Derivative Financial Instruments and Hedging Activities (Tables)

6 Months Ended

Jun. 30, 2020

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Schedule of Derivative Instruments

The table below presents the gross fair value amounts of our derivative financial instruments and the associated notional amounts:

	June 30, 2020						December 31, 2019
	Notional		Fair Value of Assets(a)		Fair Value of Liabilities(a)		Notional		Fair Value of Assets(a)		Fair Value of Liabilities(a)
Derivatives designated as hedges
Fair value hedges
Interest rate swaps	$	10,894	$	609	$	—	$	9,458	$	234	$	23
Foreign currency swaps	1,797		26		68		1,796		22		71
Cash flow hedges
Interest rate swaps	964		—		32		590		—		6
Foreign currency swaps	5,143		26		302		4,429		40		119
Derivatives not designated as hedges
Interest rate contracts	112,403		1,045		807		92,400		340		300
Total(b)	$	131,201	$	1,706	$	1,209	$	108,673	$	636	$	519

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(a) The gross amounts of the fair value of our assets and liabilities are included in other assets and other liabilities, respectively. Amounts accrued for interest payments in a net receivable position are included in other assets. Amounts accrued for interest payments in a net payable position are included in other liabilities. All our derivatives are categorized within Level 2 of the fair value hierarchy. The fair value for Level 2 instruments was derived using the market approach based on observable market inputs including quoted prices of similar instruments and foreign exchange and interest rate forward curves.

(b)

We primarily enter into derivative instruments through AmeriCredit Financial Services, Inc. (AFSI); however, our SPEs may also be parties to derivative instruments. Agreements between AFSI and its derivative counterparties include rights of setoff for positions with offsetting values or for collateral held or posted. At June 30, 2020 and December 31, 2019, the fair value of assets and liabilities available for offset was $701 million and $302 million. At June 30, 2020 and December 31, 2019, we held $778 million and $210 million of collateral from counterparties that is available for netting against our asset positions. At June 30, 2020 and December 31, 2019, we posted $274 million and $89 million of collateral to counterparties that is available for netting against our liability positions.

Schedule of Fair Value Hedging Instruments, Statements of Financial Performance and Financial Position, Location

The following amounts were recorded in the condensed consolidated balance sheet related to items designated and qualifying as hedged items in fair value hedging relationships:

	Carrying Amount of Hedged Items				Cumulative Amount of Fair Value Hedging Adjustments(a)
	June 30, 2020		December 31, 2019		June 30, 2020			December 31, 2019
Unsecured debt	$	24,203	$	20,397	$	(648	)	$	(77	)

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(a)

Includes $(111) million and $69 million at June 30, 2020 and December 31, 2019 of amortization remaining on hedged items for which hedge accounting has been discontinued.

Effect of Derivative Instruments on the Condensed Consolidated Statements of Income

The tables below present the effect of our derivative financial instruments in the condensed consolidated statements of income:

	Three Months Ended June 30,												Six Months Ended June 30,
	2020						2019						2020						2019
	Interest Expense(a)			Operating Expenses(b)			Interest Expense(a)			Operating Expenses(b)			Interest Expense(a)			Operating Expenses(b)			Interest Expense(a)			Operating Expenses(b)
Fair value hedges
Hedged items - interest rate swaps	$	(66	)	$	—		$	(313	)	$	—		$	(569	)	$	—		$	(523	)	$	—
Interest rate swaps	(56		)	—			285			—			375			—			466			—
Hedged items - foreign currency swaps	—			(41		)	—			(25		)	—			(1		)	—			7
Foreign currency swaps	(9		)	43			(15		)	27			(21		)	4			(31		)	(4		)
Cash flow hedges
Interest rate swaps	(2		)	—			1			—			(3		)	—			4			—
Foreign currency swaps	(28		)	113			(21		)	18			(57		)	7			(39		)	(15		)
Derivatives not designated as hedges
Interest rate contracts	109			—			(5		)	—			161			—			(10		)	—
Total (losses) income recognized	$	(52	)	$	115		$	(68	)	$	20		$	(114	)	$	10		$	(133	)	$	(12	)

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(a) Total interest expense was $788 million and $952 million for the three months ended June 30, 2020 and 2019 and $1.6 billion and $1.9 billion for the six months ended June 30, 2020 and 2019.

(b) Activity is offset by translation activity also recorded in operating expenses related to foreign currency-denominated loans. Total operating expenses were $345 million and $377 million for the three months ended June 30, 2020 and 2019 and $703 million and $747 million for the six months ended June 30, 2020 and 2019.

The tables below present the effect of our derivative financial instruments in the condensed consolidated statements of comprehensive income:

	Gains (Losses) Recognized In Accumulated Other Comprehensive Loss
	Three Months Ended June 30,						Six Months Ended June 30,
	2020			2019			2020			2019
Fair value hedges
Foreign currency swaps	$	(7	)	$	(9	)	$	(12	)	$	(20	)
Cash flow hedges
Interest rate swaps	(9		)	(2		)	(15		)	(2		)
Foreign currency swaps	39			(19		)	(180		)	(71		)
Total	$	23		$	(30	)	$	(207	)	$	(93	)

	(Gains) Losses Reclassified From Accumulated Other Comprehensive Loss Into Income(a)(b)
	Three Months Ended June 30,						Six Months Ended June 30,
	2020			2019			2020		2019
Fair value hedges
Foreign currency swaps	$	5		$	11		$	13	$	22
Cash flow hedges
Interest rate swaps	1			(1		)	2		(3		)
Foreign currency swaps	(63		)	2			41		41
Total	$	(57	)	$	12		$	56	$	60

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(a) All amounts reclassified from accumulated other comprehensive loss were recorded to interest expense.

(b)

During the next twelve months, we estimate $88 million in losses will be reclassified into pretax earnings from derivatives designated for hedge accounting.