WASHINGTON-The Federal Home Loan Banks are offering $500 million of bonds linked to mortgage prepayments.
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The MBS offering, the system's first in two years, will carry a 2.6% coupon and will mature no later than April 2015. The offering, which will be guaranteed by the system's 12 FHLBs, comes as NCUA is planning a multi-billion dollar offering of MBS comprised of legacy assets from corporate credit unions.
The FHLB System is among the largest government issuers of debt with $880 billion of bonds outstanding.
The bonds are said to be similar to collateralized mortgage obligations, known as CMOs, because the timing of payments to investors will vary based on loan refinancing, home sales and other sources of prepayments.
