UNITEDHEALTH GROUP INC | 2013 | FY | 3

Commercial Paper and Long-Term Debt
Commercial paper and senior unsecured long-term debt consisted of the following:
 
 
December 31, 2013
 
December 31, 2012
(in millions, except percentages)
 
Par
Value
 
Carrying
Value
 
Fair
Value
 
Par
Value
 
Carrying
Value
 
Fair
Value
Commercial Paper
 
$
1,115

 
$
1,115

 
$
1,115

 
$
1,587

 
$
1,587

 
$
1,587

4.875% notes due February 2013
 
—

 
—

 
—

 
534

 
534

 
536

4.875% notes due April 2013
 
—

 
—

 
—

 
409

 
411

 
413

4.750% notes due February 2014
 
172

 
173

 
173

 
172

 
178

 
180

5.000% notes due August 2014
 
389

 
397

 
400

 
389

 
411

 
414

Floating-rate notes due August 2014
 
250

 
250

 
250

 
—

 
—

 
—

4.875% notes due March 2015 (a)
 
416

 
431

 
436

 
416

 
444

 
453

0.850% notes due October 2015 (a)
 
625

 
624

 
628

 
625

 
623

 
627

5.375% notes due March 2016 (a)
 
601

 
641

 
657

 
601

 
660

 
682

1.875% notes due November 2016
 
400

 
398

 
408

 
400

 
397

 
412

5.360% notes due November 2016
 
95

 
95

 
107

 
95

 
95

 
110

6.000% notes due June 2017
 
441

 
479

 
506

 
441

 
489

 
528

1.400% notes due October 2017 (a)
 
625

 
613

 
617

 
625

 
622

 
626

6.000% notes due November 2017
 
156

 
168

 
178

 
156

 
170

 
191

6.000% notes due February 2018
 
1,100

 
1,116

 
1,271

 
1,100

 
1,120

 
1,339

1.625% notes due March 2019 (a)
 
500

 
489

 
481

 
—

 
—

 
—

3.875% notes due October 2020 (a)
 
450

 
435

 
474

 
450

 
442

 
499

4.700% notes due February 2021
 
400

 
416

 
436

 
400

 
417

 
466

3.375% notes due November 2021 (a)
 
500

 
472

 
494

 
500

 
512

 
533

2.875% notes due March 2022 (a)
 
1,100

 
981

 
1,046

 
1,100

 
998

 
1,128

0.000% notes due November 2022
 
15

 
9

 
10

 
15

 
9

 
11

2.750% notes due February 2023 (a)
 
625

 
563

 
572

 
625

 
619

 
631

2.875% notes due March 2023 (a)
 
750

 
729

 
698

 
—

 
—

 
—

5.800% notes due March 2036
 
850

 
845

 
935

 
850

 
845

 
1,025

6.500% notes due June 2037
 
500

 
495

 
593

 
500

 
495

 
659

6.625% notes due November 2037
 
650

 
645

 
786

 
650

 
645

 
860

6.875% notes due February 2038
 
1,100

 
1,084

 
1,370

 
1,100

 
1,084

 
1,510

5.700% notes due October 2040
 
300

 
298

 
329

 
300

 
298

 
364

5.950% notes due February 2041
 
350

 
348

 
397

 
350

 
348

 
440

4.625% notes due November 2041
 
600

 
593

 
567

 
600

 
593

 
641

4.375% notes due March 2042
 
502

 
486

 
459

 
502

 
486

 
521

3.950% notes due October 2042
 
625

 
611

 
530

 
625

 
611

 
622

4.250% notes due March 2043
 
750

 
740

 
673

 
—

 
—

 
—

Total U.S. dollar denominated debt
 
16,952

 
16,739

 
17,596

 
16,117

 
16,143

 
18,008

Cetip Interbank Deposit Rate (CDI) + 1.3% Subsidiary floating debt due October 2013
 
