The FHLBNY Putable Advance Modification Program

In an effort to provide our members with additional solutions for today’s challenging economic environment, the FHLBNY is pleased to offer the opportunity to modify certain advances. Currently under the Advance Modification Program there are multiple options available:

Putable Advance Modification:

Offers the flexibility to change the terms of outstanding Putable Advances so a member can realign its interest rate risk and funding positions by extending the lockout periods, lengthening the final maturity, and/or switching the option types (i.e., Bermudan or European options).

Putable Advance to Fixed-Rate Advance Modification:

Offers the ability to reduce optionality in a member's balance sheet, allowing the member to predict maturities with more certainty, as well as to better manage funding and liquidity risks.

Re-Modifications

Members now have the ability to modify a previously modified Putable Advance. A Putable Advance is limited to one modification per 365 day period. Advances which have been modified into a regular fixed structure cannot be re-modified.

Please note that Putable Advances that are maturing within 12 months are not eligible for modification. Modifications will be handled on a best-efforts basis and the following eligibility criteria apply:

  • The value of a modified advance must pass a 10% modification test.
  • The modified advance’s maturity and effective duration must be greater than or equal to the original advance; however,
    • Modified maturities cannot exceed 5 years if the original advance has less than 2 years remaining to maturity; and
    • Modified maturities cannot exceed 7 years if the original advance has less than 4 years remaining to maturity.

Prior to modification, the FHLBNY must review and assess each proposed transaction to ensure it conforms to FHLBNY's modification criteria. Three tests will need to be satisfied in order to complete a modification: 1.) structural similarity; 2.) 10% modification test; and 3.) prospective hedge analysis if the advance is hedged.

In addition, in order to be eligible for a modification, you will need to:

  • Executed the FHLBNY’s current version of the “Callable Advance, Putable Advance and Putable Advance with Customized Strike Customer Certification” (HLB-126) and reviewed the related disclosure (HLB-125);
  • Orally acknowledge, at the time of transaction, the structured advance pre-transaction disclosure has been reviewed; and
  • Provide a suitability disclosure (HLB-127: Advances Modification Certification).

If you have any questions, please contact a Calling Officer at (212) 441-6700.

Note: It is not the role of the FHLBNY to provide advice on which advances, if any, should be submitted for modification. Therefore, entire portfolios cannot be submitted for analysis, and each modification request must be identified individually by an advance number.


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