Freddie Mac 2008 Annual Report Download - page 228

Table 8.4 summarizes the contractual maturities of long-term debt securities (including current portion of long-term
debt) and subordinated borrowings outstanding at December 31, 2008, assuming callable debt is paid at contractual maturity.
Table 8.4 — Long-Term Debt (including current portion of long-term debt)
Annual Maturities
Contractual
Maturity
(1)(2)
(in millions)
2009 ....................................................................................... $105,420
2010 ....................................................................................... 97,965
2011 ....................................................................................... 63,561
2012 ....................................................................................... 38,202
2013 ....................................................................................... 59,904
Thereafter . . . ................................................................................. 174,322
Total
(1)
...................................................................................... 539,374
Net discounts, premiums, hedge-related and other basis adjustments
(3)
......................................... (26,055)
Long-term debt, including current portion of long-term debt . . . . . . . . .......................................... $513,319
(1) Represents par value of long-term debt securities and subordinated borrowings.
(2) For debt denominated in a currency other than the U.S. dollar, the par value is based on the exchange rate at December 31, 2008.
(3) Other basis adjustments primarily represent changes in fair value attributable to instrument-specific credit risk related to foreign-currency-denominated
debt.
Lines of Credit
We opened intraday lines of credit with third-parties to provide additional liquidity to fund our intraday activities
through the Fedwire system in connection with the Federal Reserve’s revised payments system risk policy, which restricts or
eliminates daylight overdrafts by GSEs, including us. At December 31, 2008, we had two secured, uncommitted lines of
credit totaling $17 billion. No amounts were drawn on these lines of credit at December 31, 2008. We expect to continue to
use these facilities from time to time to satisfy our intraday financing needs; however, since the lines are uncommitted, we
may not be able to draw on them if and when needed.
Lending Agreement
On September 18, 2008, we entered into the Lending Agreement with Treasury under which we may request loans until
December 31, 2009. Loans under the Lending Agreement require approval from Treasury at the time of request. Treasury is
not obligated under the Lending Agreement to make, increase, renew or extend any loan to us. The Lending Agreement does
not specify a maximum amount that may be borrowed thereunder, but any loans made to us by Treasury pursuant to the
Lending Agreement must be collateralized by Freddie Mac or Fannie Mae mortgage-related securities. As of December 31,
2008, we held approximately $484 billion of fair value in Freddie Mac and Fannie Mae mortgage-related securities available
to be pledged as collateral. In addition, as of that date, we held another approximately $39 billion in single-family loans in
our mortgage portfolio that could be securitized into Freddie Mac mortgage-related securities and then pledged as collateral
under the Lending Agreement. Treasury may assign a reduced value to mortgage-related securities we provide as collateral
under the Lending Agreement, which would reduce the amount we are able to borrow from Treasury under the Lending
Agreement. Further, unless amended or waived by Treasury, the amount we may borrow under the Lending Agreement is
limited by the restriction under the Purchase Agreement on incurring debt in excess of a specified limit.
The Lending Agreement does not specify the maturities or interest rate of loans that may be made by Treasury under
the credit facility. In a Fact Sheet regarding the credit facility published by Treasury on September 7, 2008, Treasury
indicated that loans made pursuant to the credit facility will be for short-term durations and would in general be expected to
be for less than one month but no shorter than one week. The Fact Sheet further indicated that the interest rate on loans
made pursuant to the credit facility ordinarily will be based on the daily London Interbank Offered Rate, or LIBOR for a
similar term of the loan plus 50 basis points. Given that the interest rate we are likely to be charged under the Lending
Agreement will be significantly higher than the rates we have historically achieved through the sale of unsecured debt, use of
the facility in significant amounts could have a material adverse impact on our financial results. No amounts were borrowed
under this facility as of December 31, 2008.
Subordinated Debt Interest and Principal Payments
In a September 23, 2008 statement concerning the conservatorship, the Director of FHFA stated that we would continue
to make interest and principal payments on our subordinated debt, even if we fail to maintain required capital levels. As a
result, the terms of any of our subordinated debt that provide for us to defer payments of interest under certain
circumstances, including our failure to maintain specified capital levels, are no longer applicable.
225 Freddie Mac