DEBT

We have a commercial paper program with qualified institutional investors. We also obtain other short-term funding from the issuance of demand notes to retail investors through our floating rate demand notes program. We have certain securitization programs that issue short-term asset-backed debt securities that are sold to institutional investors. Bank borrowings by several of our international affiliates in the ordinary course of business are an additional source of short-term funding. We obtain long-term debt funding through the issuance of a variety of unsecured and asset-backed debt securities in the U.S. and international capital markets.

Asset-backed debt issued in securitizations is the obligation of the consolidated securitization entity that issued the debt and is payable only out of collections on the underlying securitized assets and related enhancements. This asset-backed debt is not the obligation of Ford Credit or our other subsidiaries.

Debt is recorded on our balance sheet at par value adjusted for unamortized discount or premium (with the exception of fair value adjustments related to debt in designated hedge relationships; see Note 7 for further policy information). Debt due within one year at issuance is classified as short-term. Debt due after one year at issuance is classified as long-term. Discounts, premiums, and costs directly related to the issuance of debt generally are capitalized and amortized over the life of the debt or put date and recorded in Interest expense using the effective interest method. Gains and losses on the extinguishment of debt are recorded in Other income, net.

Interest rates and debt outstanding were as follows (in millions):



	Interest Rates
	Average Contractual				Average Effective				Debt
	2014		2013		2014		2013		March 31, 2014			December 31, 2013
Short-term debt
Asset-backed commercial paper	0.2	%	0.2	%					$	1,331		$	3,364
Floating rate demand notes	1.1	%	1.1	%					5,513			5,319
Other asset-backed short-term debt	0.7	%	0.7	%					1,972			1,963
Commercial paper	0.8	%	0.9	%					2,464			2,003
Other short-term debt	5.7	%	5.3	%					2,532			2,372
Total short-term debt	1.7	%	1.5	%	1.8	%	1.5	%	13,812			15,021
Long-term debt
Senior indebtedness
Notes payable within one year									5,675			4,479
Notes payable after one year									39,533			38,617
Asset-backed debt
Notes payable within one year									17,409			17,322
Notes payable after one year									24,448			23,238
Unamortized discount									(77		)	(87		)
Fair value adjustments									190			103
Total long-term debt	2.9	%	3.0	%	3.1	%	3.2	%	87,178			83,672
Total debt	2.7	%	2.8	%	2.9	%	3.0	%	$	100,990		$	98,693

Fair value of debt									$	103,968		$	101,866

With the exception of commercial paper, which is issued at a discount, the average contractual rates reflect the stated contractual interest rate. Average effective rates reflect the average contractual interest rate plus amortization of discounts, premiums, and issuance fees. Fair value adjustments relate to designated fair value hedges of unsecured debt.

NOTE 9. DEBT (Continued)

The fair value of debt reflects interest accrued but not yet paid of $586 million and $618 million at March 31, 2014 and December 31, 2013, respectively. Interest accrued is reported in Other liabilities and deferred income for outside debt and Accounts payable - affiliated companies for debt with affiliated companies. The fair value of debt also includes $10.5 billion and $9.7 billion of short-term debt at March 31, 2014 and December 31, 2013, respectively, carried at cost, which approximates fair value. See Note 12 for additional information.

Debt with affiliated companies included in the above table was as follows (in millions):



	March 31, 2014		December 31, 2013
Other short-term debt	$	10	$	27
Notes payable within one year	100		4
Notes payable after one year	231		307
Total debt with affiliated companies	$	341	$	338

Debt Repurchases and Calls. From time to time and based on market conditions, we may repurchase or call some of our outstanding unsecured and asset-backed debt. If we have excess liquidity and it is an economically favorable use of our available cash, we may repurchase or call debt at a price lower or higher than its carrying value, resulting in a gain or loss on extinguishment.

In the first quarter of 2014, through market transactions, we called an aggregate principal amount of $195 million (of which none were maturing in 2014) of our unsecured debt. As a result, we recorded a pre-tax loss of $1 million, net of unamortized premiums, discounts, and fees in Other income, net. There were no repurchase or call transactions for asset-backed debt during the first quarter of 2014.

In the first quarter of 2013, through market transactions, we called an aggregate principal amount of $33 million (of which none were maturing in 2013) of our unsecured debt. As a result, we recorded a de minimis pre-tax loss, net of unamortized premiums, discounts, and fees in Other income, net. There were no repurchase or call transactions for asset-backed debt during the first quarter of 2013.

Debt Maturities. Short-term and long-term debt matures at various dates through 2048. At March 31, 2014, maturities were as follows (in millions):



	2014 (a)		2015 (b)		2016		2017		2018		Thereafter (c)		Total
Unsecured debt	$	13,013	$	9,961	$	9,293	$	7,298	$	5,596	$	10,556	$	55,717
Asset-backed debt	15,300		14,905		9,293		4,546		498		618		45,160
Total	28,313		24,866		18,586		11,844		6,094		11,174		100,877
Unamortized (discount)/premium													(77		)
Fair value adjustments													190
Total debt													$	100,990

__________


(a)	Includes $12,668 million for short-term and $15,645 million for long-term debt.


(b)	Includes $1,144 million for short-term and $23,722 million for long-term debt.


(c)	Includes $10,540 million of unsecured debt maturing between 2019 and 2024 with the remaining balance maturing after 2031.