—

 
—

 
—

 
147

 
148

 
150

CDI + 1.45% Subsidiary floating debt due October 2014
 
—

 
—

 
—

 
147

 
149

 
150

110% CDI Subsidiary floating debt due December 2014
 
—

 
—

 
—

 
147

 
151

 
147

CDI + 1.6% Subsidiary floating debt due October 2015
 
—

 
—

 
—

 
74

 
76

 
76

Brazilian Extended National Consumer Price Index (IPCA) + 7.61% Subsidiary floating debt due October 2015
 
—

 
—

 
—

 
73

 
87

 
90

Total Brazilian real denominated debt (in U.S. dollars)
 
—

 
—

 
—

 
588

 
611

 
613

Total commercial paper and long-term debt
 
$
16,952

 
$
16,739

 
$
17,596

 
$
16,705

 
$
16,754

 
$
18,621


(a)
Fixed-rate debt instruments hedged with interest rate swap contracts. See below for more information on the Company’s interest rate swaps.
As of December 31, 2013, the Company’s long-term debt obligations also included $121 million of other financing obligations, of which $34 million were current.
Maturities of commercial paper and long-term debt for the years ending December 31 are as follows:
(in millions)
 
 
2014
 
$
1,969

2015
 
1,086

2016
 
1,140

2017
 
1,266

2018
 
1,116

Thereafter
 
10,283


Commercial Paper and Bank Credit Facilities
Commercial paper consists of short-duration, senior unsecured debt privately placed on a discount basis through broker-dealers. As of December 31, 2013, the Company’s outstanding commercial paper had a weighted-average annual interest rate of 0.2%.
The Company has $3.0 billion five-year and $1.0 billion 364-day revolving bank credit facilities with 23 banks, which mature in November 2018 and November 2014, respectively. These facilities provide liquidity support for the Company’s $4.0 billion commercial paper program and are available for general corporate purposes. There were no amounts outstanding under these facilities as of December 31, 2013. The interest rates on borrowings are variable based on term and are calculated based on the London Interbank Offered Rate (LIBOR) plus a credit spread based on the Company’s senior unsecured credit ratings. As of December 31, 2013, the annual interest rates on both bank credit facilities, had they been drawn, would have ranged from 1.0% to 1.2%.
Debt Covenants
The Company’s bank credit facilities contain various covenants including requiring the Company to maintain a debt to debt-plus-equity ratio of not more than 50%. The Company was in compliance with its debt covenants as of December 31, 2013.
Interest Rate Swap Contracts
The Company uses interest rate swap contracts to convert a portion of its interest rate exposure from fixed rates to floating rates to more closely align interest expense with interest income received on its cash equivalent and variable rate investment balances. The floating rates are benchmarked to LIBOR. The swaps are designated as fair value hedges on the Company’s fixed-rate debt. Since the critical terms of the swaps match those of the debt being hedged, they are assumed to be highly effective hedges and all changes in fair value of the swaps are recorded as an adjustment to the carrying value of the related debt with no net impact recorded in the Consolidated Statements of Operations.
The following table summarizes the location and fair value of the interest rate swap fair value hedges on the Company’s Consolidated Balance Sheet:
Type of Fair Value Hedge
 
Notional Amount
 
Fair Value
 
Balance Sheet Location
 
 
(in billions)
 
(in millions)
 
 
December 31, 2013
 
 
 
 
 
 
Interest rate swap contracts
 
$
6.2

 
$
163

 
Other liabilities
December 31, 2012
 
 
 
 
 
 
Interest rate swap contracts
 
$
2.8

 
$
14

 
Other assets
 
 
 
 
11

 
Other liabilities

The following table provides a summary of the effect of changes in fair value of fair value hedges on the Company’s Consolidated Statements of Operations:
 
 
For the Years Ended December 31,
(in millions)
 
2013
 
2012
 
2011
Hedge - interest rate swap (loss) gain recognized in interest expense
 
$
(166
)
 
$
3

 
$
190

Hedged item - long-term debt gain (loss) recognized in interest expense
 
166

 
(3
)
 
(190
)
Net impact on the Company’s Consolidated Statements of Operations
 
$
—

 
$
—

 
$
—

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