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Bulletin No.: 2019-29
December 3, 2019

TO: MEMBERS

SUBJECT: Bank Introduces SOFR-Linked Advance

The Federal Home Loan Bank of Dallas (Bank) is pleased to announce the availability of the new SOFR-Linked advance. The SOFR-Linked advance is a fixed-term, floating-rate, non-amortizing advance that is indexed to the Secured Overnight Financing Rate (SOFR), which is published each business day by the Federal Reserve Bank of New York. SOFR is a measure of the cost of borrowing cash overnight that is collateralized by Treasury securities.   

What is a SOFR-Linked Advance?

  • An alternative to LIBOR Floating-Rate advances
  • Available with 3-, 6-, 9-, 12-, 15- or 18-month terms
  • No minimum transaction size
  • Quarterly interest payments based on the settlement date

How It Works
The SOFR-Linked advance's interest rate resets daily and is based on the SOFR published each business day by the Federal Reserve Bank of New York. The SOFR is based on the previous business day's repo transactions. The Bank takes the published SOFR, which is referred to as the Reference Rate, and adds a spread to determine the SOFR-Linked advance's interest rate for that day.

The SOFR-Linked advance's interest rate resets daily, except when an interest payment date or advance maturity date is approaching. The interest rate will freeze during the Rate Freeze Period, starting two days before a payment or maturity date.

Member Benefits

  • Manage interest-rate sensitivity
  • Achieve a consistent spread by reducing repricing risk
  • Advance is linked to a fully transaction-based index that is not easily manipulated

Contact Member Services at 844.FHL.BANK (844.345.2265) for pricing and availability of the SOFR-Linked advance. Additional educational materials will be available at fhlb.com/sofr.

Sincerely,


Kalyan Madhavan
Executive Vice President, Group Head of Members and Markets