federal agency security

Federal Agency Security

A debt obligation owed by an agency of the U.S. government. While similar to a Treasury security, federal agency securities are issued by a particular agency of the federal government, rather than the federal government itself. Agencies that offer these securities include Ginnie Mae, the Federal Farm Credit Bank, and the U.S. Postal Service. With the exceptions of the Postal Service and the Tennessee Valley Authority, all federal agency securities are guaranteed by the U.S. government. They also offer higher interest rates than Treasury securities.

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federal agency security

The debt obligation of a government-owned agency such as the Export-Import Bank and Ginnie Mae. Federal agency securities offer higher yields than direct Treasury obligations even though, with the exception of U.S. Postal Service and Tennessee Valley Authority issues, they are guaranteed by the U.S. government. Certain issues are exempt from state and local taxes. Also called indirect government obligation. Compare federally sponsored corporate security.

Wall Street Words: An A to Z Guide to Investment Terms for Today's Investor by David L. Scott. Copyright © 2003 by Houghton Mifflin Company. Published by Houghton Mifflin Company. All rights reserved. All rights reserved.