Features of Farmer Mac Debt Debt Offering Circular Pricing Supplements Farmer Mac Dealers   Farmer Mac purchases agricultural mortgage loans from mortgage lenders such as mortgage companies, savings institutions, credit unions and commercial banks, thereby replenishing those institutions' supply of mortgage funds. Farmer Mac either packages these loans into Agricultural Mortgage-Backed Securities (AMBS), which it guarantees for full and timely payment of principal and interest, or purchases these loans for cash and retains the mortgages in its portfolio. Farmer Mac obtains the funds to finance its mortgage purchases and other business activities by selling debt securities in the capital markets. Farmer Mac obtains most of its funding through two types of funding vehicles: discount notes and medium-term notes. For each type of debt security Farmer Mac issues, disclosure documents (offering circulars and, for medium-term notes, pricing supplements) are available. The offering circular is a legal document that outlines all material details of a specific funding program. The pricing supplement provides additional details about the specific security issuance, including the CUSIP number, settlement and maturity dates, principal amount, coupon or formula, frequency of interest payments, interest payment dates and underwriters. These documents are available on this Website. Discount Notes Most of Farmer Mac's short-term funding needs are met through the discount note program. Farmer Mac offers investors flexibility with respect to specific maturity dates that can be requested through reverse inquiry. Farmer Mac's discount notes are unsecured general obligations that are issued in book-entry form through the Federal Reserve Banks. Discount notes have maturities ranging from overnight to 365 days from the date of issuance and are available in minimum amounts of $1,000 and increments of $1,000. There are no periodic payments of interest on discount notes. They are sold at a discount from the principal amount utilizing an actual/360 day count and mature at par. Discount notes are offered each business day through securities dealers and dealer banks. Discount notes are available on a cash-, regular-, or skip-day settlement basis. Medium-Term Notes (MTNs) The MTN program is the funding program for issuing debt securities with nine months or more to maturity. MTNs are generally negotiated underwritings with one or more dealers or dealer banks. MTNs can be issued in callable or non-callable structures with fixed coupon rates in maturities from one year to more than fifteen years. Medium-term notes settle and clear through the Federal Reserve Book-Entry System. Medium-term notes are available in minimum amounts of $1,000 and increments of $1,000. Farmer Mac MTNs typically have semi-annual coupon payments and principal is redeemed only at the stated final maturity of the security. Farmer Mac callable debt plays an important role in helping Farmer Mac manage the interest-rate risk inherent in the mortgage portfolio, which is subject to prepayments from the underlying borrowers of the mortgages. The mortgages that Farmer Mac owns tend to prepay faster in periods of lower interest rate levels and prepay more slowly in periods of higher interest rate levels. Callable debt provides Farmer Mac with flexibility to ensure that the durations of our liabilities and of our mortgage assets are similar. By issuing callable debt, Farmer Mac is effectively buying a call option from investors and compensating these investors with additional yield above comparable maturity non-callable securities. The decision to redeem outstanding callable debt by Farmer Mac is entirely a function of interest rate levels. We monitor our callable debt that is currently in its call period and determine whether it is economically feasible to call outstanding issues and replace them with other funding vehicles at lower yields. Callable debt securities are typically redeemed at par. The three main structural features of our callable debt securities are the maturity date, the lockout period, and the type of call. The maturity date of a callable debt instrument is the latest possible date at which the security will be retired and principal will be redeemed. Farmer Mac issues callable debt instruments with a variety of maturity dates along the yield curve. The lockout period refers to the amount of time for which a callable bond cannot be called. For example, with a 10 non-call 3-year ("10 NC3") debt security, the security cannot be called for the first three years. Farmer Mac issues mostly discrete callable debt securities, which are callable only on coupon payment dates (generally semi-annually). After the conclusion of the initial lockout period, investors benefit from the increased predictability of cash flows resulting from this structure.