OFFERING CIRCULAR SUPPLEMENT (to Offering Circular Dated September 13, 1995)
$250,000,000 Federal Home Loan Mortgage Corporation Variable Rate Debentures Due April 15, 1998
The Variable Rate Debentures Due April 15, 1998 (the "Debentures") are unsecured general obligations of the Federal Home Loan Mortgage Corporation ("Freddie Mac") offered pursuant to Freddie Mac's Debentures, Medium-Term Notes and Discount Notes Offering Circular dated September 13, 1995 (the "Offering Circular"). The Debentures will have the terms and characteristics set forth in the Offering Circular and in this Offering Circular Supplement. Capitalized terms used herein and not otherwise defined herein have the meanings given them in the Offering Circular. Interest on the Debentures is payable quarterly in arrears on the 15th day of the month, commencing July 15, 1997, at a rate of interest equal to the "Prime Rate" less a spread of 292 basis points, reset daily. The principal of the Debentures is due in full on April 15, 1998. See “Interest on the Debentures” in this Offering Circular Supplement. This Offering Circular Supplement should be read in conjunction with the Offering Circular and with Freddie Mac's Information Statement dated March 31, 1997. See "Availability of Information and Incorporation by Reference" in the Offering Circular. Salomon Brothers Inc (the "Underwriter") has agreed to purchase the Debentures from Freddie Mac at 100.00% of their principal amount ($250,000,000 aggregate proceeds to Freddie Mac, before deducting expenses payable by Freddie Mac estimated at $5,000), plus accrued interest, if any, from April 15, 1997 to the date of delivery, subject to the terms and conditions set forth in the Underwriting Agreement between Freddie Mac and the Underwriter. The Underwriter proposes to offer the Debentures for sale from time to time in one or more negotiated transactions, or otherwise, at varying prices related to prevailing market prices to be determined, in each case, at the time of sale. For further information with respect to the plan of distribution and any discounts, commissions or profits on resale that may be deemed underwriting discounts or commissions, see "Plan of Distribution" in this Offering Circular Supplement and in the Offering Circular. It is expected that the Debentures, in book-entry form, will be available for deposit at any Federal Reserve Bank on or about April 15, 1997, against payment therefor in immediately available funds.
THE DEBENTURES ARE NOT SUITABLE INVESTMENTS FOR ALL INVESTORS. IN PARTICULAR, NO INVESTOR SHOULD PURCHASE THE DEBENTURES UNLESS THE INVESTOR UNDERSTANDS AND IS ABLE TO BEAR THE ASSOCIATED MARKET AND LIQUIDITY RISKS. SEE "CERTAIN INVESTMENT CONSIDERATIONS" IN THIS OFFERING CIRCULAR SUPPLEMENT AND IN THE OFFERING CIRCULAR. THE DEBENTURES ARE OBLIGATIONS OF FREDDIE MAC ONLY. THE DEBENTURES, INCLUDING ANY INTEREST THEREON, ARE NOT GUARANTEED BY THE UNITED STATES AND DO NOT CONSTITUTE DEBTS OR OBLIGATIONS OF THE UNITED STATES OR ANY AGENCY OR INSTRUMENTALITY OF THE UNITED STATES OTHER THAN FREDDIE MAC. INCOME ON THE DEBENTURES HAS NO EXEMPTION UNDER FEDERAL LAW FROM FEDERAL, STATE OR LOCAL TAXATION. THE DEBENTURES ARE EXEMPT FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT OF 1933 AND ARE “EXEMPTED SECURITIES” WITHIN THE MEANING OF THE SECURITIES EXCHANGE ACT OF 1934.
