| Key Features
|
- Fixed rate
- Nonamortizing
- Early cancellation tied to LIBOR
|
| |
|
| Common Uses
|
- Macrofund balance sheet.
- Fund specific assets.
|
| |
|
| Maturities |
- Typically one to 15 years, but always with
the condition that the advance will be terminated
prior to final maturity if LIBOR equals or exceeds
a specified strike rate on a specified date. (LIBOR
is the London Interbank Offered Rate, which refers
to the rates that most major international banks dealing
in Eurodollar currency charge each other for large
loans.)
|
| |
|
| Lockout Periods |
- A Knockout advance is offered with an initial lockout
period during which the advance will not be terminated.
- You may choose a lockout period of three months
to 10 years.
|
| |
|
| Cancellation |
- After the initial lockout period, the Federal Home
Loan Bank of Boston will automatically cancel the
advance on any specified cancellation date if LIBOR
is equal to or greater than a predetermined "strike
rate" four London business days prior to the
scheduled cancellation date.
Some Knockout advances are offered with only one cancellation
date. Others are offered with a series of cancellation
dates at regular intervals, usually quarterly.
If the Knockout Advance is cancelled, you must repay
the advance, but you may replace the advance with
a new advance. The new advance may be for any structure
and term to maturity agreed upon between you and
the Bank, subject to the Bank's Products
Policy. The rate on the new advance will be
that in effect at the time the new advance is taken.
|
| |
|
| Availability |
|
| |
|
| Disbursement |
|
| |
|
| Offering Size |
- Orders for Knockout advances of less than $10 million
will be aggregated with other requests for advances
with identical terms and will be executed when orders
total $10 million.
- The Federal Home Loan Bank of Boston will make
its final pricing determination when the transaction
can be executed.
|
| Risks |
- Since they may be canceled before final maturity,
Knockout advances require careful risk analysis and
active liability management. The advance has features
similar to an option.
- The Federal Home Loan Bank of Boston does not act
as a financial adviser, and members should independently
evaluate the suitability and risks of these advances.
Please see the Knockout
Advance Primer for a discussion of the risks
and other considerations associated with the Knockout
advance.
- We encourage you to review the risks and rewards
of these advances and to consult your investment advisors
about investment strategies that suit your risk profile
and liability-management policies.
|
| |
|
| Payment of
Principal and Interest |
- Principal due at maturity and interest due monthly
on the second business day of the month.
- If canceled, principal and interest are due on the
cancellation date.
- Interest is calculated on an actual/360-day basis.
|
| |
|
| Member-Initiated
Prepayment |
- Prepayable at any time, subject to a fee, which
may be substantially greater than those associated
with Classic advances of the same maturity.
|
| |
|
| More Information |
- For details on the terms and conditions of the Knockout
advance, consult the application form, which is available
from the Money Desk at moneydesk@fhlbboston.com
or 1-800-357-3452.
|
