Note 5. Borrowings
Merrill Lynch issues U.S. and non-U.S. dollar-denominated debt instruments with both variable and fixed interest rates, primarily at the ML & Co. level. These borrowing activities may create exposure to market risk, most notably interest rate and currency risk. Merrill Lynch typically uses derivatives to better match the interest rate and currency characteristics of assets and liabilities, thereby reducing risk exposures. Derivatives used most frequently include swap agreements that:

• convert fixed-rate interest payments into variable payments,
  
• change the underlying interest rate basis or reset frequency, and
  
• convert non-U.S. dollar payments into U.S. dollars.

Merrill Lynch also issues debt whose repayment terms are linked to the performance of an index (e.g., S&P 500), basket of securities, or an individual security. The contingent components of these indexed debt obligations are hedged with derivatives (see Note 6 for further information).

Borrowings at December 29, 2000 and December 31, 1999 are presented below:

1. At December 29, 2000,U.S. dollar-denominated fixed-rate obligations are due between 2001 and 2028 at interest rates ranging from 6.0% to 10.0%; non-U.S. dollar-denominated fixed-rate obligations are due 2001 to 2007 at interest rates ranging from 4.3% to 7.9%.
   
2. Variable interest rates are generally based on rates such as LIBOR, the U.S. Treasury Bill Rate, or the Federal Funds Rate.
   
3. Included are various equity-linked or other indexed instruments.
   
4. The medium-term note program provides for issuances that may bear fixed or variable interest rates and may have maturities that range up to 30 years from the date of issue.

Long-term borrowings at December 29, 2000, based on their contractual terms, mature as follows:

Certain long-term borrowing agreements contain provisions whereby the borrowings are redeemable at the option of the holder at specified dates prior to maturity. Management believes, however, that a significant portion of such borrowings may remain outstanding beyond their earliest redemption date.

The effective weighted-average interest rates for borrowings, which include the impact of hedges, at December 29, 2000 and December 31, 1999 were:

Borrowing Facilities
Merrill Lynch has obtained a committed, senior unsecured revolving credit facility aggregating $8 billion under an agreement with a bank. The agreement contains covenants requiring, among other things, that Merrill Lynch maintain specified levels of net worth, as defined in the agreement, on the date of an advance. At December 29, 2000, this credit facility was not drawn upon.

The credit quality, amounts, and terms of this credit facility are continually monitored and modified as warranted by business conditions. Under the existing agreement, the credit facility will mature in May 2001. At maturity, Merrill Lynch may convert amounts borrowed, if any, into term loans that would mature in two years.

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