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Salomon Brothers Inc
_______________ Offering Circular Supplement Dated April 9, 1997
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DESCRIPTION OF THE DEBENTURES Principal Amount: Issue Date: Maturity Date: Floating Interest Rate: Interest Period: $250,000,000 April 15, 1997 April 15, 1998 Prime Rate (as defined below) minus 292 basis points, reset daily The period beginning on (and including) the Issue Date or a Payment Date, as the case may be, and ending on (but excluding) the next Payment Date (including the Maturity Date) The period beginning on the sixth Business Day prior to but not including a Payment Date (including the Maturity Date) 0% per annum Quarterly, in arrears, on July 15, 1997, October 15, 1997, January 15, 1998 and April 15, 1998 At maturity Debentures will be issued and must be maintained and transferred in minimum original principal amounts of $5,000 and additional increments of $5,000 3134A1TA8
Interest Rate Reset Suspension Period:
Minimum Interest Rate: Payment of Interest:
Payment of Principal: Minimum Principal Amounts:
CUSIP Number:
INTEREST ON THE DEBENTURES The Debentures will bear interest from the Issue Date to the Maturity Date at a rate of interest equal to the "Prime Rate" (calculated as provided below under "Calculation of Prime Rate") minus 292 basis points, reset daily. Interest on the Debentures will be calculated on the basis of the actual number of days elapsed during the Interest Period and a 360-day year. Interest payments on the Debentures will include interest accrued to (but excluding) the Payment Date (including the Maturity Date) on which such payment is made. CALCULATION OF PRIME RATE The Prime Rate for each day in an Interest Period will be determined by Freddie Mac in the manner described below; provided, however, that the Prime Rate in effect for each day in an Interest Rate Reset Suspension Period shall be the Prime Rate as determined for the first Business Day of such Interest Rate Reset Suspension Period. As used herein, "Business Day" means a day on which banks are open for business in New York City and Washington, D.C. "Prime Rate" means, with respect to any day, the rate for such day as published by the Federal Reserve System Board of Governors (the "Fed") in Federal Reserve Board Statistical Release H.15 (519) ("H.15 (519)”) in the line titled "Bank prime loan," or, if such day is not a Business Day, then the rate for the immediately preceding Business Day.
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If (i) no Prime Rate is included in the applicable H.15 (519) for a day (or for the immediately preceding Business Day, as the case may be); (ii) for any period of time H.15 (519) ceases to be published or (iii) H.15 (519) for a day is not yet available, then the Prime Rate will be determined by calculating the arithmetic mean of the rates of interest quoted for such day (or the immediately preceding Business Day, as the case may be) on Reuters page USPrime 1; provided, however, that if fewer than four rates for such day appear on Reuters page USPrime 1, then the Prime Rate for such day will be determined by calculating the arithmetic mean of the rates of interest publicly announced by each bank named on Telerate page 38 (or any successor page) under the heading "Prime Rate -- Top 30 U.S. Banks" as each such bank's U.S. dollar prime rate or base lending rate as in effect on such day at 3:00 p.m. (New York City time); provided further, however, that if fewer than four such rates appear on Telerate page 38 for such day, then the Prime Rate for such day shall be the arithmetic mean of the rates of interest publicly announced by three major money center banks in New York City, selected by Freddie Mac, as each such bank's U.S. dollar prime rate or base lending rate as in effect for such day. If Freddie Mac cannot determine the Prime Rate for any given day (or for the immediately preceding Business Day, as the case may be) using any of the applicable methods set forth above, then the Prime Rate for such day shall be the same as the Prime Rate, determined as set forth above, for the immediately preceding day. Freddie Mac considers H.15 (519) to be available on the day it is released by the Fed. For further information about calculation of interest, see “Description of the Securities - Debentures and Medium-Term Notes - Payment Terms - Variable Rate Debentures and Medium-Term Notes” in the Offering Circular. In the absence of manifest error, the establishment of the Prime Rate by Freddie Mac, as provided above, shall be final and binding. CERTAIN INVESTMENT CONSIDERATIONS An investment in the Debentures entails certain risks not associated with an investment in conventional fixed rate debt securities. See "Certain Investment Considerations - Market, Liquidity and Yield Considerations - Variable Rate Debentures and Medium-Term Notes" in the Offering Circular. The interest rate for the Debentures will be equal to the Prime Rate (as described above) minus a spread of 292 basis points, reset daily. Investors should consider the risk that the resulting interest rate will be less than that payable on a conventional fixed rate debt security issued by Freddie Mac at the same time. The secondary market for the Debentures will be affected by a number of factors independent of the creditworthiness of Freddie Mac and the level of the Prime Rate, including the volatility of the Prime Rate, the method of calculating the Prime Rate, the time remaining to the maturity of the Debentures, the
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outstanding principal amount of the Debentures and market interest rates. The level of the Prime Rate depends on a number of interrelated factors, including economic, financial and political events, over which Freddie Mac has no control. The following table, showing the level of the Prime Rate on the dates listed below, illustrates the extent of the variability of that rate: Historical Levels of the Prime Rate
Date
Prime Rate
15-Apr-90 15-Jul-90 15-Oct-90 15-Jan-91 15-Apr-91 15-Jul-91 15-Oct-91 15-Jan-92 15-Apr-92 15-Jul-92 15-Oct-92 15-Jan-93 15-Apr-93 15-Jul-93 15-Oct-93 15-Jan-94 15-Apr-94 15-Jul-94 15-Oct-94 15-Jan-95 15-Apr-95 15-Jul-95 15-Oct-95 15-Jan-96 15-Apr-96 15-Jul-96 15-Oct-96 15-Jan-97 9-Apr-97
10.00% 10.00% 10.00% 9.50% 9.00% 8.50% 8.00% 6.50% 6.50% 6.00% 6.00% 6.00% 6.00% 6.00% 6.00% 6.00% 6.25% 7.25% 7.75% 8.50% 9.00% 8.75% 8.75% 8.50% 8.25% 8.25% 8.25% 8.25% 8.50%
The historical experience of the Prime Rate should not be taken as an indication of the future performance of the Prime Rate during the term of the Debentures. Fluctuations in the level of the Prime Rate make the Debenture interest rates difficult to predict and can result in actual interest rates to investors that are lower than anticipated. In addition, historical interest rates are not necessarily indicative of future interest rates. Fluctuations in interest rates and interest rate trends that have occurred in the past are not necessarily indicative of fluctuations that may occur in the future, which may be wider or narrower than those that occurred historically.
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Investors should have the financial status and, either alone or with a financial advisor, the knowledge and experience in financial and business matters sufficient to evaluate the merits and to bear the risks of investing in the Variable Rate Debentures in light of each investor's particular circumstances. See "Certain Investment Considerations -- Suitability" and "--Market, Liquidity and Yield Considerations" in the Offering Circular. Prospective investors also should consult their own tax and legal advisors as to the tax consequences of holding, owning and disposing of the Debentures, and whether and to what extent the Debentures constitute legal investments for such investors. See "Certain Federal Tax Consequences" and "Legal Investment Considerations" in the Offering Circular. PLAN OF DISTRIBUTION Subject to the terms and conditions set forth in the Underwriting Agreement between Freddie Mac and Salomon Brothers Inc (the "Underwriter"), Freddie Mac has agreed to sell, and the Underwriter has agreed to purchase, all of the Debentures offered hereby, if any are sold and purchased. Freddie Mac has been advised by the Underwriter that it proposes initially to offer the Debentures from time to time in one or more negotiated transactions, or otherwise, at varying prices related to prevailing market prices to be determined, in each case, at the time of sale. The Underwriter may effect such transactions by sales to or through certain securities dealers, and such dealers may receive compensation in the form of discounts, concessions or commissions from the Underwriter and/or commissions from any purchasers for whom they act as agent. CERTAIN FEDERAL TAX CONSEQUENCES The Debentures are "Short Term Debt Obligations." See "Certain Federal Tax Consequences U.S. Owners - Debt Obligations With a Term of One Year or Less" in the Offering Circular. The Small Business Job Protection Act of 1996 revises the definition of "U.S. Person" (as defined in the Offering Circular under "Certain Federal Tax Consequences") with respect to a trust to mean a trust if a court within the United States is able to exercise primary supervision over the administration of the trust and one or more United States fiduciaries has the authority to control all substantial decisions of the trust. CAPITALIZATION Freddie Mac's capitalization as of December 31, 1996 is set forth in a capitalization table in Freddie Mac's Information Statement dated March 31, 1997. See "Capitalization" in the Offering Circular. LEGAL MATTERS Certain legal matters relating to the Debentures will be passed upon for Freddie Mac by Maud Mater, Esq., Senior Vice President - General Counsel and Secretary of Freddie Mac, and for the Underwriter by Cleary, Gottlieb, Steen & Hamilton. See "Legal Matters" in the Offering Circular.
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