ALEXANDRIA, Va. – The NCUA Board yesterday approved amendments to its Temporary Corporate CU Liquidity Guarantee Program, extending the program that provides a 100% government guarantee of all unsecured short-term debt issued by corporate credit unions.
The program, along with the guarantee of all shares/deposits in corporates, is part of an extensive effort by NCUA to bolster confidence in the corporate network.
The guarantee of debt covers such instruments as federal funds purchased, promissory notes, commercial paper and unsubordinated unsecured notes. The terms of the current temporary liquidity guarantee covers debt issued between Oct. 16, 2008 and June 30, 2009 and maturing on or before June 30, 2012.
NCUA has agreed to extend the issuance period ending date one year, from June 30, 2009, to June 30, 2010; and extend the date guaranteed debt will expire from June 30, 2012, to June 30, 2017. It will also change the fee structure, which goes into effect July 1, 2009, from 75 basis points per year for all guarantees to a fee dependent upon maturity of the debt.
"Today’s changes to this program provide liquidity enhancement that complements the Temporary Corporate Credit Union Share Guarantee Program," said NCUA Chairman Michael Fryzel, in a statement. "The fee structure is expected to provide sufficient income to fund any losses related to the TCCULGP. Additionally, the extended term of the guarantee will allow corporate credit unions to secure low-cost stable sources of funding."
The amendments also add language specifying that the instruments are ultimately backed by the full faith and credit of the U.S. Government.
The program is open to all corporate credit unions. Corporates that wish to participate in the revised program must sign a new contract with NCUA.
