US Postal Service 2012 Annual Report Download - page 92

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2012 Report on Form 10-K United States Postal Service- 91 -
NOTE 4 — DEBT
DEBT LIMITS
Under the Postal Reorganization Act, as amended by Public Laws 101-227 and 109-435, the Postal Service
can issue debt obligations. The Postal Service is limited by statute to net annual debt increases of $3 billion.
Total debt cannot exceed $15 billion.
NOTE PURCHASE AGREEMENTS
The Postal Service has two revolving credit line facilities with the Federal Financing Bank (FFB), a
government-owned corporation under the general supervision of the Secretary of the Treasury, both of
which are available until May 2013. One, a short-term credit line, enables it to draw up to $3,400 million
with two days prior notice. Borrowings under this credit line are typically on an overnight basis, but can have
a maximum term of up to one year. The second credit line, which only allows for borrowings on an overnight
basis, enables borrowings of up to $600 million on the same business day that funds are requested. The
interest rates for borrowings under these credit facilities are determined by the Treasury each business day.
As of September 30, 2012, these two revolving credit facilities were fully drawn.
In addition, under the provisions of a Note Purchase Agreement with the FFB, the Postal Service can use a
series of other notes with varying provisions to draw upon with two days prior notice. The Note Purchase
Agreement, renewable annually, was extended to September 30, 2013.
These credit line facilities and note arrangements provide the flexibility to borrow short- or long-term, using
fixed- or floating-rate notes. Fixed-rate notes can be either callable or non-callable at the option of the
Postal Service.
Debt, all of which is unsecured and not subject to sinking fund requirements, can be repaid at any time at a
price determined by the Secretary of the Treasury, based on prevailing interest rates in the Treasury
Security market at the time of repayment. Debt as of September 30, 2012, and 2011, is as follows: