CALL 931-379-2918

504 Rate Update

504 January 2016 Rates


4.288% – 10 Year Debenture Effective Rate *

4.831% – 20 Year Debenture Effective Rate *


Wither the RMB (“Ren Min Bi”: 人民币) & What that means for 504 Rates.
So was the intent to posit a downward trend in the value of the Chinese currency; or a spell check error for “whither” posing the question of will there be a trend?
Homophony being much more common in Chinese than in English, double-entendre is a staple of Chinese comedy referred to as “crosstalk” (“xiang sheng” 相声).
But in this case “wither” vs “whither” is no laughing matter.  As the Chinese government endeavors to deal with a daunting menu of economic risks, they are making use of significant foreign currency reserves, which have dropped from nearly $4Tn (Trillion, a very big number.) to some $3.3Tn (Still, a very big number.) over the course of 2015.  US Treasury debt makes up a significant portion of said “very big number”, and a staple of American comedy (“The Gold Bugs”) is that China would sell their US debt holdings and interest rates would go skyward.

Evidently, the Chinese are selling and the market is taking it in stride.

Chart and Statistical Data is from September 2006 to January 2016

Debenture Rate 10 Year T-Note
Spread Over T-Note
January 2016
2.18% 0.60%
2.92% 0.83%
2.86% 0.65%
0.00944383 0.005785195
504 debenture rates, being highly correlated to the Ten Year Treasury rate, are directly tied to this debate, and in the long run “regression to the mean” has only one meaning, statistics being notably lacking in puns.  Thus, while the slope of the trend, in a return to more normative interest rates is open to discussion, the fact that rates will trend upward over the coming years is not.  The 504 remains the best way to hedge against rising rates, with a below market offering for twenty year fixed rates and fully amortizing structure.

We welcome the opportunity to earn your business

* Note: Rates are subject to credit determination & auction pricing. Past performance is no guarantee of future results.

Share this message with the tools below.


South Central Tennessee Development
101 Sam Watkins Blvd.
Mount Pleasant, TN 38474
Office (931) 379-2918
Fax (931) 379-2640

Sign in front of SCTD