Ameriprise 2008 Annual Report Download - page 136

14. Debt
Debt and the stated interest rates were as follows:
Outstanding Balance Stated Interest Rate
December 31, December 31,
2008 2007 2008 2007
(in millions)
Senior notes due 2010 $ 800 $ 800 5.4% 5.4%
Senior notes due 2015 700 700 5.7 5.7
Junior subordinated notes due 2066 457 500 7.5 7.5
Municipal bond inverse floater certificates due
2021 6 18 2.2 3.7
Floating rate revolving credit borrowings due 2013 64 — 3.6 —
Total $ 2,027 $ 2,018
On November 23, 2005, the Company issued $1.5 billion of unsecured senior notes (‘‘senior notes’’) including $800 million
of five-year senior notes which mature November 15, 2010 and $700 million of 10-year senior notes which mature
November 15, 2015, and incurred debt issuance costs of $7 million. Interest payments are due semi-annually on May 15
and November 15.
In June 2005, the Company entered into interest rate swap agreements totaling $1.5 billion, which qualified as cash flow
hedges related to planned debt offerings. The Company terminated the swap agreements in November 2005 when the senior
notes were issued. The related gain on the swap agreements of $71 million was recorded to accumulated other
comprehensive income and is being amortized as a reduction to interest expense over the period in which the hedged cash
flows are expected to occur. Considering the impact of the hedge credits, the effective interest rates on the senior notes due
2010 and 2015 are 4.8% and 5.2%, respectively.
On May 26, 2006, the Company issued $500 million of unsecured junior subordinated notes (‘‘junior notes’’), which mature
June 1, 2066, and incurred debt issuance costs of $6 million. For the initial 10-year period, the junior notes carry a fixed
interest rate of 7.5% payable semi-annually in arrears on June 1 and December 1. From June 1, 2016 until the maturity date,
interest on the junior notes will accrue at an annual rate equal to the three-month LIBOR plus a margin equal to 290.5 basis
points, payable quarterly in arrears. The Company has the option to defer interest payments, subject to certain limitations. In
addition, interest payments are mandatorily deferred if the Company does not meet specified capital adequacy, net income or
shareholders’ equity levels. In the fourth quarter of 2008, the Company extinguished $43 million of its junior notes and
recognized a gain of $19 million in other revenues.
The municipal bond inverse floater certificates mature in 2021 and are non-recourse debt obligations of a consolidated
structured entity supported by a $10 million portfolio of municipal bonds.
The floating rate revolving credit borrowings at December 31, 2008 are non-recourse debt related to certain consolidated
property funds. The debt is due in 2013 and will be extinguished with the cash flows from the sale of the investments held
within the partnerships.
On September 30, 2005, the Company obtained an unsecured revolving credit facility for $750 million expiring in September
2010 from various third party financial institutions. Under the terms of the credit agreement, the Company may increase the
amount of this facility to $1.0 billion. As of December 31, 2008 and 2007, no borrowings were outstanding under this facility.
Outstanding letters of credit issued against this facility were $2 million and $6 million as of December 31, 2008 and 2007,
respectively. The Company has agreed under this credit agreement not to pledge the shares of its principal subsidiaries and
was in compliance with this covenant as of December 31, 2008 and 2007.
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