Derivative Financial Instruments And Hedging Activities

3 Months Ended

Mar. 31, 2014

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Derivative Financial Instruments And Hedging Activities

Derivative Financial Instruments and Hedging Activities

Derivative swap and cap agreements consist of the following (in millions):

	March 31, 2014				December 31, 2013
	Notional		Fair Value(a)		Notional		Fair Value(a)
Assets
Interest rate swaps	$	2,618	$	8	$	2,422	$	11
Interest rate caps	1,967		6		1,398		7
Foreign currency swaps(b)	1,678		2		1,678		3
Total assets(c)	$	6,263	$	16	$	5,498	$	21
Liabilities
Interest rate swaps	$	5,371	$	20	$	4,266	$	17
Interest rate caps	1,709		6		1,206		7
Foreign currency swaps(b)	2,227		39		2,133		29
Total liabilities(d)	$	9,307	$	65	$	7,605	$	53

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(a) See Note 8- "Fair Values of Assets and Liabilities" for further discussion of fair value disclosure related to the derivatives.

(b) The foreign currency swaps relate to (i) intercompany loans denominated in foreign currencies (notional balances on the intercompany loans of €702 million , £412 million and 153kr million have been translated to USD) and (ii) a £350 million cross-currency swap for a securitization in the International Segment.

(c) Included in other assets on the condensed consolidated balance sheets.

(d) Included in other liabilities on the condensed consolidated balance sheets.

Generally, we purchase interest rate cap agreements to limit floating rate exposures on our revolving secured debt, which typically matures in one year or less. We utilize interest rate swap agreements to convert floating rate exposures on our revolving debt maturing in two years or more, or on securities issued in securitization transactions to fixed rates, thereby hedging the variability in interest expense paid.

We provided loans denominated in foreign currencies (euro, British pound and Swedish krona) to certain of our international entities for the equivalent of $1.7 billion. We purchase foreign currency swaps to hedge against any valuation change in the loans due to changes in foreign exchange rates.

The following table presents information on the effect of derivative instruments on the condensed consolidated statements of income and comprehensive income (in millions):

	Three Months Ended March 31, 2014
Non-designated hedges:
Interest rate contracts(a)	$	(10	)
Foreign currency derivatives(b)	(16		)
	$	(26	)

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(a) Losses recognized in earnings are included in interest expense.

(b) The losses for the three months ended March 31, 2014 are substantially offset by translation gains (included in operating expenses) related to the foreign currency-denominated loans described above.

For the three months ended March 31, 2013, the effect of derivatives on the condensed consolidated statements of income and comprehensive income was insignificant.