DEBT AND COMMITMENTS

Our debt consists of short-term and long-term secured and unsecured debt securities, and secured and unsecured borrowings from banks and other lenders. Debt issuances are placed directly by us or through securities dealers or underwriters and are held by institutional and retail investors. In addition, Ford Credit sponsors securitization programs that provide short-term and long-term asset-backed financing through institutional investors in the U.S. and international capital markets.

Debt is reported on our balance sheet at par value adjusted for unamortized discount or premium, unamortized issuance costs, and adjustments related to designated fair value hedges (see Note 17). Discounts, premiums, and costs directly related to the issuance of debt are capitalized and amortized over the life of the debt or to the put date and are recorded in interest expense using the effective interest method. Gains and losses on the extinguishment of debt are recorded in Non-Financial Services interest income and other income/(loss), net and Financial Services other income/(loss), net.

NOTE 14. DEBT AND COMMITMENTS (Continued)

The carrying value of Automotive and Financial Services debt at December 31 was as follows (in millions):



							Interest Rates
							Average Contractual						Average Effective (a)
Automotive Segment	2015			2016			2015			2016			2015			2016
Debt payable within one year
Short-term	$	818		$	1,324		7.3	%		10.3	%		7.3	%		10.3	%
Long-term payable within one year
U.S. Department of Energy (“DOE”) Advanced Technology Vehicles Manufacturing (“ATVM”) Incentive Program	591			591
Other debt	370			827
Unamortized (discount)/premium	—			(57		)
Total debt payable within one year	1,779			2,685
Long-term debt payable after one year
Public unsecured debt securities	6,594			9,394
DOE ATVM Incentive Program	3,242			2,651
Other debt	1,696			1,573
Adjustments
Unamortized (discount)/premium	(412		)	(320		)
Unamortized issuance costs	(60		)	(76		)
Total long-term debt payable after one year	11,060			13,222			5.3	%	(b)	5.5	%	(b)	6.0	%	(b)	6.2	%	(b)
Total Automotive Segment	$	12,839		$	15,907

Fair value of Automotive Segment debt (c)	$	14,199		$	17,433

Financial Services Segment
Debt payable within one year
Short-term	$	12,123		$	15,330		1.6	%		2.3	%		1.6	%		2.3	%
Long-term payable within one year
Unsecured debt	10,241			12,369
Asset-backed debt	18,855			19,286
Adjustments
Unamortized (discount)/premium	(5		)	(2		)
Unamortized issuance costs	(18		)	(16		)
Fair value adjustments (d)	—			17
Total debt payable within one year	41,196			46,984
Long-term debt payable after one year
Unsecured debt	49,193			49,912
Asset-backed debt	29,390			30,112
Adjustments
Unamortized (discount)/premium	(24		)	(9		)
Unamortized issuance costs	(198		)	(197		)
Fair value adjustments (d)	458			261
Total long-term debt payable after one year	78,819			80,079			2.3	%	(b)	2.4	%	(b)	2.4	%	(b)	2.5	%	(b)
Total Financial Services Segment	$	120,015		$	127,063

Fair value of Financial Services Segment debt (c)	$	121,170		$	128,777

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(a)	Average effective rates reflect the average contractual interest rate plus amortization of discounts, premiums, and issuance costs.


(b)	Includes interest on long-term debt payable within one year and after one year.


(c)	The fair value of debt includes $560 million and $1.1 billion of Automotive short-term debt and $10.3 billion and $14.3 billion of Financial Services short-term debt at December 31, 2015 and 2016, respectively, carried at cost which approximates fair value. All debt is categorized within Level 2 of the fair value hierarchy.


(d)	Adjustments related to designated fair value hedges of unsecured debt.

NOTE 14. DEBT AND COMMITMENTS (Continued)

The fair value of debt reflects interest accrued but not yet paid. Interest accrued on Automotive debt was $213 million and $258 million at December 31, 2015 and 2016, respectively. Interest accrued on Financial Services debt was $568 million and $676 million at December 31, 2015 and 2016, respectively. Accrued interest is reported in Other liabilities and deferred revenue in the current liabilities section of our consolidated balance sheet. See Note 2 for fair value method.

