
Master Notes
Master notes are short-term debt instruments issued by the Federal Farm Credit Banks Funding Corporation. The corporation distributes Farm Credit Debt Securities, such as discount notes, designated bonds, floating-rate bonds, fixed-rate bonds and retail bonds to various investors, including commercial banks, states, municipalities, pension and money-market funds, insurance companies, investment advisers, corporations, foreign banks and governments, and other investors in the United States and internationally. According to the Federal Farm Credit Banks Funding Corporation, investors should have sufficient knowledge and experience in financial and business matters to evaluate the notes, as well as the merits and risks of investing in them. Master notes are short-term debt instruments issued by the Federal Farm Credit Banks Funding Corporation. Master notes are a short-term debt instrument issued by the Federal Farm Credit Banks Funding Corporation.

What Are Master Notes?
Master notes are short-term debt instruments issued by the Federal Farm Credit Banks Funding Corporation. They are considered high-quality fixed-income securities and are generally accepted as collateral for put or call options. Their purpose within the context of the Federal Farm Credit System (FFCS) is to provide loans to rural communities and the U.S. agricultural sector.



How Master Notes Work
Based in Jersey City, N.J., the Federal Farm Credit Banks Funding Corp. manages various debt issuances on behalf of the banks in the FFCS. The system is a group of 71 financial institutions in the United States and Puerto Rico designed to provide funding to the U.S. farming and agricultural sectors. The Federal Farm Credit Banks Funding Corp. also provides consulting, accounting, and financial reporting services to banks.
The corporation distributes Farm Credit Debt Securities, such as discount notes, designated bonds, floating-rate bonds, fixed-rate bonds and retail bonds to various investors, including commercial banks, states, municipalities, pension and money-market funds, insurance companies, investment advisers, corporations, foreign banks and governments, and other investors in the United States and internationally. It markets and distributes securities through dealers.
Banks in the system cannot hold deposits, so debt issuances are their main source of funding. Although the debt securities are not guaranteed by the U.S. government, the FFCS possesses a farm credit insurance fund, which would supply principal and interest payments should a system bank go bankrupt. System institutions are federally chartered under the Farm Credit Act and are subject to supervision, examination and regulation by a federal agency, the Farm Credit Administration.
Real World Example of Master Notes
The master notes issued by the Federal Farm Credit Banks Funding Corporation are offered with a minimum face value of $25 million. As such, they are typically an appropriate investment only for large money managers. Master notes mature in one year and pay a coupon indexed to the Fed Funds Rate or another appropriate index. Money managers value these notes highly owing to their high liquidity, as well as the fact that the principal amount can be adjusted 25% in either direction. They can also be used as underlying collateral in put or a call.
According to the Federal Farm Credit Banks Funding Corporation, investors should have sufficient knowledge and experience in financial and business matters to evaluate the notes, as well as the merits and risks of investing in them. In addition, investors should have access to, and knowledge of, appropriate analytical tools. No investor should purchase a note unless the investor understands and has sufficient financial resources to bear the price, yield, market, liquidity, structure, redemption and other risks associated with it.
Related terms:
Bond Market
The bond market is the collective name given to all trades and issues of debt securities. Learn more about corporate, government, and municipal bonds. read more
Debt Issue
A debt issue is a financial obligation that allows the issuer to raise funds by promising to repay the lender at a certain point in the future. read more
Deposit Insurance Fund – DIF
A deposit insurance fund insures the deposits of individuals covered by the Federal Deposit Insurance Corporation (FDIC). read more
Federal Agencies
Federal agencies are special government organizations set up for a specific purpose such as resource management, financial or national security. read more
Federal Land Bank (FLB)
The federal land bank (FLB) was established by President Wilson in 1916 to help farmers. Today, it is part of the Farm Credit System. read more
Federal Funds Rate
The federal funds rate is the target interest rate set by the Fed at which commercial banks borrow and lend their excess reserves to each other overnight. read more
Federal Farm Credit System (FFCS)
The Federal Farm Credit System (FFCS) is a network of financial institution that provide financing for agricultural companies in the United States. read more
Interpolated Yield Curve (I Curve)
An interpolated yield curve or "I curve" refers to a yield curve created using data on the yield and maturities of on-the-run Treasuries. read more
Money Market Fund
A money market fund is a type of mutual fund that invests in high-quality, short-term debt instruments and cash equivalents. read more
Treasury Note
A treasury note is a marketable U.S. government debt security with a fixed interest rate and a maturity between two and 10 years. read more