Before acquiring a corporate debt security, and periodically thereafter, a savings association must determine that an issuer has adequate capacity to meet all financial commitments under the security for the projected life of the security.
FDIC standards of creditworthiness will be satisfied if an issuer presents a low risk of default and is likely to make full and timely repayment of principal and interest.
A due diligence analysis may include consideration of internal analyses, third-party research and analytics including internal risk ratings, the default statistics of external credit rating agencies, and other sources of information appropriate for the particular security.
The range and type of specific factors an institution should consider will vary depending on the particular type and nature of the security.
The FDIC does not expect the final rule to change the scope of permissible corporate debt securities investments. That is, if a corporate bond was a permissible investment prior to this final rule (because it was rated in one of the four highest categories), a bond with similar default probabilities will be permissible under this rule.
FDIC-Insured Savings Associations
Chief Executive Officer
Chief Financial Officer
Chief Investment Officer
Chief Risk Officer
Final Rule: Permissible Investments for Federal and State Savings Associations: Corporate Debt Securities
Guidance on Due Diligence Requirements for Savings Associations in Determining Whether a Corporate Debt Security Is Eligible for Investment Under Part 362
Eric Reither, Senior Capital Markets Specialist, Capital Markets Branch, at firstname.lastname@example.org or
Kyle Hadley, Chief, Examination Support, Capital Markets Branch, at email@example.com or (202) 898-6532
FDIC Financial Institution Letters (FILs) may be accessed from the FDIC's Web site at
To receive FILs electronically, please visit http://www.fdic.gov/about/subscriptions/fil.html
Paper copies may be obtained through the FDIC's Public Information Center, 3501 Fairfax Drive, E-1002, Arlington, VA 22226 (877-275-3342 or 703-562-2200).