Master Notes


DEFINITION of 'Master Notes'

High-quality, short-term debt instruments offered by the Federal Farm Credit Bank (FFCB) with a minimum face value of $25 million. Master notes typically mature in one year, paying interest that is indexed to LIBOR or another appropriate index. Due to the high value of each note, these instruments are normally used by money managers who require highly liquid, customizable investments.

BREAKING DOWN 'Master Notes'

Master notes typically have an embedded put/call feature that is advantageous to most money managers. These embedded options may limit the frequency of purchases or sales of money market instruments such as discounted notes, and allow for the daily ability to adjust total value, either upwards or downwards, by 25% of the base principal.

  1. LIBOR

    LIBOR or ICE LIBOR (previously BBA LIBOR) is a benchmark rate ...
  2. Principal

    1. The amount borrowed or the amount still owed on a loan, separate ...
  3. Money Manager

    A business or bank responsible for managing the securities portfolio ...
  4. Discount Note

    A short-term debt obligation issued at a discount to par. Discount ...
  5. U.S. Savings Bonds

    A U.S. government savings bond that offers a fixed rate of interest ...
  6. Coupon

    The annual interest rate paid on a bond, expressed as a percentage ...
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