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NAFCU yesterday sent a Final Regulation summary to members breaking down the NCUA’s final rule amending its rules governing subordinated debt and grandfathered secondary capital (GSC) to accommodate a longer maximum maturity.

The final rule allows eligible credit unions to take full advantage of Emergency Capital Investment Program (ECIP) investments that have a 30-year maturity. The final rule also removes a prior constraint that limited all issuances of subordinated debt to a maximum maturity of 20 years and instead adopts a more flexible test that permits a credit union issuer to demonstrate how an instrument is debt and not equity.

Through the Final Regulation, NAFCU notes the rule:

·       creates a more flexible framework for determining the maximum maturity of a subordinated debt note by eliminating references to a 20-year limit;

·       incorporates minor technical changes to reduce administrative burdens associated with issuing subordinated debt; and

·       amends a provision related to an issuer’s obligation to obtain opinions from qualified counsel by clarifying the jurisdictional scope of this requirement.

The rule will become effective 30 days after publication in the Federal Register.