Freddie Mac this week is offering to buy back from investors up to $30 billion principal amount of its debt to reduce its effective short-term debt, the second-largest U.S. home funding provider said on Monday.

The tender offer would be Freddie Mac's largest ever. It began on Monday and ends on Friday, unless it is extended.

The company is offering to buy back for cash various debt from issues totaling nearly $70 billion with maturities between September 2009 and August 2010.

We're buying back these contractually maturing securities, and over time we'll be issuing longer maturities, Mohit Sudhakar, senior director of debt portfolio management, told Reuters.

It's just a simple liability management trade, he said.

Freddie Mac's last dollar-denominated tender offer in 2006 was also its largest, in the mid-$20 billion area, Sudhakar said.

Barclays Capital is the lead deal manager for the offers, and Morgan Stanley and Deutsche Bank are deal managers, Freddie Mac said.

Repurchasing short-term floating rate debt is consistent with reducing reliance on short-term funding in order to decrease refunding risk and match longer duration modified mortgage assets, RBS Securities analyst Margaret Kerins wrote in an e-mail.

Freddie Mac and its larger sibling home funding company Fannie Mae are focused on loan modifications and foreclosure mitigation while the Fed and Treasury are supporting MBS secondary market liquidity, she noted.

Both government-controlled companies have actively termed out their shorter-term financing this year in favor of locking in low rates on larger long-term global deals.

Freddie Mac's short-term funding dropped in the first four months of the year by $35 billion while its long-term funding increased by $64 billion, Kerins said.

(Reporting by Lynn Adler, Editing by Chizu Nomiyama)

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