PHOTO: farmcredit.com

Missouri (News Release) — A report on the Farm Credit System’s (FCS or System) funding conditions were recently released to the Farm Credit Administration (FCA) board.

According to a news release from FCA, the System’s debt volume outstanding and its portion of the agency debt market have been growing steadily. 13 percent of the agency debt market is represented by the System’s $258 billion in debt outstanding. Factors affecting the System debt include: domestic and foreign monetary policies, recently implemented financial regulations, and the System’s long-standing strong financial performance.

The report also discussed trends in the System’s interest rate spreads, the maturity profile of its outstanding debt and the composition of its debt portfolio.

Since December of 2015, when the Federal Reserve increased the federal funds target range, FCS debt yields have increased. Substantial volatility in 2016 gave the System the opportunity to exercise call options on $58 billion of callable debt. The System’s net interest spread however, continued to decrease. Even as FCS debt yields generally increased, the System was still able to enjoy favorable risk premiums on the debt it issued to investors.

The news release shared these notational votes:

Since the February FCA board meeting, the following notational votes have occurred. Notational votes are actions taken by the FCA board between board meetings.
  • On Feb. 16, the board granted preliminary approval of the proposed plan of mergerof Badgerland Financial, ACA, and its wholly owned subsidiaries, and 1st Farm Credit Services, ACA, and its wholly owned subsidiaries, with and into AgStar Financial Services, ACA, and its wholly owned subsidiaries.The continuing association will be renamed Compeer Financial, ACA, with subsidiaries Compeer Financial, PCA, and Compeer Financial, FLCA. The board’s approval is subject to certain conditions. If the voting stockholders of the three associations vote to approve the plan of merger and all conditions for final approval are met, the merger will take effect on July 1, 2017.
  • On March 6, 2017 the board granted preliminary approval of the proposed plan of merger of United FCS, ACA, and its wholly owned subsidiaries, with and into AgCountry Farm Credit Services, ACA, and its wholly owned subsidiaries. The continuing association will be AgCountry. The board’s approval is subject to certain conditions. If all requirements for the final approval are satisfied, the merger will take effect on July 1, 2017.
  • On March 8, the board removed the regulatory capital conditions and limitations it had previously imposed on System institutions’ outstanding issuances of preferred stock and subordinated debt to outside investors (i.e., investors other than the cooperative member-borrowers of the institutions) and confirmed the regulatory capital treatment of these issuances under FCA’s new tier 1/tier 2 capital rule. The new capital rule became effective on Jan. 1, 2017.

For more information visit the FCA website.