Risks
Agency bond prices can rise or fall depending on interest rates. Interest rate changes generally have a greater effect on long-term bond prices.
All agency bonds carry the credit risk that the issuer will default or will be unable to make timely payments of interest and principal. GSE debt is solely the obligation of the issuer and carries greater credit risk than U.S. Treasury securities.
Some agency bonds have call provisions that allow the issuer to redeem the bonds prior to the stated maturity date. Issuers typically call bonds during periods of declining interest rates.
Certain events can impact a GSE or agency issuer’s financial situation and ability to make timely payments to bondholders, including economic, political, legal or regulatory changes and natural disasters. Event risk is unpredictable and can significantly impact bondholders.
Agency bonds sold prior to maturity may be subject to substantial gain or loss. The secondary market may also be limited.
Learn aboutGovernment National Mortgage Association (GNMA) bonds
