6 unchanged sentences
Our principal market exposures are interest rate and foreign currency rate risks.
−Removed: • Our primary interest rate exposure as of December 31, 2021, was to interest rate fluctuations in the U.S., specifically LIBOR and asset-backed commercial paper interest rates due to their impact on variable rate borrowings and other interest rate sensitive liabilities.
+Added: • Our primary interest rate exposures as of December 31, 2022, are to interest rate fluctuations in LIBOR interest rates, asset-backed commercial paper interest rates, and SOFR interest rates due to their impact on variable rate borrowings and other interest rate sensitive liabilities.
In addition, interest rate movements in one country, as well as relative interest rate movements between countries, can impact us.
−Removed: We anticipate that LIBOR and asset-backed commercial paper rates will remain a primary market risk exposure until an appropriate replacement is adopted.
−Removed: • We are currently evaluating the impact of the transition from LIBOR as an interest rate benchmark to other potential alternative reference rates, including but not limited to SOFR.
−Removed: Currently, we have debt and derivative instruments in place that reference LIBOR-based rates.
−Removed: Although certain of these LIBOR based obligations provide for alternative methods of calculating the related interest rate payable (including transition to an alternative benchmark rate) if LIBOR is not reported, uncertainty as to the extent and manner of future changes may result in interest rates and/or payments that are higher than, lower than, or that do not otherwise correlate over time with the interest rates and/or payments that would have been made on our obligations if LIBOR was available in its current form.
−Removed: The transition from LIBOR based benchmark rates is expected to begin January 1, 2022 and be completed when USD LIBOR rates are phased out by June 30, 2023.
−Removed: Management will continue to actively assess the related opportunities and risks involved in this transition.
−Removed: We adopted appropriate LIBOR replacement rate transition language into the agreements for the renewal of our USD bank conduit facility in 2020 and the renewal of the credit agreement governing the revolving credit facility and term loan B which closed on October 22, 2021.
−Removed: These agreements represented our largest exposure to LIBOR.
−Removed: • We have foreign currency rate exposure to exchange rate fluctuations worldwide particularly with respect to the Euro, British pound sterling, Australian and Canadian dollars, and Mexican peso.
+Added: We anticipate that SOFR and asset-backed commercial paper rates will remain our primary market risk exposures.
+Added: In the first quarter of 2023, we expect to exercise our option under our credit agreement to replace LIBOR with Term SOFR, subject to lender approval, as the benchmark rate governing our revolving credit facility and Term Loan B, which would eliminate our largest exposure to LIBOR based interest rates.
+Added: • Currently, we have debt agreements in place that reference LIBOR-based rates which contain standard LIBOR replacement benchmark language to SOFR for USD denominated debt.
+Added: Although these LIBOR based obligations provide for alternative methods of calculating the related interest rate payable (including transition to an alternative benchmark rate) if LIBOR is not reported, uncertainty as to the extent and manner of future changes may result in interest rates and/or payments that are higher than, lower than, or that do not otherwise correlate over time with the interest rates and/or payments that would have been made on our obligations if LIBOR was available in its current form.
+Added: • We have foreign currency rate exposure to exchange rate fluctuations worldwide particularly with respect to the Euro, British pound sterling, Australian and Canadian dollars, Danish krone, and Mexican peso.
We anticipate that such foreign currency exchange rate risk will remain a market risk exposure for the foreseeable future.
2 unchanged sentences
The estimates assume instantaneous, parallel shifts in interest rate yield curves and exchange rates.
−Removed: We have determined, through such analyses, that a hypothetical 10% change in the interest
−Removed: rates would have resulted in a less than $1 million increase or decrease in annual consumer financing interest expense and total interest expense.
+Added: We have determined, through such analyses, that a hypothetical 10% change in the interest rates would have resulted in a $2 million increase or decrease in annual consumer financing interest expense and $3 million increase or decrease in annual debt interest expense.
We use a current market pricing model to assess the changes in the value of our foreign currency derivatives used to hedge underlying exposure that primarily consist of our non-functional current assets and liabilities and those of our subsidiaries.
2 unchanged sentences
As of December 31, 2022, the absolute notional amount of our outstanding foreign exchange hedging instruments was $65 million.
−Removed: We have determined that a hypothetical 10% change in the foreign currency exchange rates would have resulted in an approximate increase or decrease to the fair value of our outstanding forward foreign currency exchange contracts of $4 million, which would generally be offset by an opposite effect on the underlying exposure being economically hedged.
+Added: We have determined that a hypothetical 10% change in the foreign currency exchange rates would have resulted in an approximate increase or decrease to the fair value of our outstanding forward foreign currency exchange contracts of $5 million, which
+Added: would generally be offset by an opposite effect on the underlying exposure being economically hedged.
As such, we believe that a 10% change in interest rates or foreign currency exchange rates would not have a material effect on our prices, earnings, fair values, or cash flows.
−Removed: Our variable rate borrowings, which include our term loan B, non-recourse conduit facilities, and revolving credit facility, expose us to risks caused by fluctuations in the applicable interest rates.
+Added: Our variable rate borrowings, which include our term loan B facilities, non-recourse conduit facilities, and revolving credit facility, expose us to risks caused by fluctuations in the applicable interest rates.
The total outstanding balance of such variable rate borrowings at December 31, 2022 was $428 million in non-recourse debt and $574 million in corporate debt.
11 unchanged sentences
The estimates are based on the market risk sensitive portfolios described in the preceding paragraphs and assume instantaneous, parallel shifts in interest rate yield curves and exchange rates.
+Added: There were no changes to the assumptions used in this model in 2022.
Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.