10. Debt and Borrowing Arrangements

The following table summarizes the components of Debt:

	June 30, 2013			December 31, 2012
			Wt. Avg-			Wt. Avg-
			Interest			Interest
	Balance		Rate(1)	Balance		Rate(1)
	(In millions)
Term notes, in amortization	$	827	1.3%	$	424	2.2%
Term notes, in revolving period	1,650		0.9%	1,593		1.0%
Variable-funding notes	1,036		2.1%	1,415		1.6%
Other	22		5.0%	25		5.1%
Vehicle Management Asset-Backed Debt	3,535			3,457
Secured Canadian credit facility	—		—%	—		—%
Committed warehouse facilities	1,552		2.1%	1,875		2.0%
Uncommitted warehouse facilities	—		—%	—		—%
Servicing advance facility	65		2.7%	66		2.7%
Mortgage Asset-Backed Debt	1,617			1,941
Term notes	732		8.5%	732		8.5%
Convertible notes(2)	439		5.0%	424		5.0%
Unsecured credit facilities	—		—%	—		—%
Unsecured Debt	1,171			1,156
Total	$	6,323		$	6,554

(1) Represents the weighted-average stated interest rate of outstanding debt as of the respective date, which may be different from the effective rate due to the amortization of premiums, discounts and issuance costs. Facilities are variable-rate, except for the Unsecured Term notes and Convertible notes which are fixed-rate.

(2) Balance is net of unamortized discounts of $61 million and $76 million as of June 30, 2013 and December 31, 2012, respectively. The effective interest rate of the Convertible notes is 13%, which includes the accretion of the discount and issuance costs.

Assets held as collateral for asset-backed borrowing arrangements that are not available to pay the Company’s general obligations as of June 30, 2013 consisted of:

	Vehicle		Mortgage
	Asset-Backed		Asset-Backed
	Debt		Debt
	(In millions)
Restricted cash and cash equivalents	$	294	$	9
Accounts receivable	64		81
Mortgage loans held for sale (unpaid principal balance)	—		1,630
Net investment in fleet leases	3,678		—
Total	$	4,036	$	1,720

The following table provides the contractual debt maturities as of June 30, 2013:

	Vehicle		Mortgage
	Asset-Backed		Asset-Backed		Unsecured
	Debt(1)		Debt		Debt(2)		Total
	(In millions)
Within one year	$	936	$	1,617	$	—	$	2,553
Between one and two years	1,128		—		250		1,378
Between two and three years	822		—		450		1,272
Between three and four years	477		—		250		727
Between four and five years	160		—		8		168
Thereafter	12		—		275		287
	$	3,535	$	1,617	$	1,233	$	6,385

(1) Maturities of vehicle management asset-backed notes, a portion of which are amortizing in accordance with their terms, represent estimated payments based on the expected cash inflows related to the securitized vehicle leases and related assets.

(2) Maturities of convertible notes have been reflected based on the contractual maturity date. Under certain circumstances, the convertible notes may be converted, and the principal portion of the notes and the conversion premium, if any, would be due in cash prior to the contractual maturity date.

Capacity under all borrowing agreements is dependent upon maintaining compliance with, or obtaining waivers of, the terms, conditions and covenants of the respective agreements. Available capacity under asset-backed funding arrangements may be further limited by asset eligibility requirements. Available capacity under committed borrowing arrangements as of June 30, 2013 consisted of:

			Utilized		Available
	Capacity		Capacity		Capacity
			(In millions)
Vehicle Management Asset-Backed Debt:
Term notes, in revolving period	$	1,650	$	1,650	$	—
Variable-funding notes	2,276		1,036		1,240
Secured Canadian credit facility	119		—		119
Mortgage Asset-Backed Debt:
Committed warehouse facilities	3,155		1,552		1,603
Servicing advance facility	120		65		55
Unsecured credit facilities(1)	305		—		305

(1) Capacity amount shown reflects the contractual maximum capacity of the facility. The available capacity of this facility is subject to the satisfaction of compliance with a borrowing base coverage ratio test.

