Federal Agency Security is a debt instrument issued by an agency of the federal government, such as the Federal National Mortgage Association or the Federal Farm Credit Bank. Though not obligations of the U.S. Treasury, these securities are sponsored by the government and have high credit ratings.
Federal Agency Security refers to debt instruments issued by federal government agencies. Examples include organizations like the Federal National Mortgage Association (FNMA), Federal Home Loan Banks (FHLB), the Federal Farm Credit Bank (FFCB), and the Tennessee Valley Authority (TVA). These securities are not general obligations of the U.S. Treasury but are government-sponsored, which results in high credit ratings close to U.S. Treasury securities.
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Investors who seek relatively high credit quality while willing to accept a marginally higher risk compared to U.S. Treasury securities might find federal agency securities attractive.
Federal agency securities are issued by government-sponsored entities and not directly by the U.S. Treasury. Hence, while having high credit ratings, they are not backed by the full faith and credit of the U.S. government.
Yes, they are considered very safe due to their close ties to the government, though they do carry slightly more risk than U.S. Treasuries.
These securities can be bought through brokers, financial advisors, or directly when they are issued. They are also traded in secondary markets.