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504 Rate Update

504 April 2017 Rates


4.625% – 20 Year Debenture Effective Rate *


De-risking an uncertain rate environment

In recent newsletters we have discussed potential risks to a smooth slow upward glide path on the Federal Reserve’s stated intention to return the economy to a more normal rate environment. Without even going to the political arena, where nothing seems more certain than utter uncertainty, these risks include: incipient signs of inflation, possible dollar weakness, and the beginning of the unwinding of the Fed’s ex post QE I-III balance sheet.

Chart and Statistical Data is from September 2006 to April 2017

Debenture Rate 10 Year T-Note
Spread Over T-Note
April 2017
2.35% 0.49%
2.86% 0.79%
2.63% 0.62%
0.009564587 0.005539982
The recent twenty year debenture auction produced a slight, if welcome, decline in the all-in rate. However, as we have been at pains to note, there is profound uncertainty as to the likelihood of a slow and steady path forward. As lenders, we are inherently in the business of risk management. Why not take the prudent course, for both ourselves and our borrowers, and de-risk the interest rate environment? The long term fixed rates of the 504 program combined with the capacity to preserve working capital through a low equity injection, meets this need.

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.

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

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