Morgan Stanley 2014 Annual Report Download - page 145

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.
(4) Amounts include the fair value adjustment of ($0.1) billion related to the Company’s unfunded lending commitments.
At December 31, 2014 and December 31, 2013, the aggregate amount of investment grade funded loans was
$6.3 billion and $6.7 billion, respectively, and the aggregate amount of non-investment grade funded loans was
$9.9 billion and $10.2 billion, respectively. In connection with these corporate lending activities (which include
both corporate funded and unfunded lending commitments), the Company had hedges (which included “single
name,” “sector” and “index” hedges) with a notional amount of $12.9 billion related to the total corporate
lending exposure of $98.0 billion at December 31, 2014 and with a notional amount of $9.0 billion related to the
total corporate lending exposure of $95.4 billion at December 31, 2013. At December 31, 2014 and
December 31, 2013, all Corporate lending activities held for investment were current.
“Event-Driven” Loans and Lending Commitments at December 31, 2014.
Included in the total corporate lending exposure amounts in the table above at December 31, 2014 were “event-
driven” exposures of $15.2 billion composed of funded loans of $5.7 billion and lending commitments of
$9.5 billion. Included in the “event-driven” exposure at December 31, 2014 were $11.6 billion of loans and
lending commitments to non-investment grade borrowers. The maturity profile of these “event-driven” loans and
lending commitments at December 31, 2014 were as follows: 18% will mature in less than 1 year, 14% will
mature within 1 to 3 years, 37% will mature within 3 to 5 years and 31% will mature in over 5 years.
Industry Exposure—Corporate Lending. The Company also monitors its credit exposure to individual
industries for credit exposure arising from corporate loans and lending commitments as discussed below.
The following table presents the Company’s Institutional Securities credit exposure from its primary Corporate
Lending Commitments and Funded Loans by industry:
Industry At December 31, 2014 At December 31, 2013(1)
(dollars in millions)
Energy ................................................. $14,056 $12,240
Utilities ................................................ 11,717 10,404
Consumer discretionary .................................... 10,214 10,332
Healthcare .............................................. 9,707 10,096
Funds, exchanges and other financial services(2) ................ 9,277 9,297
Industrials .............................................. 9,134 10,976
Information technology .................................... 7,572 6,882
Consumer staples ......................................... 7,320 6,964
Materials ............................................... 5,259 4,895
Real Estate .............................................. 4,616 4,161
Telecommunications services ............................... 4,335 5,684
Other .................................................. 4,795 3,456
Total $98,002 $95,387
(1) All prior-year amounts have been recast to conform to the current year’s presentation.
(2) Includes mutual funds, pension funds, private equity and real estate funds, exchanges and clearinghouses and diversified financial
services.
Institutional Securities Other Lending Activities. In addition to the primary corporate lending activities described
above, the Company’s Institutional Securities business segment engages in other lending activities. These activities
include commercial and residential mortgage lending, asset-backed lending, corporate loans purchased in the
secondary market, financing extended to institutional equities clients and loans to municipalities. In 2014, loans and
lending commitments associated with these activities increased by approximately 89%, mainly due to growth in
corporate and wholesale real estate loans. At December 31, 2014 and December 31, 2013, approximately 99.9% and
99.6%, respectively, of Institutional Securities other lending activities held for investment were current and
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