Agency Debentures

Agency Debentures are debt Securities issued by government-sponsored enterprises (GSEs) or federal agencies in the United States. These instruments are typically backed by the issuing agency, which may have some implicit government backing, but they are not fully guaranteed by the U.S. government. Investors buy agency debentures for relatively higher yields compared to U.S. Treasuries while accepting slightly higher risk.

Examples of agency debentures include:

• Debentures issued by Fannie Mae (Federal National Mortgage Association)
• Debentures issued by Freddie Mac (Federal Home Loan Mortgage Corporation)
• Debentures issued by Ginnie Mae (Government National Mortgage Association)

In case of a financial crisis, agency debentures can be affected by changes in the Creditworthiness of the issuing agency. For instance, during the 2008 financial crisis, the market for these debentures saw significant volatility, leading to interventions and support from the federal government.