Strong Interest In Reverse Inquiries Seen

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Southwest Corporate FCU reported client credit unions continue to demand customized investment vehicles.

"We are on pace to match last year's record setting number of 'reverse inquiry' structures," said Cynthia Shi, Director of Portfolio Management at Southwest Corporate. "And it is likely that the dollar volume invested through the creation of these reverse inquiries will surpass last year's volume."

Reverse inquiries are customized structured certificates designed to meet an individual credit union's specific needs. Southwest Corporate has created 39 such customized certificates so far this year representing $358 million in credit union investments. Last year, credit unions invested $400 million through Southwest Corporate reverse inquiries. Reverse inquiries are structured when credit unions come to Southwest Corporate looking for a customized investment opportunity that meets the specific needs of their particular credit union.

Shi said reverse inquiries and the more standard "special certificates," which are offered as a way of aggregating investment dollars to obtain higher yields, are enjoying better than expected attention this year.

"While lending is up, there is still plenty of demand for great investments," Shi said, particularly with yields well above 5%. "It has been some four years since investment interest rates have been above 5%," she added.

Southwest Corporate noted that while lending remains strong for some credit unions, many continue to have significant investable funds. The most popular investment durations (two and three-year structures) are shorter periods than the more popular car loans that now span five or six years, SWFCU said.

In addition to the reverse inquiries, Southwest Corporate said it continues to create Special Structured Certificates available to investing credit unions on a first-come, first-served basis.

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