Fixed Income
Understanding the complexities of today’s fixed income opportunities requires seasoned professionals. That’s why investors are choosing the investment professionals at First National Capital Markets. Our brokers offer a multidisciplinary approach to plotting your course, drawing on years of real-world experience in the banking, insurance, municipal and public sectors. What results is the presentation of opportunities that fit the institutional investor, never the other way around.
On an ever-changing horizon, our institutional brokers keep their eyes trained on the road ahead – in daily market and financial strategy meetings, and with compliance updates. Our commitment to continuing education enables us to identify tomorrow’s opportunities today, so investors can capitalize on new ideas before they are a disappearing image in the rearview mirror.
Long-Term Investment:
Long-term investments from First National Capital Markets are important not only for capital preservation, but also for appreciation and income. Investments in the long-term class maintain maturity dates greater than one year.
- U.S. Treasury Notes & Bonds
- Agency Bonds
- Mortgage-Backed Securities
- Asset-Backed Securities
- Collateralized Mortgage Obligations (CMOs)
- Municipal Bonds
- Corporate Bonds
Long-Term Investments
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.
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.
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.
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.
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.
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.
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. The long-term ratings for Standard and Poor’s and Moody’s are as follows:
