IBM · 10-Q · 2026Q3 · Full report

Foreign Exchange Hedging

INTERNATIONAL BUSINESS MACHINES CORP · 2026-10-22 · Importance 66 · Surprise 40

IBM designated $18.3 billion of foreign-currency debt as hedges of net investments in foreign subsidiaries at September 30, 2026, up from $16.4 billion at December 31, 2025. The notional amount of derivatives designated as net investment hedges increased to $7.7 billion from $6.9 billion. For the nine months ended September 30, 2026, net investment hedge activity included $2,252 million recognized in OCI, helping offset translation changes in foreign subsidiaries.

Key facts

• At September 30, 2026, the total notional amount of derivative instruments designated as cash flow hedges of foreign currency-denominated debt: $9.2 billion; at December 31, 2025: $4.8 billion. source
• At September 30, 2026, the carrying value of debt designated as hedging instruments for net investments in foreign subsidiaries: $18.3 billion; at December 31, 2025: $16.4 billion. source
• At September 30, 2026, the total notional amount of forward contracts designated as cash flow hedges of forecasted royalty and cost transactions: $11.1 billion; at December 31, 2025: $10.8 billion. source
• Total notional amount of derivative instruments designated as net investment hedges at September 30, 2026: $7.7 billion; at December 31, 2025: $6.9 billion. source
• At September 30, 2026 and December 31, 2025, the total notional amount of derivative instruments in economic hedges of foreign currency exposure was $6.2 billion and $6.4 billion, respectively. source
• IBM stated the fair value of derivative instruments that were in a liability position at September 30, 2026 was $728 million before any applicable netting. source
• The company uses financial hedging instruments to limit specific currency risks related to foreign currency-based transactions and the hedging program does not hedge 100 percent of currency exposures. source