Capacity for Mortgage asset-backed debt shown above excludes $2.3 billion not drawn under uncommitted facilities. See Note 15, “Fair Value Measurements” for the measurement of the fair value of Debt.

VEHICLE MANAGEMENT ASSET-BACKED DEBT

On June 13, 2013, Chesapeake Funding LLC (“Chesapeake”) issued $700 million of Series 2013-1 Term notes. Proceeds from the notes were used to repay a portion of the Series 2010-1 notes and Series 2011-1 notes.

On June 26, 2013, Chesapeake extended the revolving period of the 2010-1 Variable funding notes to July 26, 2013.

See Note 18, “Subsequent Events”, for a discussion of Chesapeake issuances in July 2013.

MORTGAGE ASSET-BACKED DEBT

On May 22, 2013, $675 million of commitments under the variable-rate mortgage repurchase facilities with Credit Suisse First Boston Mortgage Capital LLC were extended. The expiration of the facility is based on a 364-day rolling term and may continue, at CSFB’s option, until the stated expiration of May 22, 2015.

On June 11, 2013, the committed facility with Fannie Mae that provides for the early reimbursement of certain servicing advances made on behalf of Fannie Mae was extended to September 30, 2013.

On June 21, 2013, the Company extended the term of $250 million of commitments with The Royal Bank of Scotland plc to June 20, 2014, and entered into terms for $250 million of uncommitted capacity with the lender.

UNSECURED DEBT

As of June 30, 2013, Convertible notes included: (i) $250 million of 4.0% Convertible notes with a maturity date of September 1, 2014; and (ii) $250 million of 6.0% Convertible notes with a maturity date of June 15, 2017.

As of June 30, 2013, the Convertible notes due 2014 do not meet the requirements for conversion and there have been no conversions of the notes since issuance.

Holders of the Convertible notes due 2017 may convert all or any portion of the notes, at their option, prior to December 15, 2016 only upon the occurrence of certain triggering events related to (i) the price of the notes, (ii) the price of the Company’s Common stock, or (iii) upon the occurrence of specified corporate events. Holders of the Convertible notes due 2017 may also convert all or any portion of the notes at any time, at their option from, and including, December 15, 2016 through the third scheduled trading day immediately preceding the maturity date. Upon conversion, the principal amount of the converted notes is payable in cash and the Company will pay or deliver (at its election): (i) cash; (ii) shares of the Company’s Common stock; or (iii) a combination of cash and shares of the Company’s Common stock; to settle amounts due if the conversion value exceeds the principal of the converted notes. As of June 30, 2013, the if-converted value exceeded the principal amount of the notes by $148 million, and the notes met the requirements for conversion.

DEBT COVENANTS

Certain debt arrangements require the maintenance of certain financial ratios and contain other affirmative and negative covenants, termination events, and other restrictions, including, but not limited to, covenants relating to material adverse changes, liquidity maintenance, restrictions on indebtedness of the Company and its material subsidiaries, mergers, liens, liquidations, sale and leaseback transactions, and restrictions on certain types of payments, including dividends and stock repurchases. Certain other debt arrangements, including the Fannie Mae committed facility, contain provisions that permit the Company or our counterparty to terminate the arrangement upon the occurrence of certain events, including those described below.

There were no significant amendments to the terms of debt covenants during the six months ended June 30, 2013. As of June 30, 2013, the Company was in compliance with all financial covenants related to its debt arrangements.

Under certain of the Company’s financing, servicing, hedging and related agreements and instruments, the lenders or trustees have the right to notify the Company if they believe it has breached a covenant under the agreements and may declare an event of default. If one or more notices of default were to be given, the Company believes it would have various periods in which to cure certain of such events of default. If the Company does not cure the events of default or obtain necessary waivers within the required time periods, the maturity of certain debt agreements could be accelerated and the ability to incur additional indebtedness could be restricted. In addition, an event of default or acceleration under certain agreements and instruments would trigger cross-default provisions under certain of the Company’s other agreements and instruments.