DEBT AND COMMITMENTS

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 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 reported on our balance sheet at par value adjusted for unamortized discount or premium, unamortized issuance costs, and adjustments related to designated fair value hedging (see Note 9 for additional 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 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, net.

Debt outstanding and interest rates at December 31 were as follows (in millions):



							Interest Rates
	Debt						Average Contractual				Average Effective
	2017			2018			2017		2018		2017		2018
Short-term debt
Unsecured debt
Floating rate demand notes	$	5,660		$	5,880
Commercial paper	4,889			3,749
Other short-term debt	5,890			4,213
Asset-backed debt	786			943
Total short-term debt	17,225			14,785			3.0	%	3.5	%	3.0	%	3.5	%
Long-term debt
Unsecured debt
Notes payable within one year	13,298			14,373
Notes payable after one year	55,687			52,409
Asset-backed debt
Notes payable within one year	17,817			22,130
Notes payable after one year	34,051			36,844
Unamortized (discount) / premium	(1		)	2
Unamortized issuance costs	(228		)	(211		)
Fair value adjustments (a)	(21		)	(186		)
Total long-term debt	120,603			125,361			2.5	%	2.8	%	2.6	%	2.8	%
Total debt	$	137,828		$	140,146		2.6	%	2.8	%	2.6	%	2.9	%

Fair value of debt	$	139,677		$	138,888
Interest rate characteristics of debt payable after one year
Fixed interest rate	65,569			61,749
Variable interest rate (generally based on LIBOR or other short-term rates)	24,169			27,504
Total payable after one year	$	89,738		$	89,253

__________

(a) These adjustments relate to designated fair value hedges. The carrying value of hedged debt was $39.0 billion and $38.0 billion at December 31, 2017 and 2018, respectively.

NOTE 11. DEBT AND COMMITMENTS (Continued)

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.

We measure debt at fair value for purposes of disclosure using quoted prices for our own debt with approximately the same remaining maturities. Where quoted prices are not available, we estimate fair value using discounted cash flows and market-based expectations for interest rates, credit risk, and the contractual terms of the debt instruments. For certain short-term debt with an original maturity date of one year or less, we assume that book value is a reasonable approximation of the debt’s fair value. The fair value of debt is categorized within Level 2 of the hierarchy. The fair value of debt includes $16.4 billion and $13.8 billion of short-term debt at December 31, 2017 and 2018, respectively, carried at cost, which approximates fair value. We paid interest of $2.4 billion, $2.9 billion, and $3.5 billion in 2016, 2017, and 2018, respectively, on debt.

Other short-term debt with affiliated companies was $72 million and $80 million at December 31, 2017 and 2018, respectively. Interest expense with affiliated companies is reported in Interest expense and was immaterial during the respective periods.

Maturities

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



	2019 (a)		2020		2021		2022		2023		Thereafter (b)		Total
Unsecured debt	$	28,215	$	15,073	$	15,288	$	8,343	$	5,895	$	7,810	$	80,624
Asset-backed debt	23,073		19,004		7,865		4,487		2,595		2,893		59,917
Total	51,288		34,077		23,153		12,830		8,490		10,703		140,541
Unamortized discount													2
Unamortized issuance costs													(211		)
Fair value adjustments													(186		)
Total debt													$	140,146

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(a)	Includes $14,785 million for short-term and $36,503 million for long-term debt.


(b)	Matures between 2024 and 2028.

Committed Asset-Backed Facilities

We and our subsidiaries have entered into agreements with a number of bank-sponsored asset-backed commercial paper conduits and other financial institutions. Such counterparties are contractually committed, at our option, to purchase from us eligible retail receivables or to purchase or make advances under asset-backed securities backed by retail or wholesale finance receivables or operating leases for proceeds of up to $35.4 billion ($17.4 billion of retail financing, $6.0 billion of wholesale financing, and $12.0 billion of operating leases) at December 31, 2018. In the United States, we are able to obtain funding within two days for our unutilized capacity in some of our committed asset-backed facilities. These committed liquidity facilities have varying maturity dates, with $17.9 billion having maturities within the next twelve months and the remaining balance having maturities through 2020. We plan capacity renewals to protect our global funding needs, optimize capacity utilization, and maintain sufficient liquidity.

NOTE 11. DEBT AND COMMITMENTS (Continued)

Our ability to obtain funding under these facilities is subject to having a sufficient amount of eligible assets as well as our ability to obtain interest rate hedging arrangements for certain facilities. At December 31, 2018, $20.7 billion of these commitments were in use. These programs are free of material adverse change clauses, restrictive financial covenants (for example, debt-to-equity limitations and minimum net worth requirements), and generally, credit rating triggers that could limit our ability to obtain funding. However, the unused portion of these commitments may be terminated if the performance of the underlying assets deteriorates beyond specified levels. Based on our experience and knowledge as servicer of the related assets, we do not expect any of these programs to be terminated due to such events.

FCE Bank plc (“FCE”) has pre-positioned retail receivables with the Bank of England which supports access to the Discount Window Facility. Pre-positioned assets are neither pledged to nor held as collateral by the Bank of England unless the Discount Window Facility is accessed.

Unsecured Credit Facilities

At December 31, 2018, we and our majority-owned subsidiaries had $6.0 billion of contractually committed unsecured credit facilities with financial institutions, including the FCE Credit Agreement, the Ford Bank Credit Agreement, and the allocation under Ford’s corporate credit facility. At December 31, 2018, $5.3 billion was available for use.

FCE’s £745 million (equivalent to $954 million at December 31, 2018) syndicated credit facility (the “FCE Credit Agreement”) matures in 2021. At December 31, 2018, £505 million (equivalent to $646 million) was available for use. Ford Bank’s €240 million (equivalent to $275 million at December 31, 2018) syndicated credit facility (the “Ford Bank Credit Agreement”) matures in 2021. At December 31, 2018, all €240 million was available for use.

Both the FCE Credit Agreement and Ford Bank Credit Agreement contain certain covenants, including an obligation for FCE and Ford Bank to maintain their ratio of regulatory capital to risk-weighted assets at no less than the applicable regulatory minimum. The FCE Credit Agreement requires the support agreement between FCE and Ford Credit to remain in effect (and enforced by FCE to ensure that its net worth is maintained at no less than $500 million). The Ford Bank Credit Agreement requires a guarantee of Ford Bank’s obligations under the agreement, provided by Ford Credit, to remain in effect.

Lenders under the Ford corporate credit facility have commitments totaling $13.4 billion, with 75% of the commitments maturing on April 30, 2023 and 25% of the commitments maturing on April 30, 2021. Ford has allocated $3.0 billion of commitments, including commitments under a Chinese renminbi sub-facility, to us on an irrevocable and exclusive basis to support our liquidity. At December 31, 2018, all $3.0 billion was available for use.