GIS » Topics » INTEREST RATE RISK

These excerpts taken from the GIS 10-K filed Jul 11, 2008.
INTEREST RATE RISK
We are exposed to interest rate volatility with regard to future issuances of fixed-rate debt, and existing and future issuances of floating-rate debt. Primary exposures include U.S. Treasury rates, LIBOR, and commercial paper rates in the United States and Europe. We use interest rate swaps and forward-starting interest rate swaps to hedge our exposure to interest rate changes, to reduce the volatility of our financing costs, and to achieve a desired proportion of fixed- versus floating-rate debt, based on current and projected market conditions. Generally under these swaps, we agree with a counterparty to exchange the difference between fixed-rate and floating-rate interest amounts based on an agreed notional principal amount. As of May 25, 2008, we had $4.1 billion of aggregate notional principal amount outstanding, with a net notional amount of $425.4 million that converts floating-rate notes to fixed-rates. This includes notional amounts of offsetting swaps that neutralize our exposure to interest rates on other interest rate swaps.
 
INTEREST
RATE RISK






We are exposed to interest rate volatility with regard to future
issuances of fixed-rate debt, and existing and future issuances
of floating-rate debt. Primary exposures include
U.S. Treasury rates, LIBOR, and commercial paper rates in
the United States and Europe. We use interest rate swaps and
forward-starting interest rate swaps to hedge our exposure to
interest rate changes, to reduce the volatility of our financing
costs, and to achieve a desired proportion of fixed- versus
floating-rate debt, based on current and projected market
conditions. Generally under these swaps, we agree with a
counterparty to exchange the difference between fixed-rate and
floating-rate interest amounts based on an agreed notional
principal amount. As of May 25, 2008, we had
$4.1 billion of aggregate notional principal amount
outstanding, with a net notional amount of $425.4 million
that converts floating-rate notes to fixed-rates. This includes
notional amounts of offsetting swaps that neutralize our
exposure to interest rates on other interest rate swaps.


 




EXCERPTS ON THIS PAGE:

10-K (2 sections)
Jul 11, 2008
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