Morgan Stanley 2014 Annual Report Download - page 238

MORGAN STANLEY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Asset and Liability Management. In general, securities inventories that are not financed by secured funding
sources and the majority of the Company’s assets are financed with a combination of deposits, short-term
funding, floating rate long-term debt or fixed rate long-term debt swapped to a floating rate. Fixed assets are
generally financed with fixed rate long-term debt. The Company uses interest rate swaps to more closely match
these borrowings to the duration, holding period and interest rate characteristics of the assets being funded and to
manage interest rate risk. These swaps effectively convert certain of the Company’s fixed rate borrowings into
floating rate obligations. In addition, for non-U.S. dollar currency borrowings that are not used to fund assets in
the same currency, the Company has entered into currency swaps that effectively convert the borrowings into
U.S. dollar obligations. The Company’s use of swaps for asset and liability management affected its effective
average borrowing rate as follows:
2014 2013 2012
Weighted average coupon of long-term borrowings at period-end(1) ................... 4.2% 4.4% 4.4%
Effective average borrowing rate for long-term borrowings after swaps at period-end(1) .... 2.3% 2.2% 2.3%
(1) Included in the weighted average and effective average calculations are U.S. and non-U.S. dollar interest rates.
Other. The Company, through several of its subsidiaries, maintains funded and unfunded committed credit
facilities to support various businesses, including the collateralized commercial and residential mortgage whole
loan, derivative contracts, warehouse lending, emerging market loan, structured product, corporate loan,
investment banking and prime brokerage businesses.
Other Secured Financings.
Other secured financings include the liabilities related to transfers of financial assets that are accounted for as
financings rather than sales, consolidated VIEs where the Company is deemed to be the primary beneficiary,
pledged commodities, certain equity-linked notes and other secured borrowings. See Note 7 for further
information on other secured financings related to VIEs and securitization activities.
The Company’s Other secured financings consisted of the following:
At
December 31,
2014
At
December 31,
2013
(dollars in millions)
Secured financings with original maturities greater than one year ................ $10,346 $ 9,750
Secured financings with original maturities one year or less(1) .................. 1,395 4,233
Failed sales(2) ........................................................ 344 232
Total(3) ......................................................... $12,085 $14,215
(1) Amounts include approximately $1,299 million of variable rate financings and approximately $96 million in fixed rate financings at
December 31, 2014 and approximately $3,899 million of variable rate financings and approximately $334 million in fixed rate financings
at December 31, 2013.
(2) For more information on failed sales, see Note 7.
(3) Amounts include $4,504 million and $5,206 million at fair value at December 31, 2014 and December 31, 2013, respectively.
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