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Fixed Income

Fixed Income

Fixed income investments offered by First National Capital Markets are important not only for capital preservation, but also for appreciation and income. Investments in this class maintain maturity dates greater than one year.

U.S. Treasury Notes & Bonds

U.S. Treasury Notes and Bonds are direct debt obligations of the U.S. Government, backed by the full faith and credit of the United States Treasury. U.S. Treasury Notes are issued with original maturity dates of two to ten years while U.S. Treasury Bonds are issued with original maturity dates of ten to thirty years. These notes and bonds trade on a dollar basis with accrued interest. Interest is paid semi-annually to the holder of record on the interest payment date and is exempt from state and local taxes. return to top

Agency Bonds

Agency Bonds are issued by a U.S. Agency or Government Sponsored Enterprise (known as a GSE). Most Agency Bonds are issued by the Federal Home Loan Mortgage Corporation (FHLMC or Freddie Mac), the Federal National Mortgage Association (FNMA or Fannie Mae), the Federal Home Loan Bank (FHLB) or the Federal Farm Credit Bank (FFCB) to assist the agencies with their medium to long-term funding needs. Maturity dates on Agency Bonds typically range from one year to ten years. The bonds trade on a dollar basis with accrued interest. Interest is paid semi-annually to the holder of record on the interest payment date. return to top

Mortgage-Backed Securities

Mortgage-Backed Securities represent pools of real estate mortgage loans packaged for sale to investors. Mortgage-Backed Securities are predominantly issued by FNMA, FHLMC, and the General National Mortgage Association (GNMA or Ginnie Mae). However, private label whole-loan products are also issued by money center banks and other dealers. First issued in 1970, Mortgage securities now represent one of the largest financial markets in the world. return to top

Asset-Backed Securities

An Asset-Backed Security is a security supported by underlying asset such as automobile loans, credit card receivables or other assets. They are owned by the issuer and generally placed with a trustee. return to top

Collateralized Mortgage Obligations (CMOs)

Collateral Mortgage Obligations (CMO) represent a more complex mortgage instrument - a multi-class bond backed by a pool of mortgage securities or mortgage loans. CMOs are designed with many different maturities: short-, medium- and long-term positions called tranches, which pay interest depending upon their maturity. Structures and pre-payments vary based on the other tranches contained in the issue. return to top

Municipal Bonds

Municipal bonds are bonds issued by local, county and state governments and used to finance the development of city infrastructure including repairing schools, streets, hospitals, bridges, low-income housing, water and sewer systems and other public works. Public works are typically funded by general obligation bonds, which are repaid by tax revenues. Revenue bonds are repaid by fees collected from the individuals who use the services associated with the project financed through the bond issue. Most municipals are rated by investor services such as Moody's and Standard & Poor's. Please see Corporate Bonds for a description of these ratings. return to top

Corporate Bonds

Corporate bonds are issued in a large variety of structures, coupons and credits. Corporate bonds range from investment-grade bonds to high-yield bonds with lower ratings and higher risks. The creditworthiness of these bonds depends on the issuing company, whether the bonds are secured or unsecured and their subordination level within the liabilities of the particular company. Most corporate bonds are required to be rated by a major rating agency. return to top