Fannie Mae 2012 Annual Report Download - page 284

FANNIE MAE
(In conservatorship)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
F-50
Debt of Consolidated Trusts
Debt of consolidated trusts represents the amount of Fannie Mae MBS issued from consolidated trusts and held by third-party
certificateholders.
Characteristics of Debt
As of December 31, 2012 and 2011, the face amount of our debt securities of Fannie Mae was $621.8 billion and $741.6
billion, respectively. As of December 31, 2012 and 2011, we had zero-coupon debt with a face amount of $120.7 billion and
$165.8 billion, respectively, which had an effective interest rate of 0.93% and 0.68%, respectively.
We issue callable debt instruments to manage the duration and prepayment risk of expected cash flows of the mortgage assets
we own. Our outstanding debt as of December 31, 2012 and 2011 included $177.8 billion and $187.9 billion, respectively, of
callable debt that could be redeemed in whole or in part at our option or the option of the investor any time on or after a
specified date.
The following table displays the amount of our long-term debt as of December 31, 2012 by year of maturity for each of the
years 2013 through 2017 and thereafter. The first column assumes that we pay off this debt at maturity or on the call date if
the call has been announced, while the second column assumes that we redeem our callable debt at the next available call
date.
Long-Term Debt by
Year of Maturity
Assuming Callable Debt
Redeemed at Next
Available Call Date
(Dollars in millions)
2013 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 103,187 $ 252,419
2014 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 95,040 111,089
2015 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76,591 48,130
2016 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53,872 34,077
2017 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 90,794 42,248
Thereafter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 91,147 22,668
Total debt of Fannie Mae(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 510,631 510,631
Debt of consolidated trusts(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,570,170 2,570,170
Total long-term debt(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $3,080,801 $ 3,080,801
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(1) Reported amount includes a net unamortized discount, fair value adjustments and other cost basis adjustments of $6.0 billion.
(2) Contractual maturity of debt of consolidated trusts is not a reliable indicator of expected maturity because borrowers of the underlying
loans generally have the right to prepay their obligations at any time.
(3) Includes a portion of structured debt instruments that is reported at fair value.
The following table displays the amount of our debt of Fannie Mae that was called and repurchased and the associated
weighted-average interest rates for the years ended December 31, 2012, 2011 and 2010.
For the Year Ended December 31,
2012 2011 2010
(Dollars in millions)
Debt called . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $200,713 $201,651 $289,770
Weighted-average interest rate of debt called. . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.0% 2.4% 3.1%
Debt repurchased. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 44 $ 2,887 $ 1,333
Weighted-average interest rate of debt repurchased. . . . . . . . . . . . . . . . . . . . . . . 3.8% 3.1% 3.3%
9. Derivative Instruments
Derivative instruments are an integral part of our strategy in managing interest rate risk. Derivative instruments may be
privately negotiated contracts, which are often referred to as over-the-counter derivatives, or they may be listed and traded on
an exchange. When deciding whether to use derivatives, we consider a number of factors, such as cost, efficiency, the effect
on our liquidity, results of operations, and our overall interest rate risk management strategy. We use derivatives when we