The Discount Note (DN) Floating Rate Advance is a source of term financing priced at a spread to the prevailing rates on four- and thirteen-week FHLB Discount Notes.

  • Can be used to replenish liquidity to targeted levels in the event of savings deposit withdrawals.
  • Serves as an ongoing source of liquidity at rates comparable to or below other short-term liabilities.
  • A means of funding other indexed rate assets (such as home equity loans) to achieve spread and potential arbitrage.
Maturity
Minimum maturity of 12 months up to a maximum of 60 months. The maximum maturity is subject to change based upon market conditions. Maturities of less than 12 months may be offered depending upon the availability of appropriate funding.
Rate
DN Floating Rate Advances are quoted on an actual/360 day interest accrual basis. Same day funding of Advances tied to the current rate may be suspended under volatile market conditions. In these cases, same day funding may be obtained through a CMA or Repo Advance until the following business day when DN indications are available. The actual spread to Discount Notes is subject to a number of factors which include but are not limited to the final maturity of the Advance and the prepayment structure. Contact the Credit Department for availability and pricing. 
Accrual Basis
Actual / 360 day basis
Interest is Paid
On reset dates
Principal is Paid
At maturity
Principal Prepayment Policy
Excluding structured non-prepayment periods or "lock-outs," four and thirteen week DN Floating Rate Advances are prepayable in whole on any repricing dates without a fee. Four week DN Floating Rate Advances are only prepayable on repricing dates. Members must give the FHLB at least two New York business day notice of their intent to prepay. If a thirteen week DN Floating Rate Advance is prepaid prior to the repricing date, the fee is equal to the present value of 100 percent of the lost cash flow to the FHLB for the term to the next repricing based upon the difference between the most recent preceding DN Auction rate in effect on the Advance and the current yield on FHLB securities of comparable maturity to the next repricing date. The discount rate shall be the current yield on FHLB securities. If the current yield on FHLB securities is equal to or greater than the rate on the DN Floating Rate Advance, no fee will be assessed.
Submission of Application
A Discount Note Floating Rate Advance Application is required.

 

To learn more about our Advance products, contact Lisa Wishart at 800-828-4191.

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