Long-Term Debt

9 Months Ended

Feb. 28, 2022


NOTE 7—LONG-TERM DEBT

The following table displays, by debt product type, long-term debt outstanding as of February 28, 2022 and May 31, 2021. Long-term debt outstanding totaled $21,522 million and accounted for 76% of total debt outstanding as of February 28, 2022, 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)	February 28, 2022		May 31, 2021
Secured long-term debt:
Collateral trust bonds	$	7,547,711	$	7,452,711
Unamortized discount	(219,775)		(227,046)
Debt issuance costs	(33,787)		(33,721)
Total collateral trust bonds	7,294,149		7,191,944
Guaranteed Underwriter Program notes payable	6,149,203		6,269,303
Farmer Mac notes payable	3,018,130		2,977,909
Other secured notes payable	2,755		4,412
Debt issuance costs	(11)		(22)
Total other secured notes payable	2,744		4,390
Total secured notes payable	9,170,077		9,251,602
Total secured long-term debt	16,464,226		16,443,546
Unsecured long-term debt:
Medium-term notes sold through dealers	4,891,283		3,943,728
Medium-term notes sold to members	186,104		232,346
Medium term notes sold through dealers and to members	5,077,387		4,176,074
Unamortized discount	(2,155)		(2,307)
Debt issuance costs	(19,687)		(18,036)
Total unsecured medium-term notes	5,055,545		4,155,731
Unsecured notes payable	1,979		3,886
Unamortized discount	(14)		(35)
Debt issuance costs	(2)		(5)
Total unsecured notes payable	1,963		3,846
Total unsecured long-term debt	5,057,508		4,159,577
Total long-term debt	$	21,521,734	$	20,603,123

Secured Debt

Long-term secured debt of $16,464 million and $16,444 million as of February 28, 2022 and May 31, 2021, respectively, represented 77% and 80% of total long-term debt outstanding as of each respective date. The slight increase in long-term secured debt of $20 million during the nine months ended February 28, 2022 was primarily attributable to the $500 million collateral trust bonds issuance, as described below, borrowings under the Farmer Mac revolving note purchase agreement and the Guaranteed Underwriter Program, partially offset by the early redemption of $400 million of collateral trust bonds, as described below, and the Farmer Mac and Guaranteed Underwriter Program notes payable repayments. We were in compliance with all covenants and conditions under our debt indentures as of February 28, 2022 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 increased $102 million to $7,294 million as of February 28, 2022, primarily due to the February 7, 2022 issuance of $500 million aggregate principal amount of 2.75% of Collateral Trust Bonds due April 15, 2032, partially offset by the early redemption of $400 million of 3.05% of Collateral Trust Bonds due February 15, 2022.

On February 23, 2022, we provided notice to investors that we will redeem all $450 million of 2.40% of Collateral Trust Bonds due April 25, 2022 on March 25, 2022.

Guaranteed Underwriter Program Notes Payable

Notes payable outstanding under the Guaranteed Underwriter Program decreased $120 million to $6,149 million as of February 28, 2022, due to notes payable repayments, partially offset by notes payable advances under the Guaranteed Underwriter Program. 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 $450 million and repaid $570 million of notes payable outstanding under the Guaranteed Underwriter Program during the nine months ended February 28, 2022. We had up to $1,075 million available for access under the Guaranteed Underwriter Program as of February 28, 2022.

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 $3,018 million of long-term debt as of February 28, 2022. We advanced long-term notes payable totaling $620 million under the Farmer Mac Note Purchase Agreement during the nine months ended February 28, 2022. The amount available for borrowing totaled $2,482 million as of February 28, 2022.

Unsecured Debt

Long-term unsecured debt of $5,058 million and $4,160 million as of February 28, 2022 and May 31, 2021, respectively, represented 23% and 20% of total long-term debt outstanding as of each respective date. The increase in long-term unsecured debt of $898 million for the nine months ended February 28, 2022 was primarily attributable to dealer medium-term notes issuance, as described below, partially offset by dealer medium-term notes repayments.

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. On February 7, 2022, we issued $600 million aggregate principal amount of dealer medium-term notes at a fixed rate of 1.875% due on February 7, 2025. On February 7, 2022, we also issued $400 million aggregate principal amount of dealer medium-term notes at a variable rate based on SOFR plus 0.40%, due on August 7, 2023.

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