Morgan Stanley 2014 Annual Report Download - page 144

Corporate lending commitments may not be indicative of the Company’s actual funding requirements, as the
commitment may expire unused or the borrower may not fully utilize the commitment or the Company’s portion
of the commitment may be reduced through the syndication or sales process. Such syndications or sales may
involve third-party institutional investors where the Company may have a custodial relationship, such as prime
brokerage clients.
The Company may hedge and/or sell its exposures in connection with loans and lending commitments.
Additionally, the Company may mitigate credit risk by requiring borrowers to pledge collateral and include
financial covenants in lending commitments to such borrowers. In the Company’s consolidated statements of
financial condition these loans are carried at either fair value with changes in fair value recorded in earnings; held
for investment, which are recorded at amortized cost; or held for sale, which are recorded at lower of cost or fair
value.
The Company’s credit exposure from its corporate lending positions and lending commitments is measured in
accordance with the Company’s internal risk management standards. Lending commitments represent legally
binding obligations to provide funding to clients for all lending transactions. Since commitments associated with
these business activities may expire unused or may not be utilized to full capacity, they do not necessarily reflect
the actual future cash funding requirements.
The following tables present the Company’s Institutional Securities Corporate Lending Commitments and
Funded Loans at December 31, 2014 and December 31, 2013.
At December 31, 2014
Years to Maturity
Credit Rating(1) Less than 1 1-3 3-5 Over 5 Total(2)(3)
(dollars in millions)
AAA ........................................... $ 275 $ 74 $ 37 $ — $ 386
AA ............................................ 3,760 2,764 4,580 — 11,104
A.............................................. 2,135 4,534 12,029 173 18,871
BBB ........................................... 3,350 9,303 22,424 1,503 36,580
Investment grade ............................. 9,520 16,675 39,070 1,676 66,941
Non-investment grade ............................. 2,034 7,222 17,755 4,050 31,061
Total ....................................... $11,554 $23,897 $56,825 $5,726 $98,002
(1) Obligor credit ratings are determined by the Company’s Credit Risk Management Department.
(2) For syndications led by the Company, lending commitments accepted by the borrower but not yet closed are net of the amounts agreed to
by counterparties that will participate in the syndication. For syndications that the Company participates in and does not lead, lending
commitments accepted by the borrower but not yet closed include only the amount that the Company expects it will be allocated from the
lead syndicate bank.
(3) Amounts include the fair value adjustment of ($0.3) billion related to the Company’s unfunded lending commitments.
At December 31, 2013(1)
Years to Maturity
Credit Rating(2) Less than 1 1-3 3-5 Over 5 Total(3)(4)
(dollars in millions)
AAA ........................................... $ 859 $ 114 $ 121 $ — $ 1,094
AA ............................................ 2,718 1,870 5,556 — 10,144
A.............................................. 3,159 4,230 11,417 598 19,404
BBB ........................................... 2,486 10,551 21,530 752 35,319
Investment grade ............................. 9,222 16,765 38,624 1,350 65,961
Non-investment grade ............................. 2,757 8,069 13,028 5,572 29,426
Total ....................................... $11,979 $24,834 $51,652 $6,922 $95,387
(1) All prior-year amounts have been recast to conform to the current year’s presentation.
(2) Obligor credit ratings are determined by the Company’s Credit Risk Management Department.
(3) For syndications led by the Company, lending commitments accepted by the borrower but not yet closed are net of the amounts agreed to
by counterparties that will participate in the syndication. For syndications that the Company participates in and does not lead, lending
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