Morgan Stanley 2010 Annual Report Download - page 97

(4) Amounts include guarantees issued by consolidated real estate funds sponsored by the Company of approximately $465 million. These
guarantees relate to obligations of the fund’s investee entities, including guarantees related to capital expenditures and principal and
interest debt payments. Accrued losses under these guarantees of approximately $161 million are reflected as a reduction of the carrying
value of the related fund investments, which are reflected in Financial instruments owned—Investments on the consolidated statement of
financial condition.
In the ordinary course of business, the Company guarantees the debt and/or certain trading obligations (including
obligations associated with derivatives, foreign exchange contracts and the settlement of physical commodities)
of certain subsidiaries. These guarantees generally are entity or product specific and are required by investors or
trading counterparties. The activities of the subsidiaries covered by these guarantees (including any related debt
or trading obligations) are included in the Company’s consolidated financial statements.
See Note 13 to the consolidated financial statements for information on other guarantees and indemnities.
Commitments and Contractual Obligations.
The Company’s commitments associated with outstanding letters of credit and other financial guarantees
obtained to satisfy collateral requirements, investment activities, corporate lending and financing arrangements,
mortgage lending and margin lending at December 31, 2010 are summarized below by period of expiration.
Since commitments associated with these instruments may expire unused, the amounts shown do not necessarily
reflect the actual future cash funding requirements:
Years to Maturity Total at
December 31,
2010
Less
than 1 1-3 3-5 Over 5
(dollars in millions)
Letters of credit and other financial guarantees obtained
to satisfy collateral requirements .................. $ 1,701 $ 8 $ 11 $ 1 $ 1,721
Investment activities ............................. 1,146 587 103 78 1,914
Primary lending commitments—investment
grade(1)(2) ................................... 8,104 28,291 7,885 219 44,499
Primary lending commitments—non-investment
grade(1) ..................................... 990 5,448 5,361 2,134 13,933
Secondary lending commitments(1) ................. 39 116 173 39 367
Commitments for secured lending transactions ......... 346 621 2 — 969
Forward starting reverse repurchase agreements(3) ..... 53,037 — — — 53,037
Commercial and residential mortgage-related
commitments ................................. 1,131 10 68 634 1,843
Underwriting commitments ........................ 128 — — — 128
Other commitments .............................. 198 62 3 — 263
Total ...................................... $66,820 $35,143 $13,606 $3,105 $118,674
(1) These commitments are recorded at fair value within Financial instruments owned and Financial instruments sold, not yet purchased in
the consolidated statements of financial condition (see Note 4 to the consolidated financial statements).
(2) This amount includes commitments to asset-backed commercial paper conduits of $275 million at December 31, 2010, of which
$138 million have maturities of less than one year and $137 million of which have maturities of one to three years.
(3) The Company enters into forward starting securities purchased under agreements to resell (agreements that have a trade date at or prior to
December 31, 2010 and settle subsequent to period-end) that are primarily secured by collateral from U.S. government agency securities
and other sovereign government obligations. These agreements primarily settle within three business days and at December 31, 2010,
$45.2 billion of the $53.0 billion settled within three business days.
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