Can the proceeds of debt guaranteed under the debt guarantee component of the Temporary Liquidity Guarantee Program be used to prepay debt that is not guaranteed?

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Can the proceeds of debt guaranteed under the debt guarantee component of the Temporary Liquidity Guarantee Program be used to prepay debt that is not guaranteed?

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No. Entities participating in the debt guarantee program cannot issue senior unsecured debt identified as guaranteed by the FDIC if the proceeds of that issuance are used to prepay debt that is not FDIC-guaranteed. What is meant by a prepayment of debt that is not FDIC-guaranteed? Prepayment of debt that is not FDIC-guaranteed means the extinguishment or reduction of any non-FDIC guaranteed debt by means of cash payment of the non-FDIC guaranteed debt, or substitution or exchange of FDIC-guaranteed debt for non-FDIC-guaranteed debt, if these payments, substitutions or exchanges occur prior to the stated maturity of the non-FDIC guaranteed debt. Can a participating entity issue debt up to the limit at any time between now and June 30, 2009? For example, if an eligible entity that as of September 30, 2008, had $100 million of unsecured debt maturing between now and June 30, 2009, may it issue $125 million in debt now under the Temporary Liquidity Guarantee Program? Yes.

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