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Alliancebernstein Income Fund Message Board

  • stockasticagain stockasticagain Aug 9, 2008 11:20 AM Flag


    I was looking at the list of available CD's at Scottrade and took a look at "callable CD's". "A callable CD can be redeemed at par prior to its original stated maturity at the option of the issuer. The first call date will always be posted. Typically the bank will call a CD when interest rates have declined below the rate on your CD. This is because the bank can now issue new CDs at a lower rate of interest."

    for some dumb reason, because I live in Mo., I can't buy this thru Scottrade. the bank, Southwest Bank, is a legend around here.

    Southwest Bank-St. Louis,Mo
    20 Year, Callable, Next Call 02-15-2009 @ 100.000, Semi-annually callable after 02/15/2009 6.250
    Semi 08-14-2008
    "Residents of the following states cannot purchase this issue: WI, NV, MO

    anybody have an opinion on will this CD be called? I've never played the callable game.

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    • have you ever followed any of the contests? here's one thats ongoing-
      this, of course, is for entertainment only.

    • CD
      20 Year, Callable, Next Call 02-15-2009 @ 100.000, Semi-annually callable after 02/15/2009 6.250

      20 years is a long time but at present 6.25% is a good rate

      I don't think your problem is if it gets called in 6 months for you got a good rate for 6 months

      The real problem is if rates go against you or up or if you need the capital so maybe the key thing you should look into is what the "early withdrawal penalty" would be and set up a spreadsheet accordingly to evaluate your present reward/risk against present 1yr rates at 3.5% or and 5yr at 5%.

      at Fidelity triple aaa gse
      10 year callable in 1yr (no state tax)
      you could sell this in the secondary market if rates etc go against you

      FEDERAL HOME LOAN BANKS 5.62500% 08/27/2018CONS BD
      CUSIP 3133XRYV6
      Pay Frequency SEMI-ANNUALLY
      Coupon 5.625
      Maturity Date 08/27/2018
      Moody's Rating AAA
      S&P Rating AAA
      Issuer Events NO
      Call Protection NO View Schedule
      Bond Type Agency
      Interest Accrual Date 08/27/2008
      at Fidelity triple aaa gse

      a no call fed home loan bond
      selling under par at 97 coupon 4.75, yield to maturity 5%
      have had bonds called which sucked but you got your money back never owned a callable CD

    • your asking for a prediction as to what rates will do during the life of this CD and anyone with an opinion would only be guessing. One thing's for sure, you're locking in a very favorable above market yield for at least 6 months minimum.
      But why is this bank paying higher than the going rate for similar CD's, even considering the callable feature? You say it's a legend in your area. In what way? Do they have a large mortgage book concentrated in certain gepgraphic locations?

      remember that if your CD gets called your cash will be homeless in a low yield enviornment. It's impossible to build a bond latter with callable investments cause you're never able to lock in high yields

      • 3 Replies to hirsct
      • "remember that if your CD gets called your cash will be homeless in a low yield enviornment."

        As it is now if your thinking about putting it

      • some clips from a history article-

        Southwest Bank, which is ranked #2 of Missouri’s chartered banks, was founded in 1920 at Kingshighway and Southwest Avenues, when it moved into a former tavern owned by the Busch family.

        Starting with Col. Long, and continuing with Drew Baur, now regional chairman, the bank “became known for leading the nation in lowering the prime rate,” said Spector. Col. Long's goal was to help customers prosper by lowering their borrowing costs. “His knack for knowing when to lower the prime rate, soon had international bankers looking to him before raising or lowering their rates,” Spector added.

        “Today, Southwest Bank is known for serving its customers like a ‘trusted advisor,’ explained Spector. “It believes in relationships and offering individuals the opportunity to feel they have everything taken care of in one place – from business banking, to home loans to a retirement plan.”

        In 2002 Southwest Bank was purchased by Marshall & Ilsley Corporation, a bank holding company headquartered in Milwaukee, WI. Southwest Bank retains its local commitment with its own Missouri charter and local board of directors. CEO is Robert Witterschein."<<

        hmmm, I wasn't aware of the sale.

        Marshall & Ilsley Corporation (NYSE: MI) is a diversified financial services corporation headquartered in Milwaukee, Wis., with $64.3 billion in assets. Founded in 1847, M&I Marshall & Ilsley Bank is the largest Wisconsin-based bank, with 193 offices throughout the state. In addition, M&I has 52 locations throughout Arizona; 32 offices in central Indiana, Indianapolis and nearby communities; 31 offices along Florida’s west coast and in central Florida; 15 offices in Kansas City and nearby communities; 23 offices in metropolitan Minneapolis/St. Paul, and one in Duluth, Minn.; and one office in Las Vegas, Nev. M&I’s Southwest Bank subsidiary has 17 offices in the greater St. Louis area. M&I also provides trust and investment management, equipment leasing, mortgage banking, asset-based lending, financial planning, investments, and insurance services from offices throughout the country and on the Internet ( or M&I’s customer-based approach, internal growth, and strategic acquisitions have made M&I a nationally recognized leader in the financial services industry.

      • And don't forget, if it doesn't get called, your money is locked up for 20 years. You have to be able to live with that.

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