Morgan Stanley 2009 Annual Report Download - page 174

MORGAN STANLEY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
(1) Weighted average coupon was calculated utilizing non-U.S. dollar interest rates.
(2) U.S. dollar contractual floating rate borrowings bear interest based on a variety of money market indices, including London Interbank
Offered Rates (“LIBOR”) and Federal Funds rates. Non-U.S. dollar contractual floating rate borrowings bear interest based primarily on
Euribor floating rates.
(3) Amounts include borrowings that are equity linked, credit linked, commodity linked or linked to some other index.
(4) Amounts include long-term borrowings issued under the TLGP.
(5) Amounts include an increase of approximately $2.0 billion as of December 31, 2009 to the carrying amount of certain of the Company’s
long-term borrowings associated with fair value hedges. The increase to the carrying value associated with fair value hedges by year due
was approximately less than $0.1 billion due in 2010, $0.3 billion due in 2011, $0.3 billion due in 2012, $0.4 billion due in 2013, $0.1
billion due in 2014 and $0.9 billion due thereafter.
(6) Amounts include a decrease of approximately $1.9 billion as of December 31, 2009 to the carrying amounts of certain of the Company’s
long-term borrowings for which the fair value option was elected (see Note 4).
The Company’s long-term borrowings included the following components:
At December 31,
2009 2008
(dollars in millions)
Senior debt ............................................................... $178,797 $165,181
Subordinated debt ......................................................... 3,983 4,342
Junior subordinated debentures ............................................... 10,594 10,312
Total ............................................................... $193,374 $179,835
During 2009, the Company issued notes with a principal amount of approximately $44 billion. The amount
included non-U.S. dollar currency notes aggregating approximately $8 billion. These notes include the public
issuance of approximately $30 billion of senior unsecured notes that were not guaranteed by the Federal Deposit
Insurance Corporation (“FDIC”). During 2009, approximately $33 billion of notes were repaid.
During fiscal 2008, $56.1 billion of notes were repaid. Included in these repayments were approximately $12.1
billion of fixed rate and floating-rate long-term debt repurchases by the Company in the fourth quarter of fiscal
2008 resulting in a gain of approximately $2.3 billion. In connection with these repurchases, the Company
de-designated certain swaps used to hedge the debt. These swaps were no longer considered hedges once the
related debt was repurchased by the Company (i.e., the swaps were “de-designated” as hedges).
During the one month ended December 31, 2008, the Company issued notes with a principal amount of
approximately $13 billion. The amount included non-U.S. dollar currency notes aggregating approximately $17
million. During the one month ended December 31, 2008, approximately $5.7 billion of notes were repaid.
Senior debt securities often are denominated in various non-U.S. dollar currencies and may be structured to
provide a return that is equity-linked, credit-linked, commodity-linked or linked to some other index (e.g., the
consumer price index). Senior debt also may be structured to be callable by the Company or extendible at the
option of holders of the senior debt securities. Debt containing provisions that effectively allow the holders to put
or extend the notes aggregated $63 million as of December 31, 2009 and $160 million as of December 31, 2008.
Subordinated debt and junior subordinated debentures generally are issued to meet the capital requirements of the
Company or its regulated subsidiaries and primarily are U.S. dollar denominated.
Senior Debt—Structured Borrowings. The Company’s index-linked, equity-linked or credit-linked borrowings
include various structured instruments whose payments and redemption values are linked to the performance of a
specific index (e.g., Standard & Poor’s 500), a basket of stocks, a specific equity security, a credit exposure or
basket of credit exposures. To minimize the exposure resulting from movements in the underlying index, equity,
credit or other position, the Company has entered into various swap contracts and purchased options that
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