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Derivatives

Three Convenient Options

FHLB Dallas offers interest-rate derivatives that members may use in either asset/liability management or business development initiatives.

Interest-Rate Caps
Interest-Rate Caps provide protection in a rising interest-rate environment. In exchange for an initial, one-time fee, the member is contractually guaranteed payment from FHLB Dallas in the event current market rates rise above a predetermined strike rate. Generally, interest rate caps are available with maturities ranging from six months to 15 years.
Interest-Rate Floors
Interest-Rate Floors provide protection in a falling interest-rate environment. In exchange for an initial one-time fee, the member is contractually guaranteed payment from FHLB Dallas in the event current market rates fall below a predetermined strike rate. Generally, interest-rate floors are available with maturities ranging from six months to 15 years.
Interest-Rate Swaps
Interest-Rate Swaps either provide a member the ability to synthetically fix floating-rate assets or liabilities or synthetically float fixed-rate assets or liabilities. Swaps are generally utilized for asset/liability management purposes or as a business development tool. As a business development tool, swaps allow members to provide their customers with long-term, fixed-rate financing while incurring the interest rate risk typical of a floating-rate loan. Interest-rate swaps are available for amortizing schedules, allowing members to make equal payments throughout the term, or bullet maturities, in which full payment is due at the end of the term.