

NOTE 6—LONG-TERM DEBT

The following is a summary of long-term debt outstanding as of February 29, 2016 and May 31, 2015.



(Dollars in thousands)	February 29, 2016			May 31, 2015
Unsecured long-term debt:
Medium-term notes sold through dealers	$	2,793,119		$	2,749,894
Medium-term notes sold to members	360,917			392,298
Subtotal medium-term notes	3,154,036			3,142,192
Unamortized discount	(580		)	(706		)
Debt issuance costs	(17,190		)	(15,335		)
Total unsecured medium-term notes	3,136,266			3,126,151
Guaranteed Underwriter Program notes payable	4,786,627			4,406,785
Debt issuance costs	(300		)	(320		)
Total Guaranteed Underwriter Program notes payable	4,786,327			4,406,465
Other unsecured notes payable	29,092			31,168
Unamortized discount	(527		)	(626		)
Debt issuance costs	(130		)	(155		)
Total other unsecured notes payable	28,435			30,387
Total unsecured notes payable	4,814,762			4,436,852
Total unsecured long-term debt	7,951,028			7,563,003
Secured long-term debt:
Collateral trust bonds	7,547,711			7,052,711
Unamortized discount	(268,024		)	(271,201		)
Debt issuance costs	(30,283		)	(26,443		)
Total collateral trust bonds	7,249,404			6,755,067
Farmer Mac notes payable	2,312,616			1,910,688
Other secured notes payable	14,871			16,529
Debt issuance costs	(422		)	(493		)
Total other secured notes payable	14,449			16,036
Total secured notes payable	2,327,065			1,926,724
Total secured long-term debt	9,576,469			8,681,791
Total long-term debt	$	17,527,497		$	16,244,794

Collateral Trust Bonds

During the nine months ended February 29, 2016, we issued a total of $1,450 million collateral trust bonds with an average coupon of 2.48% and maturities ranging between 2019 and 2025. On February 16, 2016, we redeemed $300 million of 3.05% collateral trust bonds due March 1, 2016. The premium and unamortized issuance costs totaling $0.3 million were recorded as a loss on early extinguishment of debt during the third quarter of fiscal year 2016.

Unsecured Notes Payable

As of February 29, 2016 and May 31, 2015, we had unsecured notes payable totaling $4,786 million and $4,407 million, respectively, outstanding under bond purchase agreements with the FFB and a bond guarantee agreement with RUS issued under the Guaranteed Underwriter Program, which provides guarantees to the FFB. We pay RUS a fee of 30 basis points per year on the total amount borrowed. As of February 29, 2016, $4,786 million of unsecured notes payable outstanding under the Guaranteed Underwriter Program require us to place mortgage notes on deposit in an amount at least equal to the principal balance of the notes outstanding. See “Note 3—Loans and Commitments” for additional information on the mortgage notes held on deposit and the triggering events that result in these mortgage notes becoming pledged as collateral. During the nine months ended February 29, 2016, we borrowed $400 million under the Guaranteed Underwriter Program. As of February 29, 2016, we had up to $350 million available under committed loan facilities from the Federal Financing Bank as part of this program. We are required to maintain collateral on deposit in an amount at least equal to the balance of debt outstanding to the FFB under this program. On September 28, 2015, we received a commitment from RUS to guarantee a loan from the Federal Financing Bank for additional funding of $250 million as part of the Guaranteed Underwriter Program. As a result, we will have an additional $250 million available under the Guaranteed Underwriter Program with a 20-year maturity repayment period during the three-year period following the date of closing.

Secured Notes Payable

As of February 29, 2016 and May 31, 2015, secured notes payable include $2,313 million and $1,911 million, respectively, in debt outstanding to Farmer Mac under a note purchase agreement totaling $4,500 million. Under the terms of the note purchase agreement, we can borrow up to $4,500 million at any time through January 11, 2020, and thereafter automatically extend the agreement on each anniversary date of the closing for an additional year, unless prior to any such anniversary date, Farmer Mac provides CFC with a notice that the draw period would not be extended beyond the remaining term. During the nine months ended February 29, 2016, we borrowed a total of $430 million under the note purchase agreement with Farmer Mac. The agreement with Farmer Mac is a revolving credit facility that allows us to borrow, repay and re-borrow funds at any time through maturity or from time to time as market conditions permit, provided that the principal amount at any time outstanding is not more than the total available under the agreement.

On July 31, 2015, we entered into a new revolving note purchase agreement with Farmer Mac totaling $300 million. Under the terms of the new agreement, we can borrow up to $300 million at any time through July 31, 2018. This agreement with Farmer Mac is a revolving credit facility that allows us to borrow, repay and re-borrow funds at any time through maturity or from time to time, provided that the principal amount at any time outstanding is not more than the total available under the agreement.

We are required to pledge eligible distribution system or power supply system loans as collateral in an amount at least equal to the total principal amount of notes outstanding under the Farmer Mac agreements. See “Note 3—Loans and Commitments” for additional information on the collateral pledged to secure notes payable under these programs.

As of February 29, 2016 and May 31, 2015, we were in compliance with all covenants and conditions under our senior debt indentures.