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Are Federal Home Loan Banks Bond (FHLA) Backed By The US Govt?

sams1985
  |     |   781 posts since 2022

I usually see some pretty attractive offerings on Fidelity. Are these backed by the US govt or riskier? They are state/local tax exempt as well.

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alan1
  |     |   877 posts since 2015
What do you mean by "backed by the US govt"?

FHLA bonds are not guaranteed by the full faith and credit of the United States. So, if that's what you mean, then the answer to the first part of your question is "No."

From the "Micro Data Reference Manual" of the Board of Governors of the Federal Reserve System:

Data Description:
Includes the amortized cost of all held-to-maturity obligations (excluding mortgage-backed securities) not held for trading that have been issued by U.S. Government-sponsored agencies. For purposes of these reports (FFIEC 031-034 and FR Y-9C), U.S. Government-sponsored agencies are defined as agencies originally established or chartered by the U.S. Government to serve public purposes specified by the U.S. Congress but whose debt obligations are not explicitly guaranteed by the full faith and credit of the U.S. Government. Includes among others, debt securities (but not mortgage pass-through securities, collateralized mortgage obligations (CMOs), real estate mortgage investment conduits (REMICs), CMO and REMIC residuals and stripped mortgage-backed securities such as interest-only strips (IOs), principal-only strips (POs) and similar instruments) of the following government-sponsored agencies: (1) Federal Agricultural Mortgage Corporation (Farmer Mac) (2) Federal Farm Credit Banks (3) Federal Home Loan Banks (FHLBs) (4) Federal Home Loan Mortgage Corporation (FHLMC or Freddie Mac) (5) Federal Land Banks (FLBs) (6) Federal National Mortgage Association (FNMA or Fannie Mae) (7) Financing Corporation (FICO) (8) Resolution Funding Corporation (REFCORP) (9) Student Loan Marketing Association (SLMA or Sallie Mae) (10) Tennessee Valley Authority (TVA) (11) U.S. Postal Service Also includes bonds issued by FNMA and FHLMC that are collateralized by mortgages, i.e., mortgage-backed bonds. COMPARABILITY: Prior to 3/31/95, included mortgage-backed securities.

https://www.federalreserve.gov/apps/mdrm/data-dictionary/search/item?keyword=1294&show_short_title=F...
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sams1985
  |     |   781 posts since 2022
Yes, that's what I meant. So they are not in the same category as Treasury bonds. I will avoid. Thank you.
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