Global Debt

The FHLBanks recognized the value of overseas investors very early, and have had a successful global debt facility since July 1994. The Global Debt Program (GDP) greatly expands the pool of investors, while diversifying FHLBank funding sources. After several years of steady issuance, sales jumped from $22 billion in 1998 to $86 billion in 2003, and will likely exceed $275 billion in 2008. With the market displaying an appetite for large, liquid, triple-A issues, GDP issuance is anticipated to remain strong indefinitely.

FHLBank global bonds are known for their flexibility; all can be investor-customized with different structures, terms and currencies. Generally, the FHLBanks will launch 10-15 separate Global bonds of $3 billion or greater during any 12 month period, along with numerous additional issues exceeding $1 billion. The most common global structures are bullets, floaters (both callable and non-callable) and fixed-rate callable bonds, with maturities of 18 months through five years. This activity has boosted GDP outstandings to well over $350 billion.

Like all FHLBank debt, bonds issued through the GDP carry the highest credit ratings from both Moody's (Aaa) and Standard & Poor's (AAA), and receive a 20% BIS risk-weighting in most countries. Superior credit quality, combined with an excellent distribution network and fast execution, has made FHLBank global bonds a top choice of investors and dealers worldwide.

Structures and Terms
GDP Bonds are available in maturities ranging from one year to 30 years. Issue sizes can range from $10 million to $7 billion or more, and individual bonds can be reopened to meet additional demand. Because the FHLBank System runs a conservative matched-book of assets and liabilities, and is an active user of swaps to reduce risk, there is a great deal of flexibility with the structures and terms of issues brought to market. Bullets are the most common global issues, particularly in sizes of $1 billion and up, but the System can effectively place floaters, step-ups/downs, zeros, and many others. Global bonds can be denominated in any currency with a country rating of AA- or better, and previous issues have been issued in Japanese Yen, Australian Dollars, British Pounds, German Marks, and Euros. Minimum denominations will vary from $10,000 to $500,000 or more, depending on the complexity and associated risk. Historical global bond data can be found in the Global Debt Statistics section of this web site. Secondary price information can be viewed on Bloomberg, TradeWeb, and other financial data services.

Purchase
Generally, underwriters contact the Office of the Finance if there is a structure/dollar target they need to meet demand. They may also negotiate directly with the regional FHLBanks. Dealers must be specifically approved for the Global Debt Program to bring these issues to market, although a dealer already underwriting domestic bond issues for the FHLBanks may be approved for specific GDP issues. Global bonds may be syndicated, or sold by a single dealer. In all cases, the FHLBanks provide rapid response to dealer inquiries and complete execution can be handled very quickly.

Settlement and Delivery
GDP bonds come with a variety of settlement options. They may be delivered through the Federal Book-Entry System, Euroclear, Clearstream, and/or DTC. The specific clearing and settlement options offered for a particular bond will depend on the expected distribution, currency denomination, and other factors.

Disclosure
Bond offerings issued through the Global Debt Program are subject to the Information Memorandum dated March 1, 2006 and as supplemented from time to time. GDP bonds are also subject to the terms and conditions as specified in the Pricing Supplement for the specific issue. The dealer provides these documents to investors prior to or at settlement. They are posted on Bloomberg or can be obtained through the Details & Documentation section of this web site.