Morgan Stanley 2015 Annual Report Download - page 117

Institutional Securities loans and lending commitments are mainly related to relationship-based and event-driven lending to
select corporate clients. Relationship-based loans and lending commitments are used for general corporate purposes, working
capital and liquidity purposes by the Company’s Investment Banking clients and typically consist of revolving lines of credit,
letter of credit facilities and term loans. In connection with the relationship-based lending activities, the Company had hedges
(which included “single name,” “sector” and “index” hedges) with a notional amount of $12.0 billion and $12.9 billion at
December 31, 2015 and December 31, 2014, respectively. Event-driven loans and lending commitments are associated with a
particular event or transaction, such as to support client merger, acquisition, recapitalization and project finance activities.
Event-driven loans and lending commitments typically consist of revolving lines of credit, term loans and bridge loans.
Institutional Securities Loans and Lending Commitments by Credit Rating(1).
At December 31, 2015
Years to Maturity
Less than 1 1-3 3-5 Over 5 Total
(dollars in millions)
AAA ....................................... $ 287 $ 24 $ 50 $ — $ 361
AA......................................... 5,022 2,553 3,735 63 11,373
A .......................................... 3,996 5,726 11,993 1,222 22,937
BBB........................................ 5,089 16,720 23,248 4,086 49,143
Investment grade .......................... 14,394 25,023 39,026 5,371 83,814
Non-investment grade .......................... 7,768 15,863 22,818 7,779 54,228
Unrated(2) ................................... 930 1,091 246 2,118 4,385
Total ................................... $ 23,092 $ 41,977 $ 62,090 $ 15,268 $ 142,427
At December 31, 2014
Years to Maturity
Less than 1 1-3 3-5 Over 5 Total
(dollars in millions)
AAA ....................................... $ 275 $ 74 $ 37 $ — $ 386
AA......................................... 3,760 3,025 4,580 — 11,365
A .......................................... 2,135 5,060 12,090 657 19,942
BBB........................................ 4,710 11,902 23,740 3,035 43,387
Investment grade .......................... 10,880 20,061 40,447 3,692 75,080
Non-investment grade .......................... 6,161 14,645 20,716 7,386 48,908
Unrated(2) ................................... 128 906 235 2,460 3,729
Total ................................... $ 17,169 $ 35,612 $ 61,398 $ 13,538 $ 127,717
(1) Obligor credit ratings are determined by the Credit Risk Management Department.
(2) Unrated loans and lending commitments are primarily trading positions that are measured at fair value and risk managed as a component of Market Risk. For a
further discussion of the Company’s Market Risk, see “Quantitative and Qualitative Disclosures about Market Risk—Risk Management” in Part II, Item 7A.
At December 31, 2015 and December 31, 2014, the aggregate amount of investment grade loans was $15.8 billion and $11.8
billion, respectively, the aggregate amount of non-investment grade loans was $26.9 billion and $25.4 billion, respectively,
and the aggregate amount of unrated loans was $4.2 billion and $3.5 billion, respectively.
Event-Driven Loans and Lending Commitments. Included in the total loans and lending commitments above at
December 31, 2015 were event-driven exposures of $23.2 billion composed of loans of $5.4 billion and lending
commitments of $17.8 billion. Included in the event-driven exposures at December 31, 2015 were $13.5 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, 2015 was as follows: 24% will mature in less than 1 year, 21% will mature within 1 to 3
years, 24% will mature within 3 to 5 years and 31% will mature in over 5 years.
Included in the total loans and lending commitments 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.
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