The 12 Federal Home Loan Banks are the only way most of community financial institutions can access the global capital markets. Structured as cooperatives, their customers are also their owners, fostering conservative management and a long-term view of financial performance.

Frequently Asked Questions:
Federal Home Loan Bank Debt

How do the Federal Home Loan Banks (FHLBanks) raise the funds needed to provide advances to their member institutions (members)?

The FHLBanks raise funds for member lending, mortgage programs and other balance sheet needs through the sale of a wide variety of debt securities, called consolidated obligations, in the global capital markets. FHLBanks are jointly and severally liable for the payment of consolidated obligations.

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Who coordinates debt issuance for the FHLBanks?

The Office of Finance coordinates debt issuance, and acts as the fiscal agent. As the clearinghouse for FHLBank debt transactions, the Office of Finance accesses the global capital markets daily to obtain the most cost-effective terms possible given current market conditions.

The FHLBanks issue discount notes in maturities ranging from one day to one year, and bonds with maturities of six months to 30 years. The majority of issues are between one and five years. Issue size can range from millions to over several billion dollars.

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How does debt issuance benefit the member institution?

Funds raised through the sale of bonds and discount notes carry a lower interest rate than FHLBank members could obtain on their own, and enable member financial institutions to pass that savings on and provide lower-cost mortgage credit to homebuyers and housing agencies.

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How are investors attracted to the consolidated obligations?

Investors are attracted to the excellent asset quality of the FHLBanks, conservative risk-adjusted capitalization, conservative underwriting standards and quality monitoring policies, and the cooperative structure.

The FHLBanks have a unique, self-capitalizing cooperative structure that provides strong credit support through the concept of joint and several liability. Principal and interest from all consolidated obligations are backed by the financial strength of the entire FHLBank System.

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Who buys debt securities issued by the FHLBanks?

FHLBank debt is sold through a broad, international network of approximately 80 underwriters.

Buyers represent the entire spectrum of domestic and international fixed-income investors, including commercial banks, central banks, investment managers, major corporations, pension funds, government agencies, and individuals.

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FHLBanks
The Basics

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