Interest Rate Caps, Floors, and Collars

Description
Interest rate caps, floors, and collars are offered in various sizes, sometimes as small as $5 million, subject to availability.

Term
Various terms may be arranged, usually in the 1 to 10 year range.

Application
Call the FHLBI by 5:00 p.m. Indianapolis time to request a credit decision and to discuss notional principal amounts. Specific terms will be discussed after credit approval has been made.

Beginning date
The cap, floor, or collar agreement will begin within 30 calendar days of credit approval; a specific beginning date will be discussed as part of the conditions of the agreement.

Rate
Specific terms will be negotiated after credit approval.

Commitment fee
The fee for a cap, floor, or collar will be determined by the FHLBI on the basis of the terms requested.

Collateral
The member will be required to post collateral in accordance with the requirements set forth in the Collateral Policy.

Capital stock
For each cap, floor, or collar, a member must hold FHLBI capital stock equal to at least 5% of the amount of collateral required for the agreement. This requirement is in addition to the capital stock required for advances and other credit products, and will be adjusted monthly with changes in the collateral requirement. Members will be notified of any required stock purchases.

Termination
Terminating a cap, floor, or collar may be arranged with the FHLBI based on market conditions and the requirements of the particular interest rate agreement. Call for details.

Updated: February 25, 2008