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Letters of Credit

Leverage the strength and security of FHLB Des Moines credit rating.

Letter of Credit Application

A Letter of Credit (LOC) from FHLB Des Moines is a product issued to guarantee payment for a member institution.

Letters of Credit are used for a variety of purposes, most commonly as an attractive alternative to pledging securities for public unit deposits. LOCs can also be used on other qualifying transactions -- bond issuances for community improvement projects, for example -- to improve the credit rating, thus lowering the cost of the project. The Bank's credit standing and capital market access substitutes for that of the member which helps to ensure a wide acceptance of our LOCs.

Confirming Letters of Credit

Used to provide credit enhancement and support for bonds, in turn lowering costs and encouraging growth in your community

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Standby Letters of Credit

An irrevocable agreement issued in favor of a public unit as an alternative to pledging securities to secure public unit deposits.

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Please contact the Money Desk with questions about Letters of Credit or for additional assistance and details.

Educational Resources

Standby Letters of Credit – A Low-Cost, High-Reward Solution for Procuring Public Deposits Article Standby Letters of Credit – A Low-Cost, High-Reward Solution for Procuring Public Deposits It's no secret that the Federal Home Loan Bank of Des Moines is best known for its Advance products, but did you know we have a lesser known product that is helping our members lower on-balance sheet liquidity costs and attract public funds? We're talking about Standby Letters of Credit (SBLOCs). Expanding Markets, Expanding Letter of Credit Uses Whitepaper Expanding Markets, Expanding Letter of Credit Uses Whether it's an opportunity to drive fee income and enhance ROE by backing a bond, supporting a self-insurance program, or covering a customer's performance obligation; it may be worth your while to explore some of these expanded uses of letters of credit. Public Unit Deposit Collateralization: Multiple Benefits to The FHLB Des Moines Member and to the Public Unit Depositor Whitepaper Public Unit Deposit Collateralization: Multiple Benefits to The FHLB Des Moines Member and to the Public Unit Depositor An FHLB Des Moines member institution requests a letter of credit via an application. Next, a letter of credit is generated in favor of a public unit. Once the letter of credit is in place, the member financial institution is set to generate funding from the public unit. Learn more in this article. The Impact of the Collateralization Method for Public Unit Deposit Letters of Credit on Liquidity Ratios and Income Whitepaper The Impact of the Collateralization Method for Public Unit Deposit Letters of Credit on Liquidity Ratios and Income It is valuable for public unit depositories to consider the benefits of diversifying their methods of collateralization. Customized sensitivity analysis involving direction of collateralization away from securities and pledging in favor of letters of credit can yield positive results.

See all educational resources regarding this topic.