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Guarantees
 9 Months Ended
Feb. 28, 2026
Guarantees [Abstract]  
GUARANTEES
NOTE 11—GUARANTEES

We guarantee certain contractual obligations of our members so they may obtain various forms of financing. We use the same credit policies and monitoring procedures in providing guarantees as we do for loans and commitments. If a member system defaults on its obligation to pay debt service, then we are obligated to pay any required amounts under our guarantees. Meeting our guarantee obligations satisfies the underlying obligation of our member systems and prevents the exercise of remedies by the guarantee beneficiary based upon a payment default by a member system. In general, the member system is required to repay any amount advanced by us with interest, pursuant to the documents evidencing the member system’s reimbursement obligation.

The following table displays the notional amount of our outstanding guarantee obligations, by guarantee type and by member class, as of February 28, 2026 and May 31, 2025.
Table 11.1: Guarantees Outstanding by Type and Member Class

(Dollars in thousands)February 28, 2026May 31, 2025
Guarantee type:  
Long-term tax-exempt bonds(1)
$48,455 $48,455 
Letters of credit(2)
911,430 978,492 
Other guarantees185,842 183,659 
Total$1,145,727 $1,210,606 
Member class:  
CFC:  
Distribution$488,623 $506,834 
Power supply509,540 599,766 
Statewide and associate(3)
47,550 43,442 
CFC total1,045,713 1,150,042 
NCSC electric
100,014 60,564 
Total$1,145,727 $1,210,606 
____________________________
(1)Represents the outstanding principal amount of long-term variable-rate guaranteed bonds.
(2)Reflects our maximum potential exposure for letters of credit, which also includes interest due, if any.
(3)Includes CFC guarantees to NCSC telecom members totaling $40 million and $42 million as of February 28, 2026 and May 31, 2025, respectively.

We had guarantees outstanding totaling $1,146 million and $1,211 million as of February 28, 2026 and May 31, 2025, respectively. Guarantees under which our right of recovery from our members was not secured totaled $793 million and $781 million and represented 69% and 65% of total guarantees as of February 28, 2026 and May 31, 2025, respectively. We were not required to perform pursuant to any of our guarantee obligations during YTD FY2026 or YTD FY2025.

Long-term tax-exempt bonds of $48 million as of both February 28, 2026 and May 31, 2025, consist 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 maturities for long-term tax-exempt bonds and the related guarantees extend through calendar year 2037.

Of the outstanding letters of credit of $911 million and $978 million as of February 28, 2026 and May 31, 2025, respectively, $279 million and $356 million were secured as of each respective date. The maturities for the outstanding letters of credit as of February 28, 2026 extend through calendar year 2044.

In addition to the outstanding letters of credit listed in the table above, under master letter of credit facilities in place as of February 28, 2026, we may be required to issue up to an additional $105 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 February 28, 2026. 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 master letter of credit facility was approved and confirm that the borrower is currently in compliance with the terms and conditions of the agreement governing the facility.
The maximum potential exposure for other guarantees was $186 million and $184 million as of February 28, 2026 and May 31, 2025, respectively, of which $25 million was secured as of both February 28, 2026 and May 31, 2025. The maturities for these other guarantees listed in the table above extend through calendar year 2030.

In addition to the guarantees described above, we were also the liquidity provider for $48 million of variable-rate tax-exempt bonds as of both February 28, 2026 and May 31, 2025, 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 YTD FY2026 or YTD FY2025.

Guarantee Liability

We recorded a total guarantee liability for noncontingent and contingent exposures related to guarantees and liquidity obligations of $16 million and $14 million as of February 28, 2026 and May 31, 2025, respectively. The noncontingent guarantee liability, which pertains to our obligation to stand ready to perform over the term of our guarantees and liquidity obligations we have entered into or modified since January 1, 2003 and accounts for the substantial majority of our guarantee liability, totaled $15 million and $13 million as of February 28, 2026 and May 31, 2025, respectively. The remaining amount pertains to our contingent guarantee exposures.