BMO Harris 6% Brokered CD

w00d00w | Sep 16, 2023 | 360 posts since 2012

Offered at Vanguard. Maturity in 2033, call protected for 6 months, then every 3 month call option. pays interest quarterly.

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me1004 | Sep 16, 2023 | 1,381 posts since 2010

Callable. Gotta figure they'll be calling that by second quarter of 2024.

Ratesaver | Sep 17, 2023 | 187 posts since 2013

I agree it is just a gotcha type of thing and then some people will just stay with them and do other investing . Not me

w00d00w | Sep 17, 2023 | 360 posts since 2012

yeah, i suspect it'll be called not long after short term (3-6 month) interest rates start to fall, whenever that is. the reason i posted it was because it's the first 6% new-issue brokered CD i've seen. perhaps others more vigilant than me have seen others in the brokered CD market at 6% prior to this.

111 | Sep 17, 2023 | 672 posts since 2019

It may be gone now? At least, it didn't show up here -
https://personal.vanguard.com/us/FixedIncomeHome
where I usually look for Vanguard rates.

Blade | Sep 17, 2023 | 49 posts since 2018

It's still being shown on the first screen (with all durations) but when you drill into the 10yr. it's gone. I'm starting to view some of these callable offers with higher rates as shorter term plays (i.e. - the first call date) and if for some reason they go the distance all the better!

w00d00w | Sep 17, 2023 | 360 posts since 2012

i think that's the best way to think about it, as a short term investment even though the maturity is 10 years out. when i looked yesterday the remaining offering amount was around 400K

w00d00w | Sep 17, 2023 | 360 posts since 2012

just for comparison, BMO is offering a direct 6 month CD at 0.05%. their best direct CD rate is a 5.25% 13 month

MAKNYC | Sep 18, 2023 | 324 posts since 2015

I recognize some might be scared off, but for those that would consider investing in this CD, a viable alternative consideration might be new issue agency paper. These bonds are issued by the Federal Home Loan Bank and the Federal Farm Credit Bank. All players, including the rating agencies (for what that’s worth) apply the same credit rating to them as they do to the US Treasury. If you’re comfortable with that concept they are currently issuing callable bonds @6.34% for 2033 maturity (same as this CD) and as high as 6.55% for 2048 maturity. Easily purchased at Fidelity and presumably other firms. Both the CD and the bonds will likely be called around the same time, if and when rates plummet, so unless one is concerned about high forever rates, a case could be made that earning .55% per year extra vs. the CD is worth consideration. Another slight advantage is the secondary marketability of the agency paper and the ability to invest more than insured amounts vs. a CD. On the downside is the lack of explicit full guarantee and the bonds can be called at any time…not just in 3 month windows.

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