Lesson 5 of 6 · 11 min
Agencies, public banks and supranationals
Agencies and government-sponsored banks usually carry the same credit risk as the sovereign that created and supports them, while supranationals are judged on the strength and support of their several sovereign owners.
In short
- Main non-sovereign government issuers: agencies, government sector banks and development financing institutions, supranationals and regional governments.
- Agencies are quasi-government entities with a public-service mission set by law; the law often authorises them to borrow.
- Backing can be implicit (the statute creating the entity) or explicit (a guarantee). Agencies and public banks are usually rated the same as the sovereign.
- An issue's features (for example a call option on a perpetual bond) can put the issue rating a notch below the agency's issuer rating.
- Supranationals are owned by several member governments pursuing a shared goal; their rating reflects the members' ratings and likely support.
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