ARLINGTON, Va.—A new analysis breaks down NCUA’s amendment to modify its proposal on subordinated debt.
The proposal would replace the maximum maturity of subordinated debt notes with a requirement to demonstrate how these investments would be considered “debt.” The rule would also extend the regulatory capital treatment of Grandfathered Secondary Capital (GSC) to 30 years from the date of issuance.
In its breakdown of the amendment, NAFCU noted:
- For investments made through the Treasury Department’s Emergency Capital Investment Program (ECIP), issued GSC would receive regulatory treatment for an extended period of 30 years
- The proposal establishes a more flexible framework for determining the maximum maturity of a subordinated debt note, and incorporates technical changes to reduce administrative burdens associated with issuing subordinated debt
- The proposal amends a provision related to an issuer’s obligation to obtain opinions from qualified counsel by clarifying the jurisdictional scope of this requirement
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