Item 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

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Item 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

In the normal course of business, we actively manage our exposure to various market risks by entering into various supplier-based and market-based hedging transactions, authorized under established risk management policies that place clear controls on these activities. Our objective in managing these exposures is to decrease the volatility of our earnings and cash flows due to changes in underlying rates and costs.

The counterparties to our market-based transactions are generally highly rated institutions. We perform assessments of their credit risk regularly. Our market-based transactions include a variety of derivative financial instruments, none of which are used for trading or speculative purposes.

Due to the completion of the Acquisition on October 11, 2016, MillerCoors' exposures are included as of December 31, 2016. As we previously accounted for our 42% interest in MillerCoors as an equity method investment, the related exposures are not included as of December 31, 2015. Further, in order to finance the Acquisition, we entered into multiple financing agreements during 2016 subject to market risk which are also included as of December 31, 2016.

Interest Rate Risk

We are exposed to volatility in interest rates with regard to current and future debt offerings. Primary exposures include U.S. Treasury rates, Canadian government rates and LIBOR. To mitigate this exposure as it pertains to future debt offerings and to achieve our desired fixed-to-floating rate debt profile, we may enter into interest rate swaps from time to time.

Foreign Exchange Risk

Foreign currency fluctuations affect our net investments in foreign subsidiaries and foreign currency-denominated cash flows. We manage our foreign currency exposures through foreign currency forward contracts and foreign-denominated debt. We may also enter into cross currency swaps from time to time.

Commodity Price Risk

We use commodities in the production and distribution of our products. To manage the related price risk for these costs, we utilize market-based derivatives and long-term supplier-based contracts. Our primary objective when entering into these transactions is to achieve price certainty for commodities used in our supply chain. We manage our exposures through a combination of purchase orders, long-term supply contracts and over-the-counter financial instruments.

Details of market-risk sensitive debt, derivative and other financial instruments are included in the table below. Notional amounts and fair values are presented in USD based on the applicable exchange rate as of December 31, 2016, and December 31, 2015, respectively. See Part II—Item 8 Financial Statements and Supplementary Data, Note 12, "Debt" and Note 16, "Derivative Instruments and Hedging Activities" of the Notes for further discussion.



	Notional amounts by expected maturity date														December 31, 2016			December 31, 2015
	Year end
	2017		2018		2019		2020		2021		Thereafter		Total		Fair value Asset/(Liability)			Fair value Asset/(Liability)
	(In millions)
Long-term debt:
CAD 500 million 3.95% Series A notes due 2017	$	372.0	$	—	$	—	$	—	$	—	$	—	$	372.0	$	(382.7	)	$	(376.0	)
CAD 400 million 2.25% notes due 2018	$	—	$	297.6	$	—	$	—	$	—	$	—	$	297.6	$	(302.3	)	$	(290.9	)
CAD 500 million 2.75% notes due 2020	$	—	$	—	$	—	$	372.0	$	—	$	—	$	372.0	$	(381.0	)	$	(363.9	)
CAD 500 million 2.84% notes due 2023	$	—	$	—	$	—	$	—	$	—	$	372.0	$	372.0	$	(372.3	)	$	—
CAD 500 million 3.44% notes due 2026	$	—	$	—	$	—	$	—	$	—	$	372.0	$	372.0	$	(370.0	)	$	—
$300 million 2.0% notes due 2017	$	300.0	$	—	$	—	$	—	$	—	$	—	$	300.0	$	(301.7	)	$	(301.1	)
$500 million 1.45% notes due 2019	$	—	$	—	$	500.0	$	—	$	—	$	—	$	500.0	$	(496.1	)	$	—
$1.0 billion 2.10% notes due 2021	$	—	$	—	$	—	$	—	$	1,000.0	$	—	$	1,000.0	$	(984.0	)	$	—
$500 million 3.5% notes due 2022	$	—	$	—	$	—	$	—	$	—	$	500.0	$	500.0	$	(511.8	)	$	(505.2	)
$2.0 billion 3.0% notes due 2026	$	—	$	—	$	—	$	—	$	—	$	2,000.0	$	2,000.0	$	(1,913.4	)	$	—
$1.1 billion 5.0% notes due 2042	$	—	$	—	$	—	$	—	$	—	$	1,100.0	$	1,100.0	$	(1,147.4	)	$	(1,046.3	)
$1.8 billion 4.2% notes due 2046	$	—	$	—	$	—	$	—	$	—	$	1,800.0	$	1,800.0	$	(1,709.1	)	$	—
EUR 800 million 1.25% notes due 2024	$	—	$	—	$	—	$	—	$	—	$	841.4	$	841.4	$	(846.6	)	$	—
Term loan due 2019	$	—	$	—	$	800.0	$	—	$	—	$	—	$	800.0	$	(800.0	)	$	—
Term loan due 2021	$	—	$	—	$	—	$	—	$	1,500.0	$	—	$	1,500.0	$	(1,500.0	)	$	—
Foreign currency management:
Forwards	$	161.3	$	109.2	$	58.9	$	—	$	—	$	—	$	329.4	$	14.4		$	44.1
Commodity pricing management:
Swaps	$	327.3	$	219.6	$	166.5	$	73.4	$	4.6	$	—	$	791.4	$	(18.1	)	$	(21.4	)
Options	$	8.3	$	5.3	$	—	$	—	$	—	$	—	$	13.6	$	—		$	—

Sensitivity Analysis

Our market sensitive derivative and other financial instruments, as defined by the SEC, are debt, foreign currency forward contracts, commodity swaps and commodity options. We monitor foreign exchange risk, interest rate risk, commodity risk and related derivatives using a sensitivity analysis.

The following table presents the results of the sensitivity analysis, which reflects the impact of a hypothetical 10% adverse change in each of these risks to our derivative and debt portfolio:



	As of
	December 31, 2016			December 31, 2015
	(In millions)
Estimated fair value volatility
Foreign currency risk:
Forwards	$	(35.1	)	$	(29.7	)
Foreign currency denominated debt	$	(223.6	)	$	(103.1	)
Interest rate risk:
Debt	$	(319.3	)	$	(99.6	)
Commodity price risk:
Commodity swaps	$	(66.8	)	$	(9.4	)
Commodity options	$	—		$	—

The volatility of the applicable rates and prices are dependent on many factors that cannot be forecast with reliable accuracy. Therefore, actual changes in fair values could differ materially from the results presented in the table above.

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