Freddie Mac 2012 Annual Report Download - page 187

See “CONSOLIDATED BALANCE SHEETS ANALYSIS — Total Debt, Net” for more information about our other
short-term debt.
Other Long-Term Debt
We issue debt with maturities greater than one year primarily through our medium-term notes program and our
Reference Notes®securities program.
Medium-term Notes
We issue a variety of fixed- and variable-rate medium-term notes, including callable and non-callable fixed-rate
securities, zero-coupon securities and variable-rate securities, with various maturities ranging up to 30 years. For purposes of
presentation in this report, medium-term notes with original maturities of one year or less are classified as short-term debt.
Medium-term notes typically contain call provisions, effective as early as three months or as long as ten years after the
securities are issued.
Reference Notes®Securities
Reference Notes®securities are regularly issued, U.S. dollar denominated, non-callable fixed-rate securities, which we
generally issue with original maturities ranging from two through ten years. Prior to 2005, we issued €Reference Notes®
securities denominated in Euros, which remain outstanding. We hedge our exposure to changes in foreign-currency exchange
rates by entering into swap transactions that convert foreign-currency denominated obligations to U.S. dollar-denominated
obligations. See “QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK — Interest-Rate Risk
and Other Market Risks — Sources of Interest-Rate Risk and Other Market Risks” for more information.
Subordinated Debt
During 2012 and 2011, we did not call or issue any Freddie SUBS®securities. At both December 31, 2012 and 2011,
the balance of our subordinated debt outstanding was $0.4 billion. Our subordinated debt in the form of Freddie SUBS®
securities is a component of our risk management and disclosure commitments with FHFA. See “BUSINESS — Regulation
and Supervision — Subordinated Debt” for a discussion of changes affecting our subordinated debt as a result of our
placement in conservatorship and the Purchase Agreement, and the Conservator’s suspension of certain requirements relating
to our subordinated debt. Under the Purchase Agreement, we may not issue subordinated debt without Treasury’s consent.
Other Debt Retirement Activities
We repurchase, call, or exchange our outstanding medium- and long-term debt securities from time to time to help
support the liquidity and predictability of the market for our other debt securities and to manage our mix of liabilities funding
our assets. When our debt securities become seasoned or one-time call options on our debt securities expire, they may
become less liquid, which could cause their price to decline. By repurchasing debt securities, we help preserve the liquidity
of our debt securities and improve their price performance, which helps to reduce our funding costs over the long-term. Our
repurchase activities also help us manage the funding mismatch, or duration gap, created by changes in interest rates. For
example, when interest rates decline, the expected lives of our investments in mortgage-related securities decrease which
reduces the need for long-term debt. We use a number of different means to shorten the effective weighted average lives of
our outstanding debt securities and thereby manage the duration gap, including retiring long-term debt through repurchases
or calls; changing our debt funding mix between short- and long-term debt; or using derivative instruments, such as entering
into receive-fixed swaps or terminating or assigning pay-fixed swaps. 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.
The table below provides the par value, based on settlement dates, of other debt securities we repurchased, called, and
exchanged during 2012 and 2011.
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