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Guarantees
 12 Months Ended
May 31, 2026
Guarantees [Abstract]  
GUARANTEES
NOTE 13—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 May 31, 2026 and 2025.

Table 13.1: Guarantees Outstanding by Type and Member Class
May 31,
(Dollars in thousands)20262025
Guarantee type:
Long-term tax-exempt bonds(1)
$47,100 $48,455 
Letters of credit(2)
1,033,710 978,492 
Other guarantees184,884 183,659 
Total$1,265,694 $1,210,606 
Member class:
CFC:
Distribution$508,383 $506,834 
Power supply614,234 599,766 
Statewide and associate(3)
45,065 43,442 
CFC total1,167,682 1,150,042 
NCSC electric
98,012 60,564 
Total$1,265,694 $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 $37 million and $42 million as of May 31, 2026 and 2025, respectively.

We had guarantees outstanding totaling $1,266 million and $1,211 million as of May 31, 2026 and 2025, respectively. Guarantees under which our right of recovery from our members was not secured totaled $910 million and $781 million and represented 72% and 65% of total guarantees as of May 31, 2026 and 2025, respectively. We were not required to perform pursuant to any of our guarantee obligations during FY2026 or FY2025.

We guarantee debt issued in connection with the construction or acquisition of pollution control, solid waste disposal, industrial development and electric distribution facilities, classified as long-term tax-exempt bonds in the table above. We unconditionally guarantee to the holders or to trustees for the benefit of holders of these bonds the full principal, interest and in most cases, premium, if any, on each bond when due.

Long-term tax-exempt bonds of $47 million and $48 million as of May 31, 2026 and 2025, respectively, consist of adjustable-rate 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-rate or 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 $1,034 million and $978 million as of May 31, 2026 and 2025, respectively, $284 million and $356 million were secured as of each respective date. The maturities for the outstanding letters of credit as of May 31, 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 May 31, 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 May 31, 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 $185 million and $184 million as of May 31, 2026 and 2025, respectively, of which $25 million was secured as of both May 31, 2026 and 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 $47 million and $48 million of variable-rate tax-exempt bonds as of May 31, 2026 and 2025, respectively, 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 FY2026, FY2025 or FY2024.

Guarantee Liability

We recorded a total guarantee liability for noncontingent and contingent exposures related to guarantees and liquidity obligations of $17 million and $14 million as of May 31, 2026 and 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 and accounts for the substantial majority of our guarantee liability, totaled $16 million and $13 million as of May 31, 2026 and 2025, respectively. The remaining amount pertains to our contingent guarantee exposures.

The following table details the scheduled maturities of our outstanding guarantees in each of the five fiscal years following May 31, 2026 and thereafter:
Table 13.2: Guarantees Outstanding Maturities
(Dollars in thousands)Amount
Maturing
2027$615,144 
2028215,737 
202938,425 
203031,627 
2031188,198 
Thereafter176,563 
Total$1,265,694