Agency securities are specific
securities
A security is a tradable financial asset. The term commonly refers to any form of financial instrument, but its legal definition varies by jurisdiction. In some countries and languages people commonly use the term "security" to refer to any for ...
that are issued by either
Ginnie Mae
The Government National Mortgage Association (GNMA), or Ginnie Mae, is a government-owned corporation of the United States Federal Government within the Department of Housing and Urban Development (HUD). It was founded in 1968 and works to exp ...
,
Fannie Mae
The Federal National Mortgage Association (FNMA), commonly known as Fannie Mae, is a United States government-sponsored enterprise (GSE) and, since 1968, a publicly traded company. Founded in 1938 during the Great Depression as part of the N ...
,
Freddie Mac
The Federal Home Loan Mortgage Corporation (FHLMC), commonly known as Freddie Mac, is a publicly traded, government-sponsored enterprise (GSE), headquartered in Tysons Corner, Virginia.[Federal Home Loan Banks
The Federal Home Loan Banks (FHLBanks, or FHLBank System) are 11 U.S. government-sponsored banks that provide liquidity to the members of financial institutions to support housing finance and community investment.
Overview
The FHLBank System was ...]
.
These
securities
A security is a tradable financial asset. The term commonly refers to any form of financial instrument, but its legal definition varies by jurisdiction. In some countries and languages people commonly use the term "security" to refer to any for ...
are backed by mortgage loans, and due to their creation from these particular corporations that are sponsored by the U.S. government, they enjoy credit protection based on either an explicit guarantee from the U.S. Government in the case of Ginnie Mae securities, or an implicit guarantee from the U.S. Government in the case of Fannie Mae and Freddie Mac. Agency securities also used as collateral for the supply of money released by the Federal Reserve. This collateral is chiefly held in the form of U.S. Treasury, federal agency, and government-sponsored enterprise securities.
["Is U.S. currency still backed by gold?" http://www.federalreserve.gov/faqs/currency_12770.htm]
Due to the expectation of federal backing, these securities historically hold the highest
credit rating
A credit rating is an evaluation of the credit risk of a prospective debtor (an individual, a business, company or a government), predicting their ability to pay back the debt, and an implicit forecast of the likelihood of the debtor defaulting.
...
possible.
References
External links
Ginnie MaeFannie MaeFreddie Mac
Securities (finance)
Stock market
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