Freddie Mac 2012 Annual Report Download - page 186

environments. Historically, we have mainly competed for funds in the debt issuance markets with Fannie Mae and the
FHLBs. We repurchase or call our outstanding debt securities from time to time to help support the liquidity and
predictability of the market for our debt securities and to manage our mix of liabilities funding our assets.
To fund our business activities, we depend on the continuing willingness of investors to purchase our debt securities.
The required reduction in our mortgage-related investments portfolio has reduced our funding needs. We expect that this
trend will continue over time as the mortgage-related investments portfolio shrinks. Changes or perceived changes in the
government’s support of us could have a severe negative effect on our access to the debt markets and on our debt funding
costs. In addition, any change in applicable legislative or regulatory exemptions, including those described in
“BUSINESS — Regulation and Supervision,” could adversely affect our access to some debt investors, thereby potentially
increasing our debt funding costs.
Spreads on our debt and our access to the debt markets remained favorable relative to historical levels during the three
months and year ended December 31, 2012, which, we believe, is due largely to support from the U.S. government. As a
result, we were able to replace certain higher cost debt with lower cost debt. Our short-term debt was 22% of outstanding
other debt at December 31, 2012 as compared to 24% at December 31, 2011. Beginning in the fourth quarter of 2011, we
started issuing a higher percentage of debt with longer-term maturities. This allows us to take advantage of attractive long-
term rates while decreasing our reliance on interest-rate swaps.
Because of the debt limit under the Purchase Agreement, we may be restricted in the amount of debt we are allowed to
issue to fund our operations. Our debt cap under the Purchase Agreement was $874.8 billion in 2012 and declined to
$780.0 billion on January 1, 2013. As of December 31, 2012, we estimate that the par value of our aggregate indebtedness
totaled $552.5 billion, which was approximately $322.3 billion below the applicable debt cap. Our aggregate indebtedness is
calculated as the par value of other debt. We disclose the amount of our indebtedness on this basis monthly under the caption
“Other Debt Activities — Total Debt Outstanding” in our Monthly Volume Summary reports, which are available on our
web site at www.freddiemac.com and in current reports on Form 8-K we file with the SEC.
Other Debt Issuance Activities
The table below summarizes the par value of other debt securities we issued, based on settlement dates, during 2012 and
2011.
Table 68 — Other Debt Security Issuances by Product, at Par Value(1)
Year Ended December 31,
2012 2011
(in millions)
Other short-term debt:
Reference Bills®securities and discount notes ...................................................... $290,501 $412,165
Medium-term notes — non-callable(2) ............................................................ — 450
Total other short-term debt .................................................................. 290,501 412,615
Other long-term debt:
Medium-term notes — callable ................................................................. 88,504 172,464
Medium-term notes — non-callable ............................................................. 25,242 77,810
U.S. dollar Reference Notes®securities — non-callable ............................................... 51,000 47,500
Total other long-term debt .................................................................. 164,746 297,774
Total other debt issued ......................................................................... $455,247 $710,389
(1) Excludes federal funds purchased and securities sold under agreements to repurchase, and lines of credit. Also excludes debt securities of consolidated
trusts held by third parties.
(2) Includes $0 billion and $0.5 billion of medium-term notes — non-callable issued for the years ended December 31, 2012 and 2011, respectively, which
were related to debt exchanges.
Other Short-Term Debt
We fund our operating cash needs, in part, by issuing Reference Bills®securities and other discount notes, which are
short-term instruments with maturities of one year or less that are sold on a discounted basis, paying only principal at
maturity. Our Reference Bills®securities program consists of large issues of short-term debt that we auction to dealers on a
regular schedule. We issue discount notes with maturities ranging from one day to one year in response to investor demand
and our cash needs. For purposes of presentation in this report, short-term debt also includes certain medium-term notes that
have original maturities of one year or less.
181 Freddie Mac