News & Insights
Subordinated debt can offer a unique investment opportunity with benefits unlike most other asset classes , but for many credit unions, subordinated debt is still an unfamiliar investment option. For those willing to do the work, subordinated debt can offer attractive yields, portfolio diversification and a way to support the broader credit union movement.
In today’s fast moving financial environment, credit unions are expected to make smart, timely investment decisions that support the balance sheet and ultimately strengthen member service. Yet many traditional trading processes can slow teams down – requiring manual research, using scattered data sources and managing workflows that aren’t built with busy credit unions in mind. That’s why more credit unions are turning to online bond trading platforms.
Entering 2026, inflation has continued to moderate from its post pandemic peak, though it remains above the Federal Reserve’s long run 2% target. Over the past year, price pressures have eased unevenly: goods inflation largely normalized, while services inflation, particularly healthcare and insurance, remains sticky.
Navigating the current rate environment requires more than defensive positioning – it demands strategic agility. For credit unions aiming to capture opportunity while preserving flexibility, the barbell investment strategy is emerging as a smart, time-tested approach.
Relationships matter. As a credit union, you need partners that will stand with you through thick and thin. This is who Catalyst is, and what Catalyst does. That’s the value of partnerships…a true relationship.
At the beginning of 2022, the NCUA instituted the Subordinated Debt Regulation which replaced the Secondary Capital Rule. This regulation permits credit unions to issue subordinated debt as a way to boost their capital position. As more credit unions look to issue subordinated debt, you are likely to see opportunities to invest in these credit union-issued subordinated debt notes.
Interest rates on investments have risen substantially since the beginning of the year, particularly on maturities of five years or less. The two-year Treasury yield is up more than 70 basis points, and the five-year Treasury is up more than 50 basis points from year-end 2021 levels. What does this mean for your investment portfolio?