We paid interest of $774 million, $693 million, and $780 million in 2014, 2015, and 2016, respectively, on Automotive debt. We paid interest of $2.7 billion, $2.4 billion, and $2.6 billion in 2014, 2015, and 2016, respectively, on Financial Services debt.

Maturities

Debt maturities at December 31, 2016 were as follows (in millions):



	2017		2018		2019		2020		2021		Thereafter		Adjustments			Total Debt Maturities
Automotive Segment
Public unsecured debt securities	$	—	$	361	$	—	$	—	$	—	$	9,033	$	(211	)	$	9,183
DOE ATVM Incentive Program	591		591		591		591		591		287		—			3,242
Short-term and other debt (a)	2,151		558		240		362		153		260		(242		)	3,482
Total	$	2,742	$	1,510	$	831	$	953	$	744	$	9,580	$	(453	)	$	15,907

Financial Services Segment
Unsecured debt	$	26,636	$	12,374	$	11,135	$	6,972	$	9,305	$	10,126	$	116		$	76,664
Asset-backed debt	20,349		12,129		9,725		4,909		2,299		1,050		(62		)	50,399
Total	$	46,985	$	24,503	$	20,860	$	11,881	$	11,604	$	11,176	$	54		$	127,063

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(a)	Primarily non-U.S. affiliate debt.

NOTE 14. DEBT AND COMMITMENTS (Continued)

Automotive Segment

Public Unsecured Debt Securities

Our public, unsecured debt securities outstanding at December 31 were as follows (in millions):



	Aggregate Principal Amount Outstanding
Title of Security	2015		2016
6 1/2% Debentures due August 1, 2018	$	361	$	361
8 7/8% Debentures due January 15, 2022	86		86
7 1/8% Debentures due November 15, 2025	209		209
7 1/2% Debentures due August 1, 2026	193		193
6 5/8% Debentures due February 15, 2028	104		104
6 5/8% Debentures due October 1, 2028 (a)	638		638
6 3/8% Debentures due February 1, 2029 (a)	260		260
7.45% GLOBLS due July 16, 2031 (a)	1,794		1,794
8.900% Debentures due January 15, 2032	151		151
9.95% Debentures due February 15, 2032	4		4
7.75% Debentures due June 15, 2043	73		73
7.40% Debentures due November 1, 2046	398		398
9.980% Debentures due February 15, 2047	181		181
7.70% Debentures due May 15, 2097	142		142
4.346% Notes due December 8, 2026	—		1,500
5.291% Notes due December 8, 2046	—		1,300
4.75% Notes due January 15, 2043	2,000		2,000
Total public unsecured debt securities (b)	$	6,594	$	9,394

__________


(a)	Listed on the Luxembourg Exchange and on the Singapore Exchange.


(b)	Excludes 9.215% Debentures due September 15, 2021 with an outstanding balance at December 31, 2016 of $180 million. The proceeds from these securities were on-lent by Ford to Ford Holdings to fund Financial Services activity and are reported as Financial Services long-term debt.

DOE ATVM Incentive Program

In September 2009, we entered into a Loan Arrangement and Reimbursement Agreement with the DOE, under which we borrowed through multiple draws $5.9 billion to finance certain costs for fuel-efficient, advanced-technology vehicles. At December 31, 2016, an aggregate $3.2 billion was outstanding. The principal amount of the ATVM loan bears interest at a blended rate based on the U.S. Treasury yield curve at the time each draw was made (with the weighted-average interest rate on all such draws being about 2.3% per annum). The ATVM loan is repayable in equal quarterly installments of $148 million, which began in September 2012 and will end in June 2022.

