{"id":1783,"date":"2019-09-27T13:33:00","date_gmt":"2019-09-27T13:33:00","guid":{"rendered":"https:\/\/analystprep.com\/cfa-level-1-exam\/?p=1783"},"modified":"2026-03-18T08:06:49","modified_gmt":"2026-03-18T08:06:49","slug":"non-sovereign-bonds","status":"publish","type":"post","link":"https:\/\/analystprep.com\/cfa-level-1-exam\/fixed-income\/non-sovereign-bonds\/","title":{"rendered":"Non-sovereign Governments, Quasi-government Entities, and Supranational Agencies"},"content":{"rendered":"\n<script type=\"application\/ld+json\">\n{\n  \"@context\": \"https:\/\/schema.org\",\n  \"@type\": \"VideoObject\",\n\n  \"name\": \"Fixed-Income Markets: Issuance, Trading and Funding (2025 Level I CFA\u00ae Exam \u2013 Fixed Income\u2013Module 2)\",\n\n  \"description\": \"This video lesson covers Topic 6 \u2013 Fixed Income Markets, Module 2 \u2013 Fixed-Income Markets: Issuance, Trading, and Funding. It examines the classifications of global fixed-income markets, the role of interbank offered rates in floating-rate debt, and the mechanisms for bond issuance in primary and secondary markets. Key segments include discussions on sovereign and non-sovereign government securities, corporate debt, structured financial instruments, and short-term bank funding alternatives, concluding with insights on repurchase agreements and their associated risks.\",\n\n  \"uploadDate\": \"2022-05-20T00:00:00+00:00\",\n\n  \"thumbnailUrl\": \"https:\/\/analystprep.com\/path-to-thumbnail\/fixed-income-markets-thumbnail.jpg\",\n\n  \"contentUrl\": \"https:\/\/youtu.be\/l7RAt_PtF9g\",\n\n  \"embedUrl\": \"https:\/\/www.youtube.com\/embed\/l7RAt_PtF9g\",\n\n  \"duration\": \"PT48M15S\",\n\n  \"publisher\": {\n    \"@type\": \"Organization\",\n    \"name\": \"AnalystPrep\",\n    \"logo\": {\n      \"@type\": \"ImageObject\",\n      \"url\": \"https:\/\/analystprep.com\/path-to-logo\/logo.jpg\",\n      \"width\": 600,\n      \"height\": 60\n    }\n  }\n}\n<\/script>\n<script type=\"application\/ld+json\">\n{\n  \"@context\": \"https:\/\/schema.org\",\n  \"@type\": \"QAPage\",\n  \"mainEntity\": {\n    \"@type\": \"Question\",\n    \"name\": \"When compared to sovereign bonds, how are non-sovereign bonds typically priced?\",\n    \"text\": \"When compared to sovereign bonds, non-sovereign bonds tend to be priced:\\n\\nA. Higher and trade at a lower yield.\\nB. Lower and trade at a higher yield.\\nC. Higher and trade at a higher yield.\",\n    \"answerCount\": 1,\n    \"acceptedAnswer\": {\n      \"@type\": \"Answer\",\n      \"text\": \"Lower and trade at a higher yield.\\n\\nNon-sovereign bonds generally carry higher credit risk than sovereign bonds. As a result, investors demand a higher yield as compensation for this additional risk, which causes non-sovereign bonds to trade at lower prices relative to sovereign bonds.\",\n      \"dateCreated\": \"2026-01-02\"\n    }\n  }\n}\n<\/script>\n\n\n\n<iframe loading=\"lazy\"\n  width=\"611\"\n  height=\"344\"\n  src=\"https:\/\/www.youtube.com\/embed\/l7RAt_PtF9g\"\n  title=\"YouTube video player\"\n  frameborder=\"0\"\n  allow=\"accelerometer; autoplay; clipboard-write; encrypted-media; gyroscope; picture-in-picture; web-share\"\n  referrerpolicy=\"strict-origin-when-cross-origin\"\n  allowfullscreen>\n<\/iframe>\n\n\n<h2><strong>Non-Sovereign Bonds<\/strong><\/h2>\n<p>Provinces, regions, states, and cities issue bonds called <span class=\"primary-color\">non-sovereign bonds<\/span><span class=\"primary-color\">\u00a0<\/span>or <span class=\"primary-color\">non-sovereign government bonds<\/span>. These bonds are generally issued to finance schools, hospitals, highways, bridges, etc.