Discover 2015 Annual Report Download - page 134

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10. Long-Term Borrowings
Long-term borrowings consist of borrowings and capital leases having original maturities of one year or more.
The following table provides a summary of the Company’s long-term borrowings and weighted-average interest rates
on outstanding balances (dollars in millions):
December 31, 2015 December 31, 2014
Maturity Interest Rate
Weighted-
Average
Interest Rate Outstanding Amount Outstanding Amount
Securitized Debt
Fixed-rate asset-backed securities(1) ................................. 2016-2020 0.69%-5.65% 1.96% $ 9,171 $8,950
Floating-rate asset-backed securities(2)(3) ........................... 2016-2019 0.51%-0.78% 0.66% 6,450 7,000
Total Discover Card Master Trust I and Discover Card
Execution Note Trust ................................................ 15,621 15,950
Floating-rate asset-backed securities(4)(5)(6)(7) ...................... 2031-2042 0.49%-4.25% 2.02% 1,143 1,445
Total SLC Private Student Loan Trusts ........................... 1,143 1,445
Total Long-Term Borrowings - owed to securitization
investors ............................................................. 16,764 17,395
Discover Financial Services (Parent Company)
Fixed-rate senior notes(1) ................................................ 2017-2025 3.75%-10.25% 4.75% 2,079 1,558
Fixed-rate retail notes .................................................... 2022-2025 3.50%-4.05% 3.80% 40 —
Discover Bank
Fixed-rate senior bank notes(1) ........................................ 2018-2026 2.00%-4.25% 3.16% 5,143 2,892
Fixed-rate subordinated bank notes ................................. 2019-2020 7.00%-8.70% 7.49% 698 698
Capital lease obligations(8) .................................................. 2016 4.51% 4.51% — 1
Total long-term borrowings ................................. $ 24,724 $ 22,544
(1) The Company uses interest rate swaps to hedge portions of these long-term borrowings against changes in fair value attributable to changes in London Interbank
Offered Rate (“LIBOR”). Use of these interest rate swaps impacts carrying value of the debt. See Note 22: Derivatives and Hedging Activities.
(2) Discover Card Execution Note Trust floating-rate asset-backed securities include issuances with the following interest rate terms: 1-month LIBOR + 18 to 45 basis
points and 3-month LIBOR + 20 basis points as of December 31, 2015.
(3) The Company uses interest rate swaps to manage its exposure to changes in interest rates related to future cash flows resulting from interest payments on a portion of
these long-term borrowings. There is no impact on debt carrying value from use of these interest rate swaps. See Note 22: Derivatives and Hedging Activities.
(4) SLC Private Student Loan Trusts floating-rate asset-backed securities include issuances with the following interest rate terms: 3-month LIBOR + 17 to 45 basis points,
Prime rate + 75 to 100 basis points and 1-month LIBOR + 350 basis points as of December 31, 2015.
(5) The Company acquired an interest rate swap related to the securitized debt assumed in the SLC transaction. The swap does not qualify for hedge accounting and has
no impact on debt carrying value. See Note 22: Derivatives and Hedging Activities.
(6) Repayment of this debt is dependent upon the timing of principal and interest payments on the underlying student loans. The dates shown represent final maturity
dates.
(7) Includes $311 million of senior notes maturing in 2031, $659 million of senior and subordinated notes maturing in 2036 and $173 million of senior notes maturing
in 2042 as of December 31, 2015.
(8) As of December 31, 2015, the outstanding amount of capital lease obligations was not material.