NOTE 11—GUARANTEES

The following table summarizes total guarantees, by type of guarantee and by member class, as of November 30, 2019 and May 31, 2019.



(Dollars in thousands)	November 30, 2019		May 31, 2019
Total by type:
Long-term tax-exempt bonds⁽¹⁾	$	308,750	$	312,190
Letters of credit⁽²⁾	339,241		379,001
Other guarantees	146,732		146,244
Total	$	794,723	$	837,435

Total by member class:
CFC:
Distribution	$	243,668	$	235,919
Power supply	533,168		586,717
Statewide and associate	5,296		4,708
CFC total	782,132		827,344
NCSC	12,591		8,517
RTFC	—		1,574
Total	$	794,723	$	837,435

^{____________________________}

⁽¹⁾Represents the outstanding principal amount of long-term fixed-rate and variable-rate guaranteed bonds.

⁽²⁾Reflects our maximum potential exposure for letters of credit.

Long-term tax-exempt bonds of $309 million and $312 million as of November 30, 2019 and May 31, 2019, respectively, included $245 million and $247 million, respectively, of adjustable or variable-rate bonds that may be converted to a fixed rate as specified in the applicable indenture for each bond offering. We are unable to determine the maximum amount of interest that we may be required to pay related to the remaining adjustable and variable-rate bonds. Many of these bonds have a call provision that allows us to call the bond in the event of a default, which would limit our exposure to future interest payments on these bonds. Our maximum potential exposure generally is secured by mortgage liens on the members’ assets and future revenue. If a member’s debt is accelerated because of a determination that the interest thereon is not tax-exempt, the member’s obligation to reimburse us for any guarantee payments will be treated as a long-term loan. The remaining long-term tax-exempt bonds of $64 million as of November 30, 2019 are fixed-rate. The maximum potential exposure for these bonds, including the outstanding principal of $64 million and related interest through maturity, totaled $89 million as of November 30, 2019. The maturities for long-term tax-exempt bonds and the related guarantees extend through calendar year 2042.

Of the outstanding letters of credit of $339 million and $379 million as of November 30, 2019 and May 31, 2019, respectively, $109 million and $126 million, respectively, were secured. We did not have any letters of credit outstanding that provided for standby liquidity for adjustable and floating-rate tax-exempt bonds issued for the benefit of our members as of November 30, 2019. The maturities for the outstanding letters of credit as of November 30, 2019 extend through calendar year 2039.

In addition to the letters of credit listed in the table above, under master letter of credit facilities in place as of November 30, 2019, we may be required to issue up to an additional $54 million in letters of credit to third parties for the benefit of our members. All of our master letter of credit facilities were subject to material adverse change clauses at the time of issuance as of November 30, 2019. Prior to issuing a letter of credit, we would confirm that there has been no material adverse change in the business or condition, financial or otherwise, of the borrower since the time the loan was approved and confirm that the borrower is currently in compliance with the letter of credit terms and conditions.

The maximum potential exposure for other guarantees was $147 million as of both November 30, 2019 and May 31, 2019 of which $25 million was secured as of both November 30, 2019 and May 31, 2019. The maturities for these other guarantees listed in the table above extend through calendar year 2025. Guarantees under which our right of recovery from our members was not secured totaled $352 million and $374 million and represented 44% and 45% of total guarantees as of November 30, 2019 and May 31, 2019, respectively.

In addition to the guarantees described above, we were also the liquidity provider for $245 million of variable-rate tax-exempt bonds as of November 30, 2019, issued for our member cooperatives. While the bonds are in variable-rate mode, in return for a fee, we have unconditionally agreed to purchase bonds tendered or put for redemption if the remarketing agents are unable to sell such bonds to other investors. We were not required to perform as liquidity provider pursuant to these obligations during the six months ended November 30, 2019 or the prior fiscal year.

Guarantee Liability

As of November 30, 2019 and May 31, 2019, we recorded a guarantee liability of $13 million and $14 million, respectively, which represents the contingent and noncontingent exposures related to guarantees and liquidity obligations. The contingent guarantee liability was $1 million as of both November 30, 2019 and May 31, 2019, based on management’s estimate of exposure to losses within the guarantee portfolio. The remaining balance of the total guarantee liability of $12 million and $13 million as of November 30, 2019 and May 31, 2019, respectively, relates to our noncontingent obligation to stand ready to perform over the term of our guarantees and liquidity obligations that we have entered into or modified since January 1, 2003.