A repurchase agreement* involves a short-term sale and subsequent repurchase of securities by a bank or other financial institution. The initial sales and the repurchase are made at the same dollar price with an agreed upon rate of interest paid to the initial buyer by the seller at the time of repurchase after a specified period of time.
Terms and Structures
Maturity
From one to 90 days
Issued
When a repurchase agreement is initiated, the bank issues a confirmation of the sale of the securities to the customer and a second confirmation of the bank's obligation to repurchase them at the maturity date
Form
The securities involved in a Repurchase Agreement can be maintained as a "hold in custody" agreement in Wachovia's Institutional Trust Services Custody Department or can be delivered to the customer through the Federal Reserve system
Quoted
Repurchase agreements are quoted on a yield basis
Rate Structure
Yields vary according to money market conditions
Interest
Paid at maturity
Denominations
Normally issued with a minimum denomination of $100,000
Security
Securities used in repurchase agreements are typically direct obligations of the U.S. Government or federal agencies
Tax Status
Fully taxable on the federal and state level
* Products and services are offered by Wachovia Capital Markets, LLC ("WCM").
Wachovia Securities is the trade name for the corporate and investment banking services of Wachovia Corporation and its subsidiaries, including Wachovia Capital Markets, LLC ("WCM"), member FINRA/SIPC.
Debt and equity underwriting, trading, research and sales, loan syndications agent services, and corporate finance and M&A advisory services are offered by WCM.
Mezzanine capital, private equity, municipal securities trading and sales, cash management, credit, international, leasing and risk management products and services are offered by various non-broker dealer subsidiaries of Wachovia Corporation.