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 consolidated balance sheet at par value adjusted for unamortized discount or premium, unamortized issuance costs, and adjustments related to designated fair value hedging (see Note 19). 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 Other income/(loss), net.

NOTE 18. DEBT AND COMMITMENTS (Continued)

The carrying value of Automotive, Ford Credit, and Other debt at December 31 was as follows (in millions):



							Interest Rates
							Average Contractual						Average Effective (a)
Automotive	2017			2018			2017			2018			2017			2018
Debt payable within one year
Short-term	$	1,396		$	614		5.5	%		2.9	%		5.5	%		2.9	%
Long-term payable within one year
Public unsecured debt securities	361			—
U.S. Department of Energy Advanced Technology Vehicles Manufacturing (“DOE ATVM”) Incentive Program	591			591
Other debt	1,031			1,125
Unamortized (discount)/premium	(23		)	(16		)
Total debt payable within one year	3,356			2,314
Long-term debt payable after one year
Public unsecured debt securities	9,033			9,033
DOE ATVM Incentive Program	2,060			1,470
Other debt	1,848			1,026
Adjustments
Unamortized (discount)/premium	(290		)	(224		)
Unamortized issuance costs	(76		)	(72		)
Total long-term debt payable after one year	12,575			11,233			5.1	%	(b)	5.2	%	(b)	5.8	%	(b)	5.7	%	(b)
Total Automotive	$	15,931		$	13,547

Fair value of Automotive debt (c)	$	17,976		$	13,319

Ford Credit
Debt payable within one year
Short-term	$	17,153		$	14,705		3.0	%		3.5	%		3.0	%		3.5	%
Long-term payable within one year
Unsecured debt	13,298			14,373
Asset-backed debt	17,817			22,130
Adjustments
Unamortized (discount)/premium	1			2
Unamortized issuance costs	(16		)	(16		)
Fair value adjustments (d)	12			(15		)
Total debt payable within one year	48,265			51,179
Long-term debt payable after one year
Unsecured debt	55,687			52,409
Asset-backed debt	34,052			36,844
Adjustments
Unamortized (discount)/premium	(2		)	—
Unamortized issuance costs	(212		)	(195		)
Fair value adjustments (d)	(33		)	(171		)
Total long-term debt payable after one year	89,492			88,887			2.5	%	(b)	2.8	%	(b)	2.6	%	(b)	2.8	%	(b)
Total Ford Credit	$	137,757		$	140,066

Fair value of Ford Credit debt (c)	$	139,605		$	138,809

Other
Long-term debt payable after one year
Unsecured debt	$	604		$	604
Adjustments
Unamortized (discount)/premium	(3		)	(3		)
Unamortized issuance costs	(2		)	(1		)
Total Other	$	599		$	600		9.3	%		9.3	%		9.2	%		9.2	%

Fair value of Other debt	$	801		$	697

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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)	At December 31, 2017 and 2018, the fair value of debt includes $1.1 billion and $458 million of Automotive short-term debt and $16.4 billion and $13.8 billion of Ford Credit short-term debt, respectively, carried at cost which approximates fair value. All debt is categorized within Level 2 of the fair value hierarchy.


(d)	These adjustments relate to designated fair value hedges. The carrying value of hedged debt was $39 billion and $38 billion at December 31, 2017 and 2018, respectively.

NOTE 18. DEBT AND COMMITMENTS (Continued)

We paid interest of $836 million, $1.1 billion, and $1.2 billion in 2016, 2017, and 2018, respectively, on Automotive and Other debt. We paid interest of $2.5 billion, $2.9 billion, and $3.5 billion in 2016, 2017, and 2018, respectively, on Ford Credit debt.

Maturities

Debt maturities at December 31, 2018 were as follows (in millions):



	2019		2020		2021		2022		2023		Thereafter		Adjustments			Total Debt Maturities
Automotive
Public unsecured debt securities	$	—	$	—	$	—	$	86	$	—	$	8,947	$	(195	)	$	8,838
DOE ATVM Incentive Program	591		591		591		288		—		—		—			2,061
Short-term and other debt	1,739		261		218		181		205		161		(117		)	2,648
Total	$	2,330	$	852	$	809	$	555	$	205	$	9,108	$	(312	)	$	13,547

Ford Credit
Unsecured debt	$	28,135	$	15,073	$	15,288	$	8,343	$	5,895	$	7,810	$	(322	)	$	80,222
Asset-backed debt	23,073		19,004		7,865		4,487		2,595		2,893		(73		)	59,844
Total	$	51,208	$	34,077	$	23,153	$	12,830	$	8,490	$	10,703	$	(395	)	$	140,066

Other
Unsecured debt	$	—	$	130	$	180	$	—	$	—	$	294	$	(4	)	$	600

NOTE 18. 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	2017		2018
6 1/2% Debentures due August 1, 2018	$	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		1,500
5.291% Notes due December 8, 2046	1,300		1,300
4.75% Notes due January 15, 2043	2,000		2,000
Total public unsecured debt securities (b)	$	9,394	$	9,033

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(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, 2018 of $180 million. The proceeds from these securities were on-lent by Ford to Ford Holdings and are reported as Other 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, 2018, an aggregate $2.1 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

Total committed Automotive credit lines at December 31, 2018 were $11.9 billion, consisting of $10.4 billion of our corporate credit facility and $1.5 billion of local credit facilities available to non-U.S. Automotive affiliates. At December 31, 2018, the utilized portion of the corporate credit facility was $27 million, representing amounts utilized for letters of credit. At December 31, 2018, the utilized portion of the local credit facilities was $735 million.

Lenders under our corporate credit facility have commitments to us totaling $13.4 billion, with 75% of the commitments maturing on April 30, 2023 and 25% of the commitments maturing on April 30, 2021. We have allocated $3 billion of commitments to Ford Credit on an irrevocable and exclusive basis to support its liquidity. We would guarantee any borrowings by Ford Credit under the corporate credit facility.

NOTE 18. DEBT AND COMMITMENTS (Continued)

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 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.

Ford Credit Segment

Asset-Backed Debt

At December 31, 2018, the carrying value of our asset-backed debt was $59.8 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 22 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, 2017 and 2018, and ranged from $0 to $9 million during 2017 and $0 to $179 million during 2018.

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 $(29) million, $60 million, and $(17) million for the years ended December 31, 2016, 2017, and 2018, respectively. See Note 19 for additional information regarding the accounting for derivatives.

Interest expense on securitization debt was $773 million, $955 million, and $1.4 billion in 2016, 2017, and 2018, 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):



	2017		2018
Assets
Cash and cash equivalents	$	3.8	$	3.0
Finance receivables, net	63.2		66.2
Net investment in operating leases	11.5		16.3

Liabilities
Debt (a)	$	52.6	$	59.8

__________


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

NOTE 18. DEBT AND COMMITMENTS (Continued)

Committed Credit Facilities

At December 31, 2018, Ford Credit’s committed capacity totaled $41.4 billion, of which $19.6 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.