Derivative Financial Instruments And Hedging Activities

3 Months Ended

Mar. 31, 2015

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Derivative Financial Instruments And Hedging Activities

Derivative Financial Instruments and Hedging Activities

Derivative swap and cap agreements consist of the following (in millions):

		Fair Value	March 31, 2015				December 31, 2014
		Level	Notional		Fair Value		Notional		Fair Value
Assets
Interest rate swaps	(a)	3	$	1,688	$	6	$	1,652	$	6
Interest rate caps	(b)	2	2,082		5		2,123		6
Foreign currency swaps	(b)	2	1,488		30		1,594		4
Total assets	(c)		$	5,258	$	41	$	5,369	$	16
Liabilities
Interest rate swaps	(a)	3	$	5,114	$	35	$	5,627	$	39
Interest rate caps	(b)	2	1,764		4		1,804		6
Foreign currency swaps	(b)	2	939		1		1,044		1
Total liabilities	(d)		$	7,817	$	40	$	8,475	$	46

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(a) The fair values of the interest rate swap agreements are estimated by discounting future net cash flows expected to be settled using current risk-adjusted rates.

(b) The fair values of the interest rate cap agreements and foreign currency swap agreements are based on quoted market prices.

(c) Included in other assets on the condensed consolidated balance sheets.

(d) Included in other liabilities on the condensed consolidated balance sheets.

We purchase interest rate cap agreements to limit floating rate exposures on certain of our revolving secured debt. We also utilize interest rate swap agreements to convert floating rate exposures on certain of our revolving debt or on securities issued in securitization transactions to fixed rates, thereby hedging the variability in interest expense paid.

At March 31, 2015, we had loans denominated in foreign currencies to certain of our international entities for the equivalent of $576 million. We purchase foreign currency swaps to hedge against any valuation change in the loans due to changes in foreign exchange rates. In addition, our operations in the U.K. had $550 million in debt denominated in U.S. Dollars outstanding, with a cross-currency swap in place to hedge against any valuation change in the debt due to changes in exchange rates.

The following table presents information on the effect of derivative instruments on the condensed consolidated statements of income and comprehensive income (in millions):

	Three Months Ended March 31,
	2015			2014
Non-designated hedges:
Interest rate contracts (a)	$	(6	)	$	(10	)
Foreign currency derivatives (b)	69			(16		)
	$	63		$	(26	)

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(a) Losses recognized in earnings are included in interest expense.

(b) Activity is substantially offset by translation activity (included in operating expenses) related to the foreign currency-denominated loans described above.

The activity for interest rate swap agreements measured at fair value on a recurring basis using significant unobservable inputs (Level 3) was insignificant for the three months ended March 31, 2015 and 2014.