Visa 2009 Annual Report Download - page 46

Table of Contents
term available-for-sale investment securities based upon our funding requirements, access to liquidity from these holdings, and return that these holdings
provide.
Investment Portfolio. Our investment portfolio primarily comprises of securities which enable us to meet a desired level of liquidity to meet working
capital needs. Our investment portfolio primarily consists of liquid securities, including money market funds, debt securities issued by U.S. government-
sponsored agencies and Canadian government debt securities. The liquidity of our investment portfolio is subject to uncertainties that are difficult to predict.
Uncertainties in the credit markets have affected a number of these holdings.
In September 2008, the Fund was unable to honor our request for the full redemption of our investment totaling $983 million. The Fund was
subsequently placed into liquidation and announced that it would distribute funds to investors on a pro-rata basis in proportion to the number of shares held by
each investor. Since the announcement, we have received distributions totaling $903 million, including $19 million received in October of fiscal 2010. We
believe that the fund will distribute its remaining assets within twelve months, and have therefore classified our remaining investment of $69 million, which
reflects an impairment of $29 million, as a current asset at September 30, 2009. See Note 6—Prepaid Expenses and Other Assets to our consolidated financial
statements.
Other factors that may impact the liquidity of our investment portfolio include changes to credit ratings of the securities as well as to the underlying
assets supporting those securities, rates of default of the underlying assets, underlying collateral value, discount rates, and ongoing strength and quality of
credit markets. We will continue to review our portfolio in light of evolving market and economic conditions. However, if current market conditions
deteriorate, the liquidity of our investment portfolio may be impacted and we could determine that some of our investments are impaired, which could
adversely impact our financial results. We have policies that limit the amount of credit exposure to any one financial institution or type of investment.
Revolving Credit Facilities. On February 15, 2008, we entered into a $3.0 billion five-year revolving credit facility with a syndicate of banks including
affiliates of certain of our class B and class C stockholders and certain of our customers and affiliates of our customers. Loans under the five-year facility may
be in the form of: (1) Base Rate Advance, which will bear interest at a rate equal to the higher of the Federal Funds Rate plus 0.5% or the Bank of America
prime rate; (2) Eurocurrency Advance, which will bear interest at a rate equal to LIBOR (as adjusted for applicable reserve requirements) plus an applicable
cost adjustment and an applicable margin of 0.11% to 0.30% based on our credit rating; or (3) U.S. Swing Loan, Euro Swing Loan, or Foreign Currency
Swing Loan, which will bear interest at the rate equal to the applicable Swing Loan rate for that currency plus the same applicable margin plus additionally for
Euro and Sterling loans, an applicable reserve requirement and cost adjustment. We also agreed to pay a facility fee on the aggregate commitment amount,
whether used or unused, at a rate ranging from 0.04% to 0.10% and a utilization fee on loans at a rate ranging from 0.05% to 0.10% based on our credit rating.
Currently, the applicable margin is 0.15%, the facility fee is 0.05% and the utilization fee is 0.05%. This facility contains certain covenants, including
financial covenant requirements relating to a maximum level of debt to EBITDA and events of default customary for financings of this type. This facility
expires on February 15, 2013. There have been no borrowings under this facility. At September 30, 2009, we were in compliance with all covenants with
respect to this facility.
U.S. Commercial Paper Programs. We maintain a $500 million U.S. commercial paper program, which provides for the issuance of unsecured debt
with maturities up to 270 days from the date of issuance at interest rates generally extended to companies with comparable credit ratings. The commercial
paper program is a source of short-term borrowed funds that may be used from time to time to cover short-term cash needs. At September 30, 2009, we had no
obligations outstanding under this program. There are no financial covenants related to this program.
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