LIBOR Financing Alternative
As the market transitions away from the London Interbank Offered Rate (LIBOR), a Discount Note (DN) advance could be an attractive alternative for floating rate funding.
Discount Note Market - Quick Facts:
Discount Note Market - Quick Facts:
- Discount Notes are short term (less than 1 year) debt securities that have been issued by the FHLBanks since 1975 and are purchased by a global institutional investor base.
- Total DN issuance in 2018 was $2.38 trillion and YTD (through 10/31/19) was $1.78 trillion.
- DN Index is 99% correlated historically to comparable LIBOR Index.
- FHLBanks are the second largest issuer in the public debt market behind the U.S. Treasury.
Benefits of DN Floater Advances:
- DN Floater advances have historically been lower cost than comparable LIBOR advances due to the FHLBanks’ strong credit ratings (Aaa/AA+).1
- Flexible rate reset dates that can be customized to your ALM needs.
- Ability to embed prepayment feature on reset dates.
- Weekly DN auction results available on the FHLBank Office of Finance website and DN Index history on Bloomberg. Daily quotes for DN Floater advances available at fhlbc.com.
![FHLBC DN Index FHLBC DN Index](/images/default-source/solutions/notes-from-the-desks/c5.jpg?sfvrsn=60a5d84c_2)
Getting Started
1. Choose Your Term: Overnight to 10 years, depending on the advance type.
2. Choose Interest Rate Reset Frequency: Overnight; 4-, 13-, or 26- weeks. Spread is locked at time of advance.
3. Execute Advance: Contact your Sales Director or call the Member Transaction Desk at (855) 345-2244.
1. Choose Your Term: Overnight to 10 years, depending on the advance type.
2. Choose Interest Rate Reset Frequency: Overnight; 4-, 13-, or 26- weeks. Spread is locked at time of advance.
3. Execute Advance: Contact your Sales Director or call the Member Transaction Desk at (855) 345-2244.