Module 5 · Fixed Income

Fixed-Income Markets for Government Issuers

EN: Sovereigns, agencies, supranationals, and quasi-government issuance.
VN: Trái phiếu chính phủ, agency, tổ chức siêu quốc gia.

1. Government Issuer Types Concept

About: Sovereign (US Treasuries, JGB, Bunds), agency / quasi-gov (Fannie/Freddie, munis), supranational (World Bank, IMF, ADB).Tóm tắt: Sovereign, agency/quasi-gov, supranational.

Sovereign National governments (US Treasuries, JGB, Bunds, Gilts, OATs).
Quasi-gov Agencies (Fannie/Freddie), state and local govts (munis).
Supranational World Bank, IMF, IBRD, ADB.

2. US Treasury Instruments Concept

About: T-bills (≤1y, zero-coupon, discount), T-notes (2-10y, semi-coupon), T-bonds (>10y), TIPS (CPI-adjusted), FRN (rare).Tóm tắt: T-bill (zero, discount), T-note (2-10y), T-bond (>10y), TIPS, FRN.

T-bill ≤ 1 year, zero-coupon, sold at discount.
T-note 2–10 years, semi-annual coupon.
T-bond > 10 years (20, 30 years), semi-annual coupon.
TIPS Inflation-protected — principal adjusts with CPI.
FRN Floating-rate Treasury (rare).

3. Tax Treatment Concept

About: Treasuries: federal-taxable, state/local exempt. Munis: federal exempt, sometimes state too. Corporate: fully taxable. Drives after-tax yield comparisons.Tóm tắt: Treasuries (federal-tax, state miễn), munis (federal miễn), corporate (đủ thuế).

Treasuries Subject to federal tax; exempt from state & local.
Munis Tax-exempt federal income; some are also state-exempt.
Corporate Subject to all levels of tax.

Practice problem Practice

Practice problem

A Texas resident in the 35% federal bracket compares two bonds: a 4% Treasury and a 3% Texas muni (state-tax-free). Which yields more after tax?

Show solution

Treasury after-tax: 4% × (1 − 0.35) = 2.60%

Muni: 3% (federal tax-exempt)

Muni wins (3.00% > 2.60%).