AN EXAMINATION OF FEDERAL AGENCY DEBT PRICING PRACTICES

Debt issuance procedures for federally sponsored agency securities differ considerably from the methods used by the U.S. Treasury and most corporate and municipal debt issuers. This paper examines the debt issuing procedures of the three major federally sponsored agencies and the efficiency with whi...

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Bibliographic Details
Published in:The Journal of financial research 1983-07, Vol.6 (2), p.83-92
Main Authors: Puglisi, Donald J., Vignola, Anthony J.
Format: Article
Language:English
Subjects:
Case studies
Efficiency
Errors
Fannie Mae
Government agencies
Government bonds
Government securities
Pricing
Procedures
Sales of securities
Statistical analysis
Citations: Items that this one cites
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Summary:Debt issuance procedures for federally sponsored agency securities differ considerably from the methods used by the U.S. Treasury and most corporate and municipal debt issuers. This paper examines the debt issuing procedures of the three major federally sponsored agencies and the efficiency with which the fiscal agents for those agencies price new debt issues. The conclusions from the analysis are: (1) fiscal agents for the major federally sponsored agencies are extremely adept at estimating the equilibrium competitive yields for new debt issues; (2) pricing errors on new issues are generally due to factors beyond a fiscal agent's control, such as the volatility of debt market conditions; and (3) the debt pricing practices for federally sponsored agency securities are efficient and effective.
ISSN:0270-2592
1475-6803
DOI:10.1111/j.1475-6803.1983.tb00316.x