September 23, 2022
Reintroducing Putable Advances, Fixed-Rate
Advances with SOFR Cap and ARC Advances with Cap/Floor
The Federal Home Loan Bank of New York (FHLBNY) is pleased to reintroduce Structured Advances to give members more flexibility and options to better manage their balance sheets. These Structured Advances were temporarily suspended as a result of LIBOR cessation. However, as a result of significant evolution of the Secured Overnight Financing Rate (SOFR), we are now reoffering our members Structured Advances using SOFR-based hedges on a limited basis. Initially, Structured Advances will be limited to $3 billion in aggregate volume, with a $2.75 billion* per member limit, available on a first-come, first-served basis.
- Putable Advances are Fixed-Rate Advances where the FHLBNY retains the option to extinguish the Advance at specified times (either one-time or quarterly option). Since the member gives the FHLBNY the option to “put” back the Advance, Putable Advances are priced very attractively and may be a solution for members to lower their cost of funds.
Putable Advance Attributes
Minimum Term 2 years Maximum Term 10 years Lockout ≥1 year Option European: 1 time
Accrual Method (Day count) Actual/360 Payment Frequency Quarterly Business Day Convention Following Minimum Advance Amount $1 million
- Fixed-Rate Advances with SOFR Cap can assist members in a rising rate environment where a cap with a specified threshold is chosen when booking the Advance. If SOFR rises to the point where it surpasses a specified threshold, the Advance would reprice downward, on a quarterly basis. The Fixed-Rate Advance with SOFR Cap is ideal to reduce interest expense when short-term rates rise sharply.
Fixed-Rate Advance with SOFR Cap Attributes
Minimum Term 1 year Maximum Term 10 years Accrual Method (Day count) Actual/360 Payment Frequency Quarterly Business Day Convention Following Interest Calculation Compounding Only Minimum Advance Amount $5 million
- Adjustable Rate Credit (ARC) Advances with Cap/Floor can help limit exposure to rising and falling interest rates by using embedded options (caps/floors). Caps give members flexibility to limit the maximum coupon of an ARC if rates rises, while adding a floor helps members obtain an advantageous level on an ARC by limiting how low the coupon could fall in a declining rate environment. Members may also create a corridor where they could add a cap and a floor to limit the variability of an ARCs coupon to a specified band.
ARC Advance with Cap/Floor Attributes
Minimum Term 3 months Maximum Term 30 years Accrual Method (Day count) Actual/360 Payment Frequency Quarterly Business Day Convention Modified Following or Following Interest Calculation Compounding or Simple Average Minimum Advance Amount $5 million
If you are interested in our Structured Advances or would like more information, please contact your Relationship Manager at (212) 441-6700 or the Member Services Desk at (212) 441-6600.
*At the FHLBNY’s sole discretion, structured advance parameters may potentially be adjusted based on market conditions. Please consult with the Member Services Desk.
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