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Credit Products – Discount Note Auction-Floater

Fixed-term advance with an interest rate that adjusts according to changes in the Federal Home Loan Bank System's Office of Finance discount-note auction rates.


 Key Features
  • Adjustable rate
  • Fixed term
  • Nonamortizing
Key Advantages
  • Long-term funding commitment at short-term rates.
  • Typically lower all-in rate than LIBOR.
Common Uses
  • Manage balance-sheet interest-rate sensitivity.
  • Manage liquidity needs.
Maturities
  • Terms out to 20 years.
Index
  • Office of Finance four- and 13-week discount-note auctions.
Minimum
  • $2 million minimum but smaller requests may be accommodated in special offerings.
Disbursement
  • Next day
Risks
  • The Federal Home Loan Bank of Boston does not act as a financial adviser, and members should independently evaluate the suitability and risks of these advances. Please see the Discount Note Auction-Floater Advance Primer Adobe PDF icon for a discussion of the risks and other considerations associated with the Discount Note Auction-Floater advance.
Rate-Reset Frequency
  • Every four or 13 weeks on an indicated reset date, based on the result of the prior day's discount-note auction, plus a predetermined spread.

  • Spread to the index is locked-in for the full term of the advance.
Payment of Principal and Interest
  • Principal due at maturity.
  • Interest due on rate-adjustment date.
Prepayment
  • Prepayable in full or in part on reset date without fee, or at any other time, subject to a fee. Partial prepayments may be in amounts as small as $100,000 and in intervals of $100,000 thereafter.
Forward Rate Commitments
  • Not available
More Information
  • For more information, contact the Money Desk.

  • Advance fact sheet Adobe PDF icon (and historical correlation between Discount Notes and LIBOR)

 
 
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