The U.S. Postal Service has set terms for additional borrowing from the Treasury Department, opening the door for the mailing agency to take on more debt even as it has greatly expanded its cash reserves.
USPS and the Federal Financing Bank, a government corporation within Treasury that lends money to federal agencies, struck the “note purchase agreement,” or NPA, this week, according to financial documents the Postal Service filed on Thursday. The agency is statutorily entitled to take on $15 billion in debt, but is currently $5 billion below that cap.
Treasury first offered borrowing terms like those agreed to this week in the 1990s after USPS threatened to sell its debt to the private sector, according to Steve Kearney, who served as the mailing agency’s treasurer at the time. While postal management has not announced any specific new loans, the agreement allows it to quickly access the funds should it need them. USPS is only able to borrow up to $3 billion in any given year.