Goldman Sachs 2009 Annual Report Download - page 130

Goldman Sachs 2009 Annual Report
128
Notes to Consolidated Financial Statements
Commitments to Extend Credit. The  rm’s commitments
to extend credit are agreements to lend to counterparties
that have  xed termination dates and are contingent on the
satisfaction of all conditions to borrowing set forth in the
contract. Since these commitments may expire unused or
be reduced or cancelled at the counterparty’s request, the
total commitment amount does not necessarily re ect
the actual future cash  ow requirements. The  rm accounts
for these commitments at fair value. To the extent that the
 rm recognizes losses on these commitments, such losses are
recorded within the  rm’s Trading and Principal Investments
segment net of any related underwriting fees.
▪
Commercial lending commitments. The  rm’s commercial
lending commitments are generally extended in connection
with contingent acquisition  nancing and other types
of corporate lending as well as commercial real estate
 nancing. The total commitment amount does not
necessarily re ect the actual future cash  ow requirements,
as the  rm may syndicate all or substantial portions of these
commitments in the future, the commitments may expire
unused, or the commitments may be cancelled or reduced at
the request of the counterparty. In addition, commitments
that are extended for contingent acquisition  nancing are
often intended to be short-term in nature, as borrowers often
seek to replace them with other funding sources.
NOTE 8
Commitments, Contingencies and Guarantees
Commitments
The following table summarizes the  rm’s commitments as of December2009 and November2008:
Commitment Amount by Period
of Expiration as of December2009 Total Commitments as of
2015– December November
(inmillions) 2010 2011–2012 2013–2014 Thereafter 2009 2008
Commitments to extend credit
(1)
Commercial lending:
Investment-grade $ 4,665 $ 5,175 $1,000 $ 575 $ 11,415 $ 8,007
Non-investment-grade
(2) 1,425 4,379 2,105 244 8,153 9,318
William Street credit extension program 4,850 18,112 2,256 – 25,218 22,610
Warehouse  nancing 12 – – – 12 1,101
Total commitments to extend credit 10,952 27,666 5,361 819 44,798 41,036
Forward starting resale and
securities borrowing agreements 34,844 – – – 34,844 61,455
Forward starting repurchase and
securities lending agreements 10,545 – – – 10,545 6,948
Underwriting commitments 1,811 – – – 1,811 241
Letters of credit
(3) 1,621 33 146 4 1,804 7,251
Investment commitments
(4) 2,686 9,153 128 1,273 13,240 14,266
Construction-related commitments
(5) 142 – – – 142 483
Other 109 58 38 33 238 260
Total commitments $62,710 $ 36,910 $5,673 $2,129 $107,422 $131,940
(1) Commitments to extend credit are presented net of amounts syndicated to third parties.
(2) Included within non-investment-grade commitments as of December2009 and November2008 were $1.20billion and $2.07billion, respectively, related to
leveraged lending capital market transactions; $40million and $164million, respectively, related to commercial real estate transactions; and $6.91billion and
$7.09billion, respectively, arising from other unfunded credit facilities. Including funded loans, the total notional amount of the  rm’s leveraged lending capital
market transactions was $4.45billion and $7.97billion as of December2009 and November2008, respectively.
(3) Consists of commitments under letters of credit issued by various banks which the  rm provides to counterparties in lieu of securities or cash to satisfy various
collateral and margin deposit requirements.
(4) Consists of the  rm’s commitments to invest in private equity, real estate and other assets directly and through funds that the  rm raises and manages in
connection with its merchant banking and other investing activities, consisting of $2.46billion and $3.15billion as of December2009 and November2008,
respectively, related to real estate private investments and $10.78billion and $11.12billion as of December2009 and November2008, respectively, related to
corporate and other private investments. Such commitments include $11.38billion and $12.25billion as of December2009 and November2008, respectively,
of commitments to invest in funds managed by the  rm, which will be funded at market value on the date of investment.
(5) Includes commitments of $104million and $388million as of December2009 and November2008, respectively, related to the  rm’s new headquarters in
NewYork City.