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Home > News & Events > Press Releases

Press Release
April 21, 2009

Federal Reserve announces two new interest
rates applicable to loans extended under Term
Asset-Backed Securities Loan Facility (TALF)
For release at 4:00 p.m. EDT
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The Federal Reserve Board on Tuesday announced two new interest
rates applicable to loans extended under the Term Asset-Backed
Securities Loan Facility (TALF). The rates apply to certain loans secured
by asset-backed securities (ABS) with weighted average lives to
maturity (WALM) of less than two years. The new rates will be based on
one- and two-year London interbank offered (Libor) swap rates, resulting
in a better match to the duration of the underlying ABS collateral.
The new rates, along with some technical clarifications, will take effect
for the May TALF funding. Subscriptions for the May funding will be
accepted on May 5, and the loans will settle on May 12.
The new interest rates apply to fixed-rate TALF loans secured by ABS
that do not benefit from a government guarantee. The interest rate for
TALF loans secured by ABS with a WALM of less than one year will be
the one-year Libor swap rate plus 100 basis points. The interest rate for
loans secured by ABS with a WALM of one year or more but less than
two years will be the two-year Libor swap rate plus 100 basis points. The
interest rate on loans secured by ABS with a WALM of two years or
more will continue to be the three-year Libor swap rate plus 100 basis
points.
The Board authorized the TALF on November 24, 2008, under section

13(3) of the Federal Reserve Act. The TALF is intended to make credit
available to consumers and businesses on more favorable terms by
facilitating the issuance of ABS and improving the market conditions for
ABS more generally. Under the TALF, the Federal Reserve Bank of New
York extends three-year loans secured by AAA-rated ABS backed by
newly and recently originated loans.
A new term sheet and a revised frequently-asked-questions document
are attached.
Terms and conditions
Frequently asked questions

Last Update: April 21, 2009

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