Item 7A. Quantitative and Qualitative Disclosures About Market Risk
Item 7A. Quantitative and Qualitative Disclosures About Market Risk.
We are exposed to market risk primarily from changes in interest rates, which may affect our future income, cash flows and fair value, depending on changes to interest rates. In certain situations, we may seek to reduce cash flow volatility associated with changes in interest rates by entering into financial arrangements intended to provide a hedge against a portion of the risks associated with such volatility.
Interest Rate Risk
We are exposed to interest rate risk on our variable-rate debt. The interest rate on our variable-rate debt discussed below is based on the secured overnight financing rate ("SOFR"), and our risk related to future interest rates is most vulnerable to changes in this rate.
The following table sets forth the contractual maturities and the total fair values as of December 31, 2024 for our financial instruments that are materially affected by interest rate risk:
Maturities by Period
2025 (1)
2026 2027 2028 2029 Thereafter
Carrying
Value
Fair
Value
(in millions, excluding average interest rate)
Liabilities:
Fixed-rate debt $ 60 $ 1,550 $ 30 $ 725 $ 750 $ 550 $ 3,665 $ 3,538
Average interest rate 4.82 % 4.20 % 5.37 % 5.88 % 4.88 % 7.00 % 5.11 %
Variable-rate debt $ — $ — $ 200 $ — $ — $ — $ 200 $ 199
Average interest rate — % — % 6.21 % — % — % — % 6.21 %
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(1) Excludes the SF Mortgage Loan.
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Refer to Note 7: "Debt" in our audited consolidated financial statements included elsewhere in this Annual Report on Form 10-K for additional information.
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Text extracted from the filing as submitted to EDGAR. Formatting, tables and exhibits are simplified for reading; the original document is authoritative for anything you rely on.