 2 on pages 151–
156 of this Annual Report.
Junior subordinated deferrable interest debentures held by
trusts that issued guaranteed capital debt securities
At December 31, 2009, the Firm had established 25 wholly-owned
Delaware statutory business trusts (“issuer trusts”) that had issued
guaranteed capital debt securities.
The junior subordinated deferrable interest debentures issued by the
Firm to the issuer trusts, totaling $19.6 billion and $18.6 billion at
December 31, 2009 and 2008, respectively, were reflected in the
Firm’s Consolidated Balance Sheets in long-term debt, and in the
table on the preceding page under the caption “Junior subordinated
debt” (i.e., trust preferred capital debt securities). The Firm also
records the common capital securities issued by the issuer trusts in
other assets in its Consolidated Balance Sheets at December 31,
2009 and 2008. The debentures issued to the issuer trusts by the
Firm, less the common capital securities of the issuer trusts, qualify
as Tier 1 capital.
The following is a summary of the outstanding trust preferred capital debt securities, including unamortized original issue discount, issued by
each trust, and the junior subordinated deferrable interest debenture issued to each trust, as of December 31, 2009.
December 31, 2009 (in millions)
Amount
of trust preferred
capital debt
securities issued
by trust (a)
Principal amount
of debenture
issued to trust (b)
Issue date
Stated maturity
of trust preferred
capital securities
and debentures
Earliest
redemption
date
Interest rate of
trust preferred
capital securities
and debentures
Interest payment/
distribution dates
Bank One Capital III $ 474 $ 650 2000 2030 Any time 8.75% Semiannually
Bank One Capital VI 525 553 2001 2031 Any time 7.20% Quarterly
Chase Capital II 481 497 1997 2027 Any time LIBOR + 0.50% Quarterly
Chase Capital III 295 304 1997 2027 Any time LIBOR + 0.55% Quarterly
Chase Capital VI 241 249 1998 2028 Any time LIBOR + 0.625% Quarterly
First Chicago NBD Capital I 248 256 1997 2027 Any time LIBOR + 0.55% Quarterly
J.P. Morgan Chase Capital X 1,000 1,014 2002 2032 Any time 7.00% Quarterly
J.P. Morgan Chase Capital XI 1,075 1,000 2003 2033 Any time 5.88% Quarterly
J.P. Morgan Chase Capital XII 400 389 2003 2033 Any time 6.25% Quarterly
JPMorgan Chase Capital XIII 465 480 2004 2034 2014 LIBOR + 0.95% Quarterly
JPMorgan Chase Capital XIV 600 584 2004 2034 2009 6.20% Quarterly
JPMorgan Chase Capital XV 995 1,101 2005 2035 Any time 5.88% Semiannually
JPMorgan Chase Capital XVI 500 491 2005 2035 2010 6.35% Quarterly
JPMorgan Chase Capital XVII 496 517 2005 2035 Any time 5.85% Semiannually
JPMorgan Chase Capital XVIII 748 749 2006 2036 Any time 6.95% Semiannually
JPMorgan Chase Capital XIX 563 564 2006 2036 2011 6.63% Quarterly
JPMorgan Chase Capital XX 995 996 2006 2036 Any time 6.55% Semiannually
JPMorgan Chase Capital XXI 836 837 2007 2037 2012 LIBOR + 0.95% Quarterly
JPMorgan Chase Capital XXII 996 997 2007 2037 Any time 6.45% Semiannually
JPMorgan Chase Capital XXIII 643 643 2007 2047 2012 LIBOR + 1.00% Quarterly
JPMorgan Chase Capital XXIV 700 700 2007 2047 2012 6.88% Quarterly
JPMorgan Chase Capital XXV 1,492 1,734 2007 2037 2037 6.80% Semiannually
JPMorgan Chase Capital XXVI 1,815 1,815 2008 2048 2013 8.00% Quarterly
JPMorgan Chase Capital XXVII 995 995 2009 2039 2039 7.00% Semiannually
JPMorgan Chase Capital XXVIII 1,500 1,500 2009 2039 2014 7.20% Quarterly
Total
$ 19,078 $ 19,615
(a) Represents the amount of trust preferred capital debt securities issued to the public by each trust, including unamortized original issue discount.
(b) Represents the principal amount of JPMorgan Chase debentures issued to each trust, including unamortized original-issue discount. The principal amount of debentures
issued to the trusts includes the impact of hedging and purchase accounting fair value adjustments that were recorded on the Firm’s Consolidated Financial Statements.