<\/p>\n<p>The national government does not guarantee non-sovereign bonds. Still, the default rates for non-sovereign bonds are low, and their credit ratings are relatively high. However, non-sovereign bonds usually trade at higher yields and lower prices than their sovereign counterparts.<\/p>\n<div style=\"text-align: center; margin: 25px 0;\"><a style=\"display: inline-flex; align-items: center; justify-content: center; padding: 10px 18px; border: 2px solid #1a73e8; border-radius: 999px; color: #1a73e8; text-decoration: none; font-weight: 500; background-color: #f5f9ff; white-space: nowrap;\" href=\"https:\/\/analystprep.com\" target=\"_blank\" rel=\"noopener\"> Understand non-sovereign and quasi-government bonds for CFA Level I <\/a><\/div>\n<h2><strong>Quasi-Government Bonds<\/strong><\/h2>\n<p>National governments establish quasi-government organizations, which have both public and private sector characteristics. These entities issue quasi-government bonds or agency bonds. Some examples are Fannie Mae (Federal Mortgage Association), Freddie Mac in the US, and Hydro-Quebec in Canada. Quasi-government bonds are rated very highly due to their extremely low default rates. National governments do not guarantee these bonds, yet investors often perceive an implicit guarantee.<\/p>\n<h2><strong>Supranational Bonds<\/strong><\/h2>\n<p>Supranational agencies or multilateral agencies could issue bonds that are often highly rated. Some examples include the World Bank, the International Monetary Fund (IMF), the European Investment Bank (EIB), and the African Development Bank (ADB). Supranational bonds are generally plain vanilla bonds, meaning they pay period coupons and principal at maturity.<\/p>\n<blockquote>\n<h3><strong>Question<\/strong><\/h3>\n<p>When compared to sovereign bonds, non-sovereign bonds tend to be priced:<\/p>\n<ol style=\"list-style-type: upper-alpha;\">\n<li data-tadv-p=\"keep\">Higher and trade at a lower yield.<\/li>\n<li data-tadv-p=\"keep\">Lower and trade at a higher yield.<\/li>\n<li data-tadv-p=\"keep\">Higher and trade at a higher yield.<\/li>\n<\/ol>\n<p><strong>Solution<\/strong><\/p>\n<p>The correct answer is <strong>B<\/strong>.<\/p>\n<p>Non-sovereign bonds usually trade at a higher yield and lower price than sovereign bonds.<\/p>\n<\/blockquote>\n<div style=\"text-align: center; margin: 40px 0;\"><a style=\"display: inline-flex; align-items: center; justify-content: center; padding: 12px 20px; border-radius: 999px; background-color: #1a73e8; color: #ffffff; text-decoration: none; font-weight: 600;\" href=\"https:\/\/analystprep.com\" target=\"_blank\" rel=\"noopener\"> Start Free Trial \u2192 <\/a>\n<p style=\"font-size: 15px; margin-top: 12px; color: #555;\">Learn how non-sovereign and quasi-government bonds differ from sovereign debt, including credit risk, yield spreads, and sources of repayment tested in CFA exams.<\/p>\n<\/div>","protected":false},"excerpt":{"rendered":"<p>Non-Sovereign Bonds Provinces, regions, states, and cities issue bonds called non-sovereign bonds\u00a0or non-sovereign government bonds. These bonds are generally issued to finance schools, hospitals, highways, bridges, etc. The national government does not guarantee non-sovereign bonds. Still, the default rates for&#8230;<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[9],"tags":[],"class_list":["post-1783","post","type-post","status-publish","format-standard","hentry","category-fixed-income","blog-post","no-post-thumbnail","animate"],"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v26.9 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>Non-Sovereign &amp; Quasi-Government Bonds | CFA Level 1<\/title>\n<meta name=\"description\" content=\"Non-sovereign bonds are issued by regions, states, or cities, while quasi-government bonds are backed by governmental entities. 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