MasterCard 2008 Annual Report Download - page 85

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Interest Rate Risk
Our interest rate sensitive assets are our debt instruments, which we hold as available-for-sale investments.
With respect to fixed maturities, our general policy is to invest in high quality securities, while providing
adequate liquidity and maintaining diversification to avoid significant exposure. The fair value and maturity
distribution of the Company’s available for sale investments as of December 31 was as follows:
Maturity
(In millions)
Financial Instrument Summary Terms
Fair Market
Value at
December 31,
2008
No
Contractual
Maturity 2009 2010 2011 2012 2013
2014 and
thereafter
Municipal bonds ......... fixed interest $ 485 $— $ 16 $ 68 $112 $101 $ 89 $ 98
Short-term bond funds .... fixed/variable
interest 103 103 ————— —
Auction rate securities .... variable interest 192 — ————— 192
Other .................. — — ————— —
Total .................. $ 780 $103 $ 16 $ 68 $112 $101 $ 89 $290
Maturity
(In millions)
Financial Instrument Summary Terms
Fair Market
Value at
December 31,
2007
No
Contractual
Maturity 2008 2009 2010 2011 2012
2013 and
thereafter
Municipal bonds ......... fixed interest $ 555 $— $ 14 $ 61 $122 $134 $103 $120
Short-term bond funds .... fixed/variable
interest 306 306 ————— —
Auction rate securities .... variable interest 348 — ————— 348
Other .................. 99 99 ————— —
Total .................. $1,308 $405 $ 14 $ 61 $122 $134 $103 $468
* Note that amounts in the above table may not sum due to rounding
At December 31, 2008, we had various credit facilities to provide liquidity in the event of material member
settlement failures, settlement service operations and other operational needs. These credit facilities have variable
rates, which are applied to the borrowing based on terms and conditions set forth in each agreement. We had no
material borrowings at December 31, 2008 or 2007. See Note 13 (Debt) to the consolidated financial statements
in Item 8 of this Report for additional information.
In addition, as of December 31, 2008, we had a 7.36% fixed short-term secured note for $149 million with a
fair value of $155 million relating to the Company’s Variable Interest Entity, see Note 15 (Consolidation of
Variable Interest Entity) to the consolidated financial statements in Item 8 of this Report for additional
information.
Equity Price Risk
The Company did not have significant equity price risk as of December 31, 2008. At December 31, 2007,
MasterCard’s investment in shares of Redecard S.A. common stock, which was classified as an available-for-sale
security was subject to equity price risk. At December 31, 2007, the effect of a hypothetical 10 percent decline in
market value would have been approximately $10 million.
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