MARRIOTT VACATIONS WORLDWIDE Corp 10-K

Item 7A. Quantitative and Qualitative Disclosures About Market Risk Quantitative and Qualitative Disclosures About Market Risk. We are exposed to market risk from changes in interest rates, currency exchange rates, and debt prices. We manage our exposure to these risks by monitoring available financing alternatives, through pricing policies that may take into account currency exchange rates, and by entering into derivative arrangements. We are exposed to interest rate risk through borrowings on our Warehouse Credit Facility and our Corporate Credit Facility, which includes our Revolving Corporate Credit Facility and our Term Loan, as these facilities bear interest at variable rates. All other interest bearing debt, including securitized debt, incurs interest at fixed rates. Changes in interest rates also impact the fair value of our fixed-rate notes receivable and our fixed-rate debt. The following table sets forth the scheduled maturities and the total fair value as of year-end 2021 for our financial instruments that are impacted by market risks: ($ in millions) Average Interest Rate Maturities by Period 2022 2023 2024 2025 2026 Thereafter Total Carrying Value Total Fair Value Assets – Maturities represent expected principal receipts; fair values represent assets Vacation ownership notes receivable — non-securitized 13.0% $ 50 $ 30 $ 30 $ 30 $ 31 $ 212 $ 383 $ 390 Vacation ownership notes receivable — securitized 13.1% $ 177 $ 181 $ 182 $ 181 $ 181 $ 760 $ 1,662 $ 1,712 Liabilities – Maturities represent expected principal payments; fair values represent liabilities Securitized debt 2.3% $ (191) $ (196) $ (200) $ (199) $ (199) $ (892) $ (1,877) $ (1,900) Senior notes 2025 Notes 6.1% $ — $ — $ — $ (250) $ — $ — $ (250) $ (261) 2028 Notes 4.8% $ — $ — $ — $ — $ — $ (350) $ (350) $ (362) 2029 Notes 4.5% $ — $ — $ — $ — $ — $ (500) $ (500) $ (505) Term Loan 1.8% $ — $ — $ — $ (784) $ — $ — $ (784) $ (784) 2022 Convertible Notes 4.7% $ (230) $ — $ — $ — $ — $ — $ (230) $ (280) 2026 Convertible Notes —% $ — $ — $ — $ — $ (575) $ — $ (575) $ (682) We are exposed to currency exchange rate risk through investments in foreign subsidiaries that transact business in a currency other than the U.S. dollar and through the revaluation of assets and liabilities denominated in a currency other than the functional currency. We use derivative instruments as part of our overall strategy to manage our exposure to market risks associated with fluctuations in interest rates and currency exchange rates. As a matter of policy, we only enter into transactions that we believe will be highly effective at offsetting the underlying risk and we do not use derivatives for trading or speculative purposes. However, we cannot assure you that these transactions will be as effective as we anticipate. 67