The Callable Adjustable Rate Credit Advance
The Callable Adjustable Rate Credit (Callable ARC) Advance offers two distinct option structures that give members the flexibility to meet the demands of a fluctuating balance sheet. Members can use the call feature to strategically extinguish (and potentially rebook) the advance when the remaining term reaches either a 1-month-left-to-maturity or 1-year-left-to-maturity window, affording greater control in managing liquidity needs with no additional prepayment fees.
The Callable ARC is available with the Secured Overnight Financing Rate (SOFR) index with the following product structures:
Callable ARC Advance: 1-Month Call at the End | |
|---|---|
|
Terms |
4-month minimum term with a 1-month-left-to-maturity call option |
| Available Indices | SOFR |
| Maturities | 3-year maximum term for Callable advances tied to SOFR |
| Option Structure | One time European (Euro) call option |
| Example | 4 months Non-Call 3 months (4mNC3m) (Euro) |
Callable ARC Advance: 1-Year Call at the End | |
|---|---|
|
Terms |
3-year minimum term with a 1-year-left-to-maturity call option |
| Available Index | SOFR |
| Maturity | 3-year is the maximum term (at this time) |
| Option Structure | One time European (Euro) call option |
| Example | 3 year Non-Call 2 year 3yNC2y (Euro) |
Please note: Due to limited amounts available at this time, funds will be distributed on a first-come, first-served basis.
Advantages of the Callable ARC Advance:
- Respond to changes in liquidity profile: If you no longer require floating-rate funding, the Callable ARC provides the flexibility to extinguish the advance at no cost on its call date. Should you require liquidity of a longer-term, you can extinguish at the call date and rebook an advance of a longer tenor.
- Manage Balance Sheet and Capital Levels: Affords you with the ability to manage your balance sheet and capital levels more tightly.
- Match Fund Floating Rate Assets: The Callable ARC can be linked to the SOFR index, which can enable you to match the interest rate characteristics of floating-rate assets.
- Capitalize on Market Volatility: Should the pricing level on the ARC advance improve or worsen with market volatility, members have the flexibility of either extinguishing the advance and rebooking at more advantageous levels or maintaining the advance to its original contractual maturity.
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