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Credit Products – HLB-Option Advance

Intermediate- and long-term, fixed-rate advances for which the Federal Home Loan Bank of Boston holds the option to cancel on certain specified dates.


 Key Features
  • Fixed rate
  • Nonamortizing
Common Uses
  • Generally used in a flat yield curve environment to obtain a lower cost of funding than a Classic advance with a maturity equal to the lockout period.

  • Fund short- or long-term assets.
Maturities
  • Typically out to 20 years, but always with the condition that the Federal Home Loan Bank of Boston may cancel the advance prior to final maturity.
Lockout Periods
  • An HLB-Option advance is offered with an initial lockout period during which the Federal Home Loan Bank of Boston cannot cancel the advance.

  • You may choose a lockout period of three months to 10 years.
Cancellation
  • After the initial lockout period, the Federal Home Loan Bank of Boston may cancel the advance only on a scheduled cancellation date.

  • The Federal Home Loan Bank of Boston makes no warranties as to the circumstances under which it might cancel an advance.

  • The Federal Home Loan Bank of Boston will provide notice of cancellation in writing at least four business days before the cancellation date.

  • Some HLB-Option advances are offered with only one cancellation date. Others are offered with a series of cancellation dates at regular intervals, usually quarterly.

  • If the Federal Home Loan Bank of Boston exercises its option to cancel, you must repay the advance, but you may replace the advance with a new advance. The new advance may be for any structure and term to maturity agreed upon between you and the Bank, subject to the Bank's Products and Solutions Guide Adobe PDF icon . The rate on the new advance will be that in effect at the time the new advance is taken.
Availability
  • Available until 1 p.m.
Disbursement
  • Second-day
Offering Size
  • The minimum offering size is $2 million. Offering size orders for less than $2 million will be aggregated with other requests for advances with identical terms and will be executed when orders total $2 million.
  • The Federal Home Loan Bank of Boston will make its final pricing determination when the transaction can be executed.
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 HLB Option Advance Primer Adobe PDF icon for a discussion of the risks and other considerations associated with the HLB Option advance.
Payment of Principal and Interest
  • Principal due at maturity and interest due monthly on the second business day of the month.

  • If canceled, principal and interest are due on the cancellation date.

  • Interest is calculated on an actual/360-day basis.
Member-Initiated Prepayment
  • Prepayable at any time, subject to a fee, which may be substantially greater than those associated with Classic advances of the same maturity. Partial prepayments may be in amounts as small as $100,000 and in intervals of $100,000 thereafter.
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