What Are Agency Bonds?
What are Agency Bonds? Agency bonds are a type of investment sponsored by the US Treasury department. These bonds are referred to as agency bonds or government sponsored bonds because they are actually issued by the government, but by private agencies. It is important to note that typically these investments are fare far better non-government sponsored bonds, but they are not guaranteed by the full faith of the US Government for repayment. Agency bonds are often confused with government bonds because of the sponsorship factor among other things they both share in common such as tax exemptions on earned coupon interest payments. In the case of agency bonds, most often just state and local taxes are exempt from taxation while the federal government will still want their share.
The Advantage To Agency Bonds
With no government backing or federal tax exemption such as those offered by government bonds, government sponsored bonds still have many advantages. Primarily these agency bonds will be offered only by institutions which meet many stringent conditions set by the US Treasury department. The institutions themselves typically must in some way benefit the public by offering low cost lending. Not just any institution can offer these types of bonds. In most cases agency bonds are only available through major players such as the following:
Student Loan Marketing Association (Sallie Mae)
Federal National Mortgage Association (Fannie Mae)
Federal Home Loan Mortgage Corporation (Freddie Mac).
Related posts:- What are Government Bonds?
- What Are Interest Bonds?
- What Are Treasury Bonds?
- What Are Callable Bonds?
- How To Buy Bonds?
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