Long-Term Debt

12 Months Ended

Dec. 31, 2018

19. Long-Term Debt

The following table presents the components of our long-term debt, net of unamortized discounts and adjustments related to hedging with derivative financial instruments. We use interest rate swaps and caps, which modify the repricing characteristics of certain long-term debt, to manage interest rate risk. For more information about such financial instruments, see Note 8 (“Derivatives and Hedging Activities”).



December 31,
dollars in millions	2018		2017
Senior medium-term notes due through 2021 ^(a)	$	3,278	$	2,766
3.136% Subordinated notes due 2028 ^(b)	162		161
6.875% Subordinated notes due 2029 ^(b)	104		109
7.75% Subordinated notes due 2029 ^(b)	135		141
7.25% Subordinated notes due 2021 ^(c)	336		348
6.75% Senior notes due 2020 ^(d)	315		327
Other subordinated notes ^{(b), (e)}	70		69
Total parent company	4,400		3,921
Senior medium-term notes due through 2039 ^(f)	7,022		8,011
3.18% Senior remarketable notes due 2027 ^(g)	212		202
4.625% Subordinated notes due 2018 ^(h)	—		100
3.40% Subordinated notes due 2026 ^(h)	560		565
6.95% Subordinated notes due 2028 ^(h)	299		299
Secured borrowing due through 2025 ⁽ⁱ⁾	10		24
Federal Home Loan Bank advances due through 2038 ^(j)	1,130		1,106
Investment Fund Financing due through 2052 ^(k)	83		88
Obligations under Capital Leases due through 2032 ^(l)	16		17
Total subsidiaries	9,332		10,412
Total long-term debt	$	13,732	$	14,333


(a)	Senior medium-term notes had a weighted-average interest rate of 4.057% at December 31, 2018, and 3.56% at December 31, 2017. These notes had fixed interest rates at December 31, 2018, and December 31, 2017. These notes may not be redeemed prior to their maturity dates.


(b)	See Note 20 (“Trust Preferred Securities Issued by Unconsolidated Subsidiaries”) for a description of these notes.


(c)	The First Niagara subordinated debt had a weighted-average interest rate of 7.25% at December 31, 2018, and a weighted-average interest rate of 7.25% at December 31, 2017. These notes may not be redeemed prior to their maturity dates.


(d)	The First Niagara senior notes had a weighted-average interest rate of 6.75% at December 31, 2018, and a weighted-average interest rate of 6.75% at December 31, 2017. These notes may not be redeemed prior to their maturity dates.


(e)	The First Niagara variable rate trust preferred securities had a weighted-average interest rate of 4.20% at December 31, 2018, and 3.022% at December 31, 2017. These notes may be redeemed prior to their maturity dates.


(f)	Senior medium-term notes had weighted-average interest rates of 2.593% at December 31, 2018, and 2.24% at December 31, 2017. These notes are a combination of fixed and floating rates. These notes may not be redeemed prior to their maturity dates.


(g)	The remarketable senior medium-term notes had a weighted-average interest rate of 3.18% at December 31, 2018, and 3.18% at December 31, 2017. These notes had fixed interest rates at December 31, 2017, and December 31, 2018. These notes may not be redeemed prior to their maturity dates.


(h)	These notes are all obligations of KeyBank and may not be redeemed prior to their maturity dates.

(i)

The secured borrowing had weighted-average interest rates of 4.455% at December 31, 2018, and 4.460% at December 31, 2017. This borrowing is collateralized by commercial lease financing receivables, and principal reductions are based on the cash payments received from the related receivables. Additional information pertaining to these commercial lease financing receivables is included in Note 4 (“Loan Portfolio”).


(j)	Long-term advances from the Federal Home Loan Bank had a weighted-average interest rate of 2.333% at December 31, 2018, and 2.318% at December 31, 2017. These advances, which had fixed interest rates, were secured by real estate loans and securities totaling $1.1 billion at December 31, 2018, and $1.1 billion at December 31, 2017.


(k)	Investment Fund Financing had a weighted-average interest rate of 1.85% at December 31, 2018, and 1.94% at December 31, 2017.


(l)	These are capital leases acquired in the First Niagara merger with a maturity range from June 2019 through October 2032.

At December 31, 2018, scheduled principal payments on long-term debt were as follows:



in millions	Parent		Subsidiaries		Total
2019	—		$	2,262	$	2,262
2020	$	1,298	1,396		2,694
2021	1,350		1,744		3,094
2022	—		1,469		1,469
2023	—		456		456
All subsequent years	1,752		2,005		3,757

As described below, KeyBank and KeyCorp have a number of programs that support our long-term financing needs.

Global bank note program. On September 29, 2015, KeyBank updated its Global Bank Note Program, authorizing the issuance of up to $20 billion of notes domestically and abroad. Under the program, KeyBank is authorized to issue notes with original maturities of seven days or more for senior notes or five years or more for subordinated notes. Notes may be denominated in U.S. dollars or in foreign currencies. Amounts outstanding under the program and any prior bank note programs are classified as “long-term debt” on the balance sheet.

In 2017, KeyBank issued the following notes under the 2015 Global Bank Note Program: on June 9, 2017, $600 million of 2.40% Senior Bank Notes due June 9, 2022; and on September 14, 2017, $750 million of 2.30% Senior Bank Notes due September 14, 2022.

In 2018, KeyBank issued the following notes under the 2015 Global Bank Note Program: on March 7, 2018, $500 million of 3.375% Senior Bank Notes due March 7, 2023; and on June 13, 2018, $500 million of 3.35% Senior Bank Notes due June 15, 2021.

On September 28, 2018, KeyBank again updated its Bank Note Program authorizing the issuance of up to $20 billion of notes. Under the program, KeyBank is authorized to issue notes with original maturities of seven days or more for senior notes or five years or more for subordinated notes. Notes will be denominated in U.S. dollars. Amounts outstanding under the program and any prior bank note programs are classified as “long-term debt” on the balance sheet. As of December 31, 2018, no notes had been issued under the 2018 Bank Note Program, and $20 billion remained available for issuance.

KeyCorp shelf registration, including Medium-Term Note Program. KeyCorp has a shelf registration statement on file with the SEC under rules that allow companies to register various types of debt and equity securities without limitations on the aggregate amounts available for issuance. KeyCorp also maintains a Medium-Term Note Program that permits KeyCorp to issue notes with original maturities of nine months or more.

In 2018, KeyCorp issued the following notes under the program: on April 30, 2018, $750 million of 4.10% Senior Notes due April 30, 2028; and on October 29, 2018, $500 million of 4.150% Senior Notes due October 29, 2025.

At December 31, 2018, KeyCorp had authorized and available for issuance up to $2.75 billion of additional debt securities under the Medium-Term Note Program.

Issuances of capital securities or preferred stock by KeyCorp must be approved by the Board and cannot be objected to by the Federal Reserve.