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Bulletin No.: 2014-26
October 30, 2014

TO: MEMBERS

SUBJECT: Bank Offers Symmetrical Prepayment Feature on Select Advances

The Federal Home Loan Bank of Dallas (Bank) is pleased to announce the availability of a Symmetrical Prepayment feature for certain Fixed-Rate, Fixed-Term or Principal-Amortizing (PRAM) advances. This new feature provides members with flexibility and potential financial benefits with respect to the prepayment of advances.

Symmetrical Prepayment Feature

The Symmetrical Prepayment feature allows a member to prepay a fixed-rate, fixed-term, or principal-amortizing (PRAM) advance below par and realize a gain if interest rates have risen sufficiently since the advance was originated. Traditional advances without the Symmetrical Prepayment feature cannot be prepaid below par even if the rates on those advances are significantly lower than current rates.

The Symmetrical Prepayment feature can provide the following member benefits:

• Liquidity and flexibility – A member could use a Symmetrical Prepayment feature to provide long-term liquidity but retain the flexibility to prepay and potentially receive a prepayment credit in a rising-rate environment.

• Offset losses in fixed-rate mortgages, loans, or other investments from rising interest rates – A member could use a Symmetrical Prepayment feature to fund a fixed-rate investment and, if interest rates rise, the increased value of the feature may help offset market value declines of the fixed-rate investment.

The Symmetrical Prepayment feature must be requested by a member at advance origination and approval is subject to the Bank’s standard credit and collateral policies.

• Maturity Terms: 1 Year – 10 Years

• Minimum Transaction Size: $1 Million

• Qualifying Advance Types: Fixed-Rate, Fixed-Term or Principal Amortizing (PRAM) advances

• Availability and Pricing: Contact Member Sales at 800.442.9841

For additional information on the Symmetrical Prepayment feature, please see the enclosed white paper or contact your Member Sales Officer at 800.442.9841.

Sincerely,

Sanjay K. Bhasin
President and Chief Executive Officer