SOURCE: National Rural Utilities Cooperative Finance Corporation (NRUCFC)

December 17, 2008 11:20 ET

NRUCFC Signs $500 Million Secured Note Transaction With Farmer Mac

HERNDON, VA--(Marketwire - December 17, 2008) - National Rural Utilities Cooperative Finance Corporation (NRUCFC) has signed a note purchase agreement with the Federal Agricultural Mortgage Corporation (Farmer Mac), pursuant to which NRUCFC will sell up to $500 million of notes that will be secured by eligible loans to NRUCFC borrowers and guaranteed by Farmer Mac.

The agreement permits NRUCFC to draw on this facility until December 31, 2010. NRUCFC may select a variable rate or fixed rate at the time of each advance. Notes issued with a variable rate will mature in two years or less from the advance date, and notes issued with a fixed rate will mature five years from the advance date.

"Our ongoing relationship with Farmer Mac helps us to further diversify our funding sources and provide our members with affordable financing, especially during the challenging conditions in today's global capital markets," said NRUCFC CEO Sheldon C. Petersen.

This is one of a number of transactions that NRUCFC has conducted with Farmer Mac since 2005. NRUCFC has sold more than $400 million of rural utility loans to Farmer Mac over the past two years. In addition, NRUCFC sold $500 million of three-year secured notes in July 2005. Then, in March 2008, Farmer Mac purchased $400 million of five-year, LIBOR-indexed secured notes from NRUCFC that mature in 2013.

The facility established under this agreement is the first under the authority granted to Farmer Mac in the Food, Conservation and Energy Act of 2008 to purchase loans made by cooperative lenders to rural utilities and to guarantee and purchase securities backed by those loans.

On December 15, NRUCFC purchased $15 million of Farmer Mac Series B-1 preferred stock. Pursuant to the note purchase agreement, NRUCFC will purchase additional Farmer Mac Series C preferred stock in an amount that is at least equal to 4 percent of the outstanding debt under the facility.

Farmer Mac is a stockholder-owned instrumentality of the United States chartered by Congress to establish a secondary market for agricultural real estate and rural housing mortgage loans and rural utilities loans and to facilitate capital market funding for USDA-guaranteed farm program and rural development loans. Additional information about Farmer Mac is available at www.farmermac.com.

NRUCFC is a not-for-profit finance cooperative that serves the nation's rural utility systems, the majority of which are electric cooperatives and their subsidiaries. With approximately $20 billion in assets, NRUCFC provides its member-owners with an assured source of market-priced capital and state-of-the-art financial products and services. For more information about NRUCFC, its mission and services, go to www.nrucfc.coop.

Contact Information

  • Contacts:
    Mike O'Brien
    V.P., Corp. Communications
    703-709-6709
    Email Contact

    Andrew Don
    V.P., Capital Market Relations
    703-709-6869
    Email Contact