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March 19, 2020 FHLBank Topeka Product Update

As communicated in our message related to COVID-19 earlier this week, we continue to have access to the debt markets to raise the funding necessary to meet our members’ liquidity needs. However, the size and unexpected nature of the Federal Open Markets Committee interest rate cuts over the past several weeks have made it difficult for the liquidity pool we use to fund line of credit and short-term advances to reprice down in a way that keeps up with the magnitude of the rate cuts. We expect to be able to lower our line of credit and short-term rates steadily over the coming weeks as pieces of our liquidity pool mature and are replaced with lower costing debt.

Additionally, we have suspended our offering of convertible and regular adjustable callable advances. Because of the embedded options in these advances along with the volatility of market rates in longer-term debt, it was determined those special risk characteristics are likely to be magnified in the current market environment. We will continue to monitor market factors and revisit this decision when the current volatility in the market has subsided.

Finally, to help our members participating in the MPF Program better manage increased volume, we are waiving delivery commitment extension fees up to 30 days for each delivery commitment expiring in March. The process for refunding the fees will work as a rebate that will take place at month-end for fees charged during the month of March. We’ll continue to evaluate our members' needs as we move into the month of April.

Please call your regional account manager or the Lending Desk at 800.809.2733 if you have any questions.

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