XML 52 R34.htm IDEA: XBRL DOCUMENT v3.22.4
Commitments, Contingencies and Guarantees
 12 Months Ended
Nov. 30, 2022
Commitments and Contingencies Disclosure [Abstract]  
Commitments, Contingencies and Guarantees Commitments, Contingencies and Guarantees
Commitments
The following table summarizes our commitments at November 30, 2022 (in millions):
Expected Maturity Date (fiscal years)
202320242025 and 20262027 and 20282029 and LaterMaximum Payout
Equity commitments (1)
$25.2 $1.4 $103.3 $2.8 $160.2 $292.9 
Loan commitments (1)
271.5 — 70.0 9.9 — 351.4 
Loans purchase commitments (2)2,363.9 — — — — 2,363.9 
Underwriting commitments
62.3 — — — — 62.3 
Forward starting reverse repos (3)8,470.9 — — — — 8,470.9 
Forward starting repos (3)4,213.7 — — — — 4,213.7 
Other unfunded commitments (1)
0.1 287.5 109.7 — — 397.3 
Total commitments$15,407.6 $288.9 $283.0 $12.7 $160.2 $16,152.4 
(1)Equity, loan and other unfunded commitments are presented by contractual maturity date. The amounts, however, are available on demand.
(2)Loan purchase commitments comprise of unfunded commitments to acquire secondary market loans. For the population of loans to be acquired under the loan purchase commitments, at November 30, 2022, Jefferies had also entered into back-to-back committed sale contracts aggregating to $2.67 billion.
(3)At November 30, 2022, $7.73 billion within forward starting securities purchased under agreements to resell and all except $2.6 million of forward starting securities sold under agreements to repurchase settled within three business days.
Equity Commitments. Include a commitment to invest in our joint venture, Jefferies Finance, and commitments to invest in private equity funds and in Jefferies Capital Partners, LLC, the manager of the private equity funds, which consists of a team led by our President and a director. At November 30, 2022, our outstanding commitments relating to Jefferies Capital Partners, LLC and its private equity funds were $10.6 million.
Additionally, at November 30, 2022, we had other outstanding equity commitments to invest up to $230.1 million with strategic affiliates and $36.8 million to various other investments.
Loan Commitments. From time to time we make commitments to extend credit to clients and to strategic affiliates. These commitments and any related drawdowns of these facilities typically have fixed maturity dates and are contingent on certain representations, warranties and contractual conditions applicable to the borrower. At November 30, 2022, we had $97.4 million of outstanding loan commitments to clients and $4.0 million to strategic affiliates.
Loan commitments outstanding at November 30, 2022 also include our portion of the outstanding secured revolving credit facility provided to Jefferies Finance, to support loan underwritings by Jefferies Finance.
Underwriting Commitments. In connection with investment banking activities, we may from time to time provide underwriting commitments to our clients in connection with capital raising transactions.
Forward Starting Reverse Repos and Repos. We enter into commitments to take possession of securities with agreements to resell on a forward starting basis and to sell securities with agreements to repurchase on a forward starting basis that are primarily secured by U.S. government and agency securities.
Other Unfunded Commitments. Other unfunded commitments include obligations in the form of revolving notes, warehouse financings and debt securities to provide financing to asset-backed and CLO vehicles. Upon advancing funds, drawn amounts are collateralized by the assets of an entity.
Guarantees
Derivative Contracts. As a dealer, we make markets and trade in a variety of derivative instruments. Certain derivative contracts that we have entered into meet the accounting definition of a guarantee under U.S. GAAP, including credit default swaps, written foreign currency options and written equity put options. On certain of these contracts, such as written interest rate caps and foreign currency options, the maximum payout cannot be quantified since the increase in interest or foreign exchange rates are not contractually limited by the terms of the contract. As such, we have disclosed notional values as a measure of our maximum potential payout under these contracts.
The following table summarizes the notional amounts associated with our derivative contracts meeting the definition of a guarantee under U.S. GAAP at November 30, 2022 (in millions):
Expected Maturity Date (Fiscal Years)
202320242025 and 20262027 and 20282029 and LaterNotional/ Maximum Payout
Guarantee Type:
Derivative contracts—non-credit related$19,015.0 $6,933.1 $11,994.3 $850.3 $— $38,792.7 
Written derivative contracts—credit related— 0.2 — — — 0.2 
Total derivative contracts$19,015.0 $6,933.3 $11,994.3 $850.3 $— $38,792.9 
The derivative contracts deemed to meet the definition of a guarantee under U.S. GAAP are before consideration of hedging transactions and only reflect a partial or “one-sided” component of any risk exposure. Written equity options and written credit default swaps are often executed in a strategy that is in tandem with long cash instruments (e.g., equity and debt securities). We substantially mitigate our exposure to market risk on these contracts through hedges, such as other derivative contracts and/or cash instruments, and we manage the risk associated with these contracts in the context of our overall risk management framework. We believe notional amounts overstate our expected payout and that fair value of these contracts is a more relevant measure of our obligations. At November 30, 2022, the fair value of derivative contracts meeting the definition of a guarantee is approximately $702.1 million.
Berkadia. We have agreed to reimburse Berkshire Hathaway for up to one-half of any losses incurred under a $1.5 billion surety policy securing outstanding commercial paper issued by an affiliate of Berkadia. At November 30, 2022, the aggregate amount of commercial paper outstanding was $1.47 billion.
HomeFed. For real estate development projects, we are generally required to obtain infrastructure improvement bonds at the beginning of construction work and warranty bonds upon completion of such improvements. These bonds are issued by surety companies to guarantee a municipality satisfactory completion of a project. As the planned area is developed and the municipality accepts the improvements, the bonds are released. At November 30, 2022, the aggregate amount of infrastructure improvement bonds outstanding was $70.7 million.
Standby Letters of Credit. At November 30, 2022, we provided guarantees to certain counterparties in the form of standby letters of credit in the amount of $57.6 million, with a weighted average maturity of less than one year. Standby letters of credit commit us to make payment to the beneficiary if the guaranteed party fails to fulfill its obligation under a contractual arrangement with that beneficiary. Since commitments associated with these collateral instruments may expire unused, the amount shown does not necessarily reflect the actual future cash funding requirement.
Other Guarantees. We are members of various exchanges and clearing houses. In the normal course of business, we provide guarantees to securities clearing houses and exchanges. These guarantees generally are required under the standard membership agreements, such that members are required to guarantee the performance of other members. Additionally, if a member becomes unable to satisfy its obligations to the clearing house, other members would be required to meet these shortfalls. To mitigate these performance risks, the exchanges and clearing houses often require members to post collateral. Our obligations under such guarantees could exceed the collateral amounts posted. Our maximum potential liability under these arrangements cannot be quantified; however, the potential for us to be required to make payments under such guarantees is deemed remote. Accordingly, no liability has been recognized for these arrangements. Additionally, we provide certain indemnifications in connection with third-party clearing and execution arrangements whereby a third-party may clear and settle transactions on behalf of our clients. These indemnifications generally have standard contractual terms and are entered into in the ordinary course of business. Our obligations in respect of such transactions are secured by the assets in our client’s account, as well as any proceeds received from the transactions cleared and settled on behalf of our client. However, we believe that it is unlikely we would have to make any material payments under these arrangements and no material liabilities related to these indemnifications have been recognized.