18. Long-Term Debt

The following table presents the components of our long-term debt, net of unamortized discounts and adjustments related to hedging with derivative financial instruments. We use interest rate swaps and caps, which modify the repricing characteristics of certain long-term debt, to manage interest rate risk. For more information about such financial instruments, see Note 8 (“Derivatives and Hedging Activities”).


December 31,

dollars in millions	2014		2013
Senior medium-term notes due through 2021 ^(a)	$	2,575	$	2,553
0.975% Subordinated notes due 2028 ^(b)		162		162
6.875% Subordinated notes due 2029 ^(b)		113		103
7.750% Subordinated notes due 2029 ^(b)		147		133
Total parent company		2,997		2,951

Senior medium-term notes due through 2039 ^(c)		2,611		1,858
7.413% Subordinated remarketable notes due 2027 ^(d)		272		270
5.80% Subordinated notes due 2014 ^(d)		—		768
4.95% Subordinated notes due 2015 ^(d)		251		251
5.45% Subordinated notes due 2016 ^(d)		524		544
5.70% Subordinated notes due 2017 ^(d)		222		229
4.625% Subordinated notes due 2018 ^(d)		103		104
6.95% Subordinated notes due 2028 ^(d)		298		298
Lease financing debt due through 2016 ^(e)		—		5
Secured borrowing due through 2020 ^(f)		302		58
Federal Home Loan Bank advances due through 2036 ^(g)		200		224
Investment Fund Financing due through 2052 ^(h)		95		90
Total subsidiaries		4,878		4,699
Total long-term debt	$	7,875	$	7,650

(a)

The senior medium-term notes had a weighted-average interest rate of 3.89% at December 31, 2014, and December 31, 2013. These notes had fixed interest rates at December 31, 2014, and December 31, 2013. One of the three notes can be redeemed one month prior to its maturity date, while the other two notes may not be redeemed prior to their maturity dates.

(b)	See Note 19 (“Trust Preferred Securities Issued by Unconsolidated Subsidiaries”) for a description of these notes.

(c)

Senior medium-term notes had weighted-average interest rates of 1.84% at December 31, 2014, and 1.58% at December 31, 2013. These notes had a combination of fixed and floating interest rates. Two of the six notes can be redeemed one month prior to their maturity dates, while the other four notes may not be redeemed prior to their maturity dates. The 2014 issuance was at a higher rate than the existing debt.

(d)	These notes are all obligations of KeyBank. Only the subordinated remarketable notes due 2027 may be redeemed prior to their maturity dates.

(e)	Lease financing debt was paid off during 2014 and had a weighted-average interest rate of 5.99% at December 31, 2013. This category of debt consisted primarily of nonrecourse debt collateralized by leased equipment under operating, direct financing, and sales-type leases.

(f)

The secured borrowing had weighted-average interest rates of 4.41% at December 31, 2014, and 4.79% at December 31, 2013. This borrowing is collateralized by commercial lease financing receivables, and principal reductions are based on the cash payments received from the related receivables. Additional information pertaining to these commercial lease financing receivables is included in Note 4 (“Loans and Loans Held for Sale”).

(g)

Long-term advances from the Federal Home Loan Bank had a weighted-average interest rate of 3.47% at December 31, 2014, and December 31, 2013. These advances, which had a combination of fixed and floating interest rates, were secured by real estate loans and securities totaling $280 million at December 31, 2014, and $337 million at December 31, 2013.

(h)	Investment Fund Financing had a weighted-average interest rate of 2.01% at December 31, 2014, and December 31, 2013.

At December 31, 2014, scheduled principal payments on long-term debt were as follows:


in millions	Parent		Subsidiaries		Total
2015	$	756	$	540	$	1,296
2016		—		1,381		1,381
2017		—		298		298
2018		745		1,126		1,871
2019		—		774		774
All subsequent years		1,496		759		2,255

As described below, KeyBank and KeyCorp have a number of programs that support our long-term financing needs.

Global bank note program and predecessor programs. In August 2012, KeyBank adopted a Global Bank Note Program permitting the issuance of up to $20 billion of notes domestically and abroad. Under the program, KeyBank is authorized to issue notes with original maturities of seven days or more for senior notes or five years or more for subordinated notes. Notes may be denominated in U.S. dollars or in foreign currencies. Amounts outstanding under the program are classified as “long-term debt” on the balance sheet.

For the purpose of issuing bank notes, the Global Bank Note Program replaces KeyBank’s prior bank note programs. Amounts outstanding under prior programs remain outstanding in accordance with their original terms and conditions and at their original stated maturities, and are classified as “long-term debt” on the balance sheet.

On February 1, 2013, KeyBank issued $1 billion of 1.65% Senior Bank Notes due February 1, 2018, under the Global Bank Note Program. On November 26, 2013, KeyBank issued $350 million of 1.10% Senior Notes and $400 million of Floating Rate Senior Notes, each due November 25, 2016. On November 24, 2014, KeyBank issued $750 million of 2.50% Senior Notes due December 15, 2019. At December 31, 2014, $17.5 billion remained available for future issuance under the Global Bank Note Program. On February 12, 2015, KeyBank issued $1 billion of 2.250% Senior Bank Notes due March 16, 2020; $16.5 billion remained available for future issuance under the Global Bank Note Program.

KeyCorp shelf registration, including Medium-Term Note Program. KeyCorp has a shelf registration statement on file with the SEC under rules that allow companies to register various types of debt and equity securities without limitations on the aggregate amounts available for issuance. KeyCorp also maintains a Medium-Term Note Program that permits KeyCorp to issue notes with original maturities of nine months or more. During the second quarter of 2014, the KeyCorp shelf registration statement, including the Medium-Term Note Program, was updated. In connection with the updated Medium-Term Note Program, the Board of Directors authorized KeyCorp to issue up to $4 billion of debt, and revoked all prior issuance authority under previous KeyCorp shelf registration statements including through previous medium-term note programs. On November 13, 2013, KeyCorp issued $750 million of 2.30% Medium-Term Notes due December 13, 2018. At December 31, 2014, KeyCorp had authorized and available for issuance up to $4 billion of additional debt securities under the Medium-Term Note Program.

Issuances of capital securities or preferred stock by KeyCorp must be approved by the Board and cannot be objected to by the Federal Reserve.