Agency Bond

Bonds issued by federal agencies such as Government National Mortgage Association (GNMA) and government/government-sponsored enterprises such as Small Business Administration (SBA). An Agency bond is a direct obligation of the Treasury even though some agencies are government sponsored or guaranteed. The net effect is that agency bonds are considered almost defaultrisk free (if not legally so in all cases) and, therefore, are typically priced to provide only a slightly higher yield than their corresponding T-bond counterparts.