XML 25 R16.htm IDEA: XBRL DOCUMENT v3.22.2
Derivative Financial Instruments and Hedging Activities
 6 Months Ended
Jun. 30, 2022
Derivative Instruments and Hedging Activities Disclosure [Abstract]  
Derivative Financial Instruments and Hedging Activities Derivative Financial Instruments and Hedging Activities
We are exposed to certain risks arising from both our business operations and economic conditions. We manage economic risks, including interest rate risk, primarily by managing the amount, sources, and duration of our assets and liabilities and by using derivative financial instruments. Specifically, we enter into derivative financial instruments to manage exposures that arise from business activities that result in the receipt or payment of future known and uncertain cash amounts, the value of which are determined by interest rates. Our derivative financial instruments are used to manage differences in the amount, timing, and duration of our known or expected cash receipts and our known or expected cash payments principally related to our borrowings.
Certain of our foreign operations expose us to fluctuations of foreign interest rates and exchange rates. We primarily finance our earning assets with debt in the same currency to minimize the impact to earnings from our exposure to fluctuations in exchange rates. When we use a different currency, these fluctuations may impact the value of our cash receipts and payments in terms of our functional currency. We enter into derivative financial instruments to protect the value or fix the amount of certain assets and liabilities in terms of the relevant functional currency.
The table below presents the gross fair value amounts of our derivative financial instruments and the associated notional amounts:
 June 30, 2022December 31, 2021
NotionalFair Value of AssetsFair Value of LiabilitiesNotionalFair Value of AssetsFair Value of Liabilities
Derivatives designated as hedges
Fair value hedges
Interest rate swaps$21,600 $2 $536 $15,058 $74 $88 
Foreign currency swaps— — — 682 — 59 
Cash flow hedges
Interest rate swaps806 25 — 611 12 4 
Foreign currency swaps7,444 7 649 7,419 85 201 
Derivatives not designated as hedges
Interest rate contracts109,673 1,526 1,183 110,053 846 339 
Foreign currency contracts— — — 148 — — 
Total$139,523 $1,560 $2,368 $133,971 $1,017 $691 
 The gross amounts of the fair value of our derivative instruments that are classified as assets or liabilities are included in other assets or 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.
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, 2022 and December 31, 2021, the fair value of derivative instruments that are classified as assets or liabilities available for offset was $970 million and $505 million. At June 30, 2022 and December 31, 2021, we held $272 million and $376 million of collateral from counterparties that was available for netting against our asset positions. At June 30, 2022 and December 31, 2021, we had $864 million and $45 million of collateral posted to counterparties that was available for netting against our liability positions.
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, 2022December 31, 2021June 30, 2022December 31, 2021
Unsecured debt$28,646 $24,964 $454 $(226)
 _________________
(a)Includes $94 million and $246 million of unamortized gains remaining on hedged items for which hedge accounting has been discontinued at June 30, 2022 and December 31, 2021.
The table below presents the effect of our derivative financial instruments in the condensed consolidated statements of income:
Three Months Ended June 30,Six Months Ended June 30,
2022202120222021
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$301 $— $(107)$— $677 $— $245 $— 
Interest rate swaps(282)— 118 — (622)— (217)— 
Hedged items - foreign currency swaps(c)
— — — (45)— 23 — 32 
Foreign currency swaps— — (4)48 (2)(24)(9)(28)
Cash flow hedges
Interest rate swaps3 — (5)— 5 — (10)— 
Hedged items - foreign currency swaps(c)
— 499 — (38)— 659 — 152 
Foreign currency swaps(42)(499)(30)38 (81)(659)(60)(152)
Derivatives not designated as hedges
Interest rate contracts28 — 19 — 28 — 39 — 
Total income (loss) recognized$8 $— $(9)$3 $5 $— $(12)$4 
_________________
(a)Total interest expense was $642 million and $633 million for the three months ended June 30, 2022 and 2021, and $1.2 billion and $1.3 billion for the six months ended June 30, 2022 and 2021.
(b)Total operating expenses were $393 million and $378 million for the three months ended June 30, 2022 and 2021, and $766 million and $789 million for the six months ended June 30, 2022 and 2021.
(c)Transaction activity recorded in operating expenses related to foreign currency-denominated loans.
The tables below present the effect of our derivative financial instruments in the condensed consolidated statements of comprehensive income (loss):
 Gains (Losses) Recognized In
Accumulated Other Comprehensive Income (Loss)
Three Months Ended June 30,Six Months Ended June 30,
2022202120222021
Fair value hedges
Foreign currency swaps$— $(1)$(2)$(4)
Cash flow hedges
Interest rate swaps6 1 10 6 
Foreign currency swaps(392)(6)(449)(131)
Total$(386)$(6)$(441)$(129)
(Gains) Losses Reclassified From Accumulated Other
Comprehensive Income (Loss) Into Income
Three Months Ended June 30,Six Months Ended June 30,
2022202120222021
Fair value hedges
Foreign currency swaps$— $1 $2 $4 
Cash flow hedges
Interest rate swaps(2)4 (3)7 
Foreign currency swaps408 (6)557 160 
Total$406 $(1)$557 $171 
All amounts reclassified from accumulated other comprehensive income (loss) were recorded to interest expense. During the next 12 months, we estimate $51 million in gains will be reclassified into pre-tax earnings from derivatives designated for hedge accounting.