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Secured Overnight Financing Rate Advance

As a leader in the global market, the Federal Home Loan Bank System is preparing for a future shift in the benchmark interest rate from the London Interbank Offered Rate (LIBOR) to the Secured Overnight Financing Rate (SOFR).

In anticipation of this transition over the next few years, the Federal Home Loan Bank of Des Moines (FHLB Des Moines) will offer occasional opportunities for members to participate in a SOFR benchmark advance. Stay tuned for more information regarding upcoming offerings. For more information, click here.

Background

SOFR was established by the Alternative Reference Rate Committee (ARRC) as a potential replacement for LIBOR as the benchmark interest rate in the global market.

The United Kingdom’s Finance Conduct Authority (FCA) accelerated the advancement of SOFR when they announced that panel banks would no longer be compelled to participate in surveys used to determine daily LIBOR rates after 2021.

SOFR is intended to be a broad measure on the cost of borrowing cash overnight collateralized by Treasury securities. The Federal Reserve reports that SOFR is calculated as a volume-weighted median of transaction-level tri-party repo data collected from The Bank of New York Mellon, as well as General Collateral Finance repurchase agreement transaction data and data on bilateral United States Treasury repurchase transactions cleared through the Fixed Income Clearance Corporation (FICC) delivery-versus-payment service.

Three Member Directors Declared Elected

Three member directors from Idaho, North Dakota and Wyoming have been declared elected following the conclusion of the nomination period for the 2018 FHLB Des Moines Director Election nomination period on August 2, 2018. Click here for full details.

Letters of Credit Changes

The following changes to Federal Home Loan Bank of Des Moines Letters of Credit go into effect on February 5, 2018:

Collapsing of Price Tiers

  • FHLB Des Moines is collapsing the pricing tiers for Letters of Credit.
  • There is now a single price for all Letter of Credit types, regardless of size, including Letters of Credit issued in conjunction with the FHLB Des Moines Public Unit Deposit program.
  • This change provides greater flexibility for members. 
  • To view the updated pricing schedule, please see the Fee Schedule.

Elimination of Average Daily Balance and Direct Pay Letters of Credit

  • The Average Daily Balance and Direct Pay Letters of Credit are no longer available.
  • Outstanding Average Daily Balance and Direct Pay Letters of Credit types will be honored until the next scheduled renewal date, or expiration date, whichever occurs first.

Adjustment to Minimum Fees

  • FHLB Des Moines has long held our service fees well below industry norm.
  • The changes to our Letters of Credit fees are specific to minimum fees which many Letters of Credit charges easily exceed.

For questions regarding the Letters of Credit changes above, please contact your FHLB Des Moines Relationship Manager

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