Products and Solutions Guide - Federal Home Loan Bank of Boston

Fixed-Rate Advances – Knockout AdvanceKnockout AdvanceNonamortizing, fixed-term and rateadvance. The advance will be cancelledautomatically if LIBOR equals or exceedsa specified strike rate on selected dates,both selected by the member.Common Uses• Generally used in a flat yield-curveenvironment to obtain a lower cost offunding than Classic advances with amaturity equal to the lockout period.• Fund short- or long-term assets.Terms• Maturities available for terms out to 20 years, but alwayswith the condition that the advance will be terminatedprior to final maturity if LIBOR equals or exceeds thespecified strike rate on a specified date.• The Knockout advance is offered with an initial lockoutperiod during which the advance will not be terminated.You may choose a lockout period of three months to10 years. After the initial lockout period, the Bank willautomatically cancel the advance on any specifiedcancellation date if LIBOR equals or exceeds the strikerate, four London business days prior to the scheduledcancellation date.• Some Knockout advances are offered with only onecancellation date. Others are offered with a series ofcancellation dates at regular intervals, usually quarterly.DisbursementFunds are available two business days after the trade date.Principal and Interest• Principal is due at maturity. Interest is due monthly on thesecond business day of the month.• The minimum offering size is $10 million. Offering sizeorders for less than $10 million will be aggregated withother requests for advances with identical terms and willbe executed when orders total $10 million.• If the Knockout Advance is cancelled, you must repay theadvance, but you may replace the advance with a newadvance. The new advance may be for any structure andterm to maturity agreed upon between you and the Bank.The rate on the new advance will be that in effect at thetime the new advance is taken.• Interest is calculated on an actual/360-day basis.PrepaymentAdvances may be prepaid, subject to a fee. Please see theKnockout Advance Confirmation for more information ofprepayment fees.Additional InformationFor further details, including comments on risks please seeKnockout Advance.credit productsMain Telephone: 617-292-9600 • Customer Service: 1-800-358-9709 • Money Desk: 1-800-357-3452 • Relationship Managers, MPF, and Housing & Community Investment: 1-888-424-3863 14