On Your Side
June 4, 2018
CFC Investment Products: Helping You Earn a Competitive Return on Excess Cash
For more than four decades CFC has offered member cooperatives a suite of short-term and long-term investment products. These flexible options, complete with varying maturities and competitive returns, can help members earn supplementary income while also providing a valuable source of funds for the electric cooperative network.
“We started our ‘win-win’ commercial paper program for members in the early 1970s,” recalls CFC CEO Sheldon C. Petersen. “It gave members the opportunity to invest in their financial cooperative and earn a return while also enhancing CFC’s position in the capital markets.”
One word that’s frequently used to describe them is ‘sticky.’ Historically, they have proved to be a very stable source of funding—funding that’s ‘recycled’ in the form of low-cost loans to the electric cooperative network.
Member Investments Impress Rating Agencies
CFC Senior Vice President and CFO J. Andrew Don explains that rating agencies and institutional investors take a favorable view of member investments in CFC as they demonstrate evidence of members’ commitment to the organization. They have also historically proved to be a very stable source of funding.
“When banks, investors and rating agencies look at member investments, they view them similar to consumer deposits in a bank or credit union,” Don notes. “One word that’s frequently used to describe them is ‘sticky’ because CFC member investments stay at a very predictable level, and that’s a credit positive for us.”
Building on the success of commercial paper, CFC has introduced other investments over the years to better meet members’ needs based on maturity preference, return requirements and minimum investment requisites.