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Agency bond |
Also found in: Wikipedia | 0.07 sec. |
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Agency bond. Some federal agencies, including Ginnie Mae (GNMA) and the Tennessee Valley Authority (TVA), raise money by issuing bonds and short-term discount notes for sale to investors. The money raised by selling these debt securities is typically used to make reduced-cost loans available to specific groups, including home buyers, students, or farmers. Interest paid on the securities is generally higher than you'd earn on Treasury issues, and the bonds are considered nearly as safe from default. In addition, the interest on some -- but not all -- of these securities is exempt from certain income taxes. Securities issued by former federal agencies that are now public corporations, including mortgage-buyers Fannie Mae and Freddie Mac, are also sometimes described as agency bonds. How to thank TFD for its existence? Tell a friend about us, add a link to this page, add the site to iGoogle, or visit webmaster's page for free fun content. |
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At a time when
Treasury bonds were widely dismissed as overpriced and due for a
setback, government and agency bond funds have posted a 5 percent return
over the past year. These could
include Industrial Development Agency bond financing, state economic
development grant financing and power rate reductions. With that in mind, it may be best to invest in individual agency
bonds as a substitute for Treasuries when you're looking to
preserve a certain amount of savings for a specific target, such as
college or retirement Ask your broker to price both an agency bond and a
comparable Treasury, and factor in the brokerage fees in both cases when
comparing yields. |
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