Freddie Mac 2004 Annual Report Download - page 98

Internet address here or elsewhere in this Information Statement to incorporate additional information into
this Information Statement.)
By adhering to our Ñnancing calendars, we are able to provide our debt investors with a predictable source
of investment opportunities. However, there is no assurance that we will be able to continue to adhere to our
Ñnancing calendars in the future. In order to continue our debt oÅerings as scheduled and properly manage our
asset/liability mix, we regularly conduct repurchases of outstanding debt securities. Our repurchase operations
support the transparency, liquidity and predictability of Reference Notes» securities, 4Reference Notes»
securities and callable debt securities. During 2004 and 2003, we repurchased approximately $9.0 billion and
$24.8 billion, respectively, of our outstanding Reference Notes»securities and 4Reference Notes»securities.
In addition, primarily as a response to declining interest rates, we called approximately $120.0 billion and
$153.0 billion of our higher-rate long-term callable debt during 2004 and 2003, respectively. From time to
time, we may also enter into transactions in which we exchange newly issued debt securities for similar
outstanding debt securities held by investors. These transactions are not accounted for as repurchases, but
rather as debt exchanges.
Credit Ratings. Our ability to access the capital markets and other sources of funding, as well as our
cost of funds, are highly dependent upon our credit ratings. Table 46 indicates our credit ratings at May 23,
2005.
Table 46 Ì Freddie Mac Credit Ratings
Rating Agency
Standard & Poor's Moody's Fitch
Senior long-term debt(1) ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ AAA Aaa AAA
Short-term debt(2) ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ A-1° Prime-1 F-1°
Subordinated debt ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ AA¿ Aa2 AA¿Watch Negative
Preferred stockÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ AA¿ Aa3 AA¿Watch Negative
(1) Includes Medium-term Notes, U.S. dollar denominated Reference Notes»securities and 4Reference Notes» securities.
(2) Includes Reference Bills»securities and discount notes.
In addition to the ratings described in Table 46, Standard & Poor's, or S&P, provides a ""Risk-To-The-
Government'' rating that measures our ability to meet our debt obligations and the value of our franchise in
the absence of any implied government support. Our ""Risk-To-The-Government'' rating was AA- at May 23,
2005. Moody's also provides a ""Bank Financial Strength'' rating that represents Moody's opinion of our
intrinsic safety and soundness and, as such, excludes certain external credit risks and credit support elements.
Ratings under this measure range from A, the highest, to E. Our ""Bank Financial Strength'' rating was A- at
May 23, 2005.
Equity Securities
During the Ñrst Ñve months of 2005 and all of 2004 and 2003, we did not issue, redeem or repurchase any
equity securities, other than transfers of previously issued treasury stock under our stock compensation plans.
During 2002, we redeemed $287 million of 6.125 percent preferred stock issued in November 1996, and
eÅectively replaced it with a 5.81 percent perpetual non-cumulative preferred stock issuance with a
redemption value of $300 million, resulting in additional net cash proceeds to us of approximately $13 million.
We repurchased approximately 9.1 million common shares during 2002 for approximately $555 million.
Cash and Investments Portfolio
We maintain a Cash and investments portfolio that is important to our Ñnancial management and our
ability to provide liquidity and stability to the mortgage market. At December 31, 2004, the investments in this
portfolio consisted of liquid non-mortgage-related securities that could be sold or Ñnanced to:
‚ protect against temporary disruptions in our ability to obtain funding for our business operations;
‚ manage recurring cash Öows and meet other cash management needs;
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