Wednesday, April 24, 2024
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MANAGING DIRECTOR:
Scott Carrithers
PORTFOLIO SALES AND SERVICE:
Chris Thompson • Sean Doherty • Kevin Doyle • Mark Tranckino
Natalie Regan • Aaron Stoffer • David Farris • Lonnie Harris • Brian Schaff • Jeff Macy
Josh Kiefer • Tom Toburen • Todd Czinege
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US Treasury Market
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| Date |
1 mo |
3 mo |
6 mo |
1 yr |
2 yr |
3 yr |
5 yr |
7 yr |
10 yr |
20 yr |
30 yr |
| 04/17/24 |
5.39 |
5.40 |
5.36 |
5.16 |
4.93 |
4.77 |
4.62 |
4.61 |
4.59 |
4.82 |
4.70 |
| 04/18/24 |
5.39 |
5.40 |
5.37 |
5.18 |
4.99 |
4.82 |
4.68 |
4.66 |
4.63 |
4.86 |
4.73 |
| 04/19/24 |
5.39 |
5.41 |
5.37 |
5.17 |
4.99 |
4.82 |
4.67 |
4.65 |
4.62 |
4.84 |
4.71 |
| 04/22/24 |
5.39 |
5.41 |
5.37 |
5.17 |
4.97 |
4.80 |
4.65 |
4.64 |
4.61 |
4.84 |
4.71 |
| 04/23/24 |
5.39 |
5.38 |
5.37 |
5.14 |
4.93 |
4.77 |
4.63 |
4.62 |
4.60 |
4.85 |
4.73 |
The data in the table above is static as of the time it was pulled, so rates may have changed. Treat all data in this table and PMR as indications only and availability is always subject to change. This information was pulled manually from sources we believe to be reliable. New source, as of 12/12/2022, Bloomberg, L.L.P. As of: close of business 4/23/2024.
Are DUS Bonds a Good Fit for my Bank?
DUS (Delegated Underwriting & Servicing) bonds have become a valuable tool within the Agency CMBS sector. Over the last 15 years, the program sponsored by FNMA has grown from $800mm to over $400b- today. FNMA supports a multitude of commercial and multi-family projects from apartment buildings, senior and student housing to military housing and coop’s that support local area (low-medium income) housing that often helps community banks satisfy credits for their CRA requirements.
DUS lenders under the FNMA program have strict guidelines for underwriting. We believe these guidelines provide investors with access to a product with solid credit quality. These are often defined through Tiers of credit. FNMA also guarantees timely payments principal and interest to ensure AAA quality for investors. Additionally, DUS bonds can feature Yield Maintenance (YM) provisions, as well as prepayment penalties, that offer prepayment protection for investors. This creates a structure ideal for banks that behave very similar to Agency bullets in a “balloon-like” structure that mitigates extension and reinvestment risk with tight prepayment windows. The benefit is a “bullet-like” return profile providing for additional spread opportunities. DUS often provide a better return profile (into lower rates) versus comparable 10-15yr MBS product (less refi risk).
We currently offer the following PC (Freddie Mac program version). It’s benefits may be a good fit for your portfolio.
o 4.5 year legal stated final
o Secured Credit (Timely P&I guaranteed by Freddie Mac in rare event of default)
o Very limited extension risk
o Picks ~22bps vs. 5yr/nc3yr 1x FHLB 5.04% (recent new issue)
o Possible CRA credit for local bank
Source: Bloomberg, LP / Indications only, subject to change and availability without notice.
Please reach out to your Country Club Bank representative to discuss the nuances and advantages of utilizing DUS bonds in your portfolio. We believe it offers a great way to obtain bullet-like cashflow with more spread than a traditional bullet and it just may qualify to meet your CRA needs too!
This information is intended for institutional investors only. The material provided in this document/presentation is for informational purposes only and is intended solely for private use. Past performance is not indicative of future results. This material is not intended as an offer or solicitation for the purchase or sale of any financial instruments.
•Not FDIC Insured •No Bank Guarantee •May Lose Value
