Solutions

At the FHLBank Chicago, we understand that access to flexible funding is paramount in today’s dynamic economic landscape. That’s why we’re committed to continuing to offer a variety of advance specials. You can take advantage of our specials to secure discounts that come with flexibility in interest rate type, advance term, and transaction date – allowing you to tailor the structure to your unique needs! Your institution should ensure it takes advantage of our discounts, currently available now through September 30, 2023.

Advance Specials for All Occasions

Members continue to find value in borrowing longer-term fixed-rate advances in today’s volatile interest rate environment. Our advance specials can be leveraged in a variety of ways including, but not limited to: 

1. Adding Call Protection to an Advance: The fixed-rate callable advances structure gives members the option to cancel an advance after a predetermined lockout period. This is an excellent tool when paired with a prepayable asset. Members can take advantage of a 5 basis point (bps) discount on any A122 advances that meet the following criteria:

• Minimum principal per advance - $1 million
• Term – two year minimum and five year maximum. One year minimum lockout period
• Option type – either Bermudan (quarterly, semi-annual, annual) or European (single date)
• Use case: A callable advance can be used to hedge prepay risk inherent in residential mortgage assets, adding call protection to hedge mortgage portfolios.

2. Lock-in Fixed Rate, Fixed Term Funding Today: Fixed rate, fixed term advances are as straightforward as they get! They can be used to lock-in long term, low cost funding today, ahead of any further potential rate increases. Members can take advantage of a 5 bps discount on any A121 advances that meet the following criteria:

• Minimum principal per advance - $1 million
• Term – six month minimum and up to ten year maximum
• Use case: If members are anticipating still higher rates or are looking to fund longer term fixed-rate assets, they can execute longer-term advances under these specials to increase liability duration.

3. Match Fund an Amortizing Asset: An A290 Fixed-Rate Amortizer is best suited to match funding long-term prepay protected assets. Members can take advantage of a 5 bps discount on any A290 advances that meet the following criteria:

• Minimum principal per advance - $1 million
• Term – the maturity and amortization period must be at least five years or greater than the settlement date and cannot exceed 20 years from the settlement date.
• Use case: If members are anticipating still higher rates or just wanting to match fund an amortizing asset, they can execute longer-term advances under these specials to increase liability duration.

4. The Early Bird Special: Members who know they need funding early in the day should take advantage of our early bird special, available before 10 a.m. Members can take advantage of a 2 bps discount on all A120 (<= 27 days) advances, as well as one month and three month A121 advances executed before 10 a.m.

Meet Our Newest Special – the S.A.V.E. Advance

1. Flexible Funding: Members can customize the type, term, amount, and capitalization within the available structures below:

• Advance type – either:
  • The A121 Fixed Rate, Fixed Term advance, or
  • The A300 SOFR Floater advance
• Term - one to three years and any term within this range is eligible
• Amount – any amount up to a maximum of $5 million
• Capitalization – select either a 4.5% or 2% Reduced Capitalization Advance Program (RCAP) activity stock requirement.

2. Competitive Rates: With the S.A.V.E. Advance, you can access market rates at discounted prices, allowing you to minimize costs more effectively in today’s competitive landscape. This advance is eligible for a one-time 10 bps discount off the prevailing market rate, set when the advance is executed.
3. Diverse Options: We understand the difficulties in predicting where rates will go in the future and the term for which you will need funding. With rates vastly different than where they were one or two years ago, it can feel impossible to decide between funding options. If you believe rates will only continue to climb higher, it could make sense to capitalize on a fixed rate advance today and leverage the discount (and our dividends) to lock in lower cost funding. If you hold the opinion that there is an impending slowdown or a recession on the horizon, you could utilize a floating rate advance with the discount and dividends to play the falling rate scenario potentially in 2024.
4. Today, over 100 FHLBank Chicago members have utilized a S.A.V.E. Advance for a cumulative $450 million in outstanding advances! Members have executed at various terms and structures, with the 3 year fixed-rate advance being overwhelming popular.

How to Get Started

Call the Member Transaction Desk at 855.345.2244, option 1, anytime through September 30 to request our regular advance specials. Our S.A.V.E. Advance is available through October 31, 2023. No additional application is required. Members must specifically request the S.A.V.E. Advance to receive the discount. Please contact your Sales Director to learn more about our various advance specials and how they can be leveraged to meet the unique funding needs of your institution.

View our FAQ document to learn more about the S.A.V.E. Advance requirements and process for transacting. In addition, you can view the specifics of all advance specials on fhlbc.com.