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Finance Glossary

Just call us Bond. Amortized bond.

Over 700 finance terms, Shmooped to perfection.

Agency Bond

Definition:

When you're a big dog like the federal government and want to issue bonds or T-Bills, you can guarantee your bonds with all the cash of the government (like the major moolah in the Federal Reserve).

But what happens when you’re a medium-sized dog... like a government agency? If you’re Fannie Mae or another government agency, and the government won’t guarantee your bonds, you can issue agency bonds. You have to pay a slightly higher interest rate than the Fuzz, but you get cash by issuing bonds. Booya.