Long-Term Debt

6 Months Ended

Nov. 30, 2021


NOTE 7—LONG-TERM DEBT

The following table displays, by debt product type, long-term debt outstanding as of November 30, 2021 and May 31, 2021. Long-term debt outstanding totaled $20,804 million and accounted for 75% of total debt outstanding as of November 30, 2021, compared with $20,603 million and 75% of total debt outstanding as of May 31, 2021.

Table 7.1: Long-Term Debt by Debt Product Type


(Dollars in thousands)	November 30, 2021		May 31, 2021
Secured long-term debt:
Collateral trust bonds	$	7,047,711	$	7,452,711
Unamortized discount	(221,016)		(227,046)
Debt issuance costs	(31,205)		(33,721)
Total collateral trust bonds	6,795,490		7,191,944
Guaranteed Underwriter Program notes payable	6,290,600		6,269,303
Farmer Mac notes payable	3,121,485		2,977,909
Other secured notes payable	4,412		4,412
Debt issuance costs	(14)		(22)
Total other secured notes payable	4,398		4,390
Total secured notes payable	9,416,483		9,251,602
Total secured long-term debt	16,211,973		16,443,546
Unsecured long-term debt:
Medium-term notes sold through dealers	4,406,592		3,943,728
Medium-term notes sold to members	202,710		232,346
Medium term notes sold through dealers and to members	4,609,302		4,176,074
Unamortized discount	(2,315)		(2,307)
Debt issuance costs	(18,446)		(18,036)
Total unsecured medium-term notes	4,588,541		4,155,731
Unsecured notes payable	3,886		3,886
Unamortized discount	(19)		(35)
Debt issuance costs	(2)		(5)
Total unsecured notes payable	3,865		3,846
Total unsecured long-term debt	4,592,406		4,159,577
Total long-term debt	$	20,804,379	$	20,603,123

Secured Debt

Long-term secured debt of $16,212 million and $16,444 million as of November 30, 2021 and May 31, 2021, respectively, represented 78% and 80% of total long-term debt outstanding as of each respective date. The decrease in long-term secured debt of $232 million during the six months ended November 30, 2021 was primarily attributable to the early redemption of $400 million of collateral trust bonds, as described below, partially offset by debt borrowings under the Farmer Mac revolving note purchase agreement. We were in compliance with all covenants and conditions under our debt indentures as of November 30, 2021 and May 31, 2021.

We are required to pledge eligible mortgage notes in an amount at least equal to the outstanding balance of our secured debt. See “Note 4—Loans” for information on pledged collateral under our secured debt agreements.

Collateral Trust Bonds

Collateral trust bonds outstanding decreased $396 million to $6,795 million as of November 30, 2021, primarily due to the early redemption of $400 million of 3.05% of collateral trust bonds due February 12, 2021.

Guaranteed Underwriter Program Notes Payable

Notes payable outstanding under the Guaranteed Underwriter Program increased $21 million to $6,291 million as of November 30, 2021, due to notes payable advances under the Guaranteed Underwriter Program, partially offset by principal amortization. On November 4, 2021, we closed on a $550 million committed loan facility (“Series S”) from the Federal Financing Bank under the Guaranteed Underwriter Program. Pursuant to this facility, we may borrow any time before July 15, 2026. Each advance is subject to quarterly amortization and a final maturity not longer than 30 years from the date of the advance. We borrowed $200 million and redeemed $100 million of notes payable outstanding under the Guaranteed Underwriter Program during the six months ended November 30, 2021. We had up to $1,325 million available for access under the Guaranteed Underwriter Program as of November 30, 2021.

The notes outstanding under the Guaranteed Underwriter Program contain a provision that if during any portion of the fiscal year, our senior secured credit ratings do not have at least two of the following ratings: (i) A3 or higher from Moody’s Investors Service (“Moody’s”), (ii) A- or higher from S&P Global Inc. (“S&P”), (iii) A- or higher from Fitch Ratings (“Fitch”) or (iv) an equivalent rating from a successor rating agency to any of the above rating agencies, we may not make cash patronage capital distributions in excess of 5% of total patronage capital. 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 Guaranteed Underwriter Program.

Farmer Mac Notes Payable

We have a revolving note purchase agreement with Farmer Mac, dated March 24, 2011, as amended, under which we can borrow up to $5,500 million from Farmer Mac at any time, subject to market conditions, through June 30, 2026, with successive automatic one-year renewals without notice by either party. Beginning June 30, 2025, the revolving note purchase agreement is subject to termination of the draw period by Farmer Mac upon 425 days’ prior written notice. Pursuant to this revolving note purchase agreement, we can borrow, repay and re-borrow funds at any time through maturity, as market conditions permit, provided that the outstanding principal amount at any time does not exceed the total available under the agreement. Each borrowing under the revolving note purchase agreement is evidenced by a pricing agreement setting forth the interest rate, maturity date and other related terms as we may negotiate with Farmer Mac at the time of each such borrowing. We may select a fixed rate or variable rate at the time of each advance with a maturity as determined in the applicable pricing agreement. The amount outstanding under this agreement included $3,121 million of long-term debt as of November 30, 2021. We advanced long-term notes payable totaling $450 million under the Farmer Mac Note Purchase Agreement during the six months ended November 30, 2021. The amount available for borrowing totaled $2,379 million as of November 30, 2021.

Unsecured Debt

Long-term unsecured debt of $4,592 million and $4,160 million as of November 30, 2021 and May 31, 2021, respectively, represented 22% and 20% of total long-term debt outstanding as of each respective date. The increase in long-term unsecured debt of $432 million for the six months ended November 30, 2021 was primarily attributable to dealer medium-term notes issuance, as described below.

Medium-Term Notes

Medium-term notes represent unsecured obligations that may be issued through dealers in the capital markets or directly to our members.

On October 18, 2021, we issued $400 million aggregate principal amount of dealer medium-term notes at a fixed rate of 1.000%, due on October 18, 2024, and $350 million aggregate principal amount of dealer medium-term notes at a variable rate based on the Secured Overnight Financing Rate (“SOFR”) plus 0.33%, due on October 18, 2024.

See “Note 7—Long-Term Debt” in our 2021 Form 10-K for additional information on our various long-term debt product types.