Automotive Credit Facilities

Lenders under our Third Amended and Restated Credit Agreement dated as of April 29, 2016 and as further amended (the “corporate credit facility”) have commitments to us totaling $13.4 billion, with 75% of the commitments maturing on April 30, 2021 and 25% of the commitments maturing on April 30, 2019. We have allocated $3 billion of commitments to Ford Credit on an irrevocable and exclusive basis to support its liquidity. Any borrowings by Ford Credit under the corporate credit facility would be guaranteed by us.

The corporate credit facility is unsecured and free of material adverse change conditions to borrowing, restrictive financial covenants (for example, interest or fixed charge coverage ratio, debt-to-equity ratio, and minimum net worth requirements), and credit rating triggers that could limit our ability to obtain funding. The corporate credit facility contains a liquidity covenant that requires us to maintain a minimum of $4 billion in aggregate of domestic cash, cash equivalents, and loaned and marketable securities and/or availability under the corporate credit facility. If our senior, unsecured, long‑term debt does not maintain at least two investment grade ratings from Fitch, Moody’s, and S&P, the guarantees of certain subsidiaries will be required.

At December 31, 2016, the utilized portion of the corporate credit facility was $35 million, representing amounts utilized as letters of credit.

NOTE 14. DEBT AND COMMITMENTS (Continued)

At December 31, 2016, we had $1.5 billion of local credit facilities available to non-U.S. Automotive affiliates, of which $967 million had been utilized.

Financial Services Segment

Asset-Backed Debt

At December 31, 2016, the carrying value of our asset-backed debt was $50.4 billion. This secured debt is issued by Ford Credit and includes asset-backed securities used to fund operations and maintain liquidity. Assets securing the related debt issued as part of all our securitization transactions are included in our consolidated results and are based upon the legal transfer of the underlying assets in order to reflect legal ownership and the beneficial ownership of the debt holder. The third-party investors in the securitization transactions have legal recourse only to the assets securing the debt and do not have such recourse to us, except for the customary representation and warranty provisions or when we are counterparty to certain derivative transactions of the special purpose entities (“SPEs”). In addition, the cash flows generated by the assets are restricted only to pay such liabilities; Ford Credit retains the right to residual cash flows. See Note 16 for additional information.

Although not contractually required, we regularly support our wholesale securitization programs by repurchasing receivables of a dealer from a SPE when the dealer’s performance is at risk, which transfers the corresponding risk of loss from the SPE to us. In order to continue to fund the wholesale receivables, we also may contribute additional cash or wholesale receivables if the collateral falls below required levels. The balances of cash related to these contributions were $0 at December 31, 2015 and 2016, and ranged from $0 to $72 million during 2015 and $0 to $12 million during 2016.

SPEs that are exposed to interest rate or currency risk may reduce their risks by entering into derivative transactions. In certain instances, we have entered into derivative transactions with the counterparty to protect the counterparty from risks absorbed through derivative transactions with the SPEs. Derivative income/(expense) related to the derivative transactions that support Ford Credit’s securitization programs were $4 million, $2 million, and $(29) million for the years ended December 31, 2014, 2015, and 2016, respectively. See Note 17 for additional information regarding the accounting for derivatives.

Interest expense on securitization debt was $595 million, $630 million, and $773 million in 2014, 2015, and 2016, respectively.

The assets and liabilities related to our asset-backed debt arrangements included on our financial statements at December 31 were as follows (in billions):



	2015		2016
Assets
Cash and cash equivalents	$	4.3	$	3.4
Finance receivables, net	53.6		58.3
Net investment in operating leases	13.3		11.8

Liabilities
Debt (a)	$	50.0	$	50.4

__________


(a)	Debt is net of unamortized discount and issuance costs.

Committed Credit Facilities

At December 31, 2016, Ford Credit’s committed capacity totaled $40.1 billion of which $19.5 billion is available for use. Ford Credit’s committed capacity is primarily comprised of unsecured credit facilities with financial institutions, committed asset-backed security lines from bank-sponsored commercial paper conduits and other financial institutions, and allocated commitments under the corporate credit facility.