General Electric and Bank of America just unveiled plans to sell a total of more than $16 billion in Federal Deposit Insur-rnance Corp.-insured bonds under the U.S. government's Temporary Liquidity Guarantee Program. The bonds yield one percentage point more than an equivalent Treasury. "A lot of investors looking for high-quality paper are considering them," says Matt Tucker, head of fixed-income investment strategy at Barclays Capital. (The iShares Barclays Agency Bond exchange-traded fund includes one FDIC -insured bond, issued by Bank of America, among its 19 holdings.) But Thomas Atteberry, co-manager of First Pacific Advisors' NewrnIncome Fund, says not to confuse insured debt with ultrasafe U.S. government debt. Insurance is an iffy proposition, he says-just ask buyers of Fannie Mae and Freddie Mac preferred shares who assumed the government would have their backs. He's been buying 2003 and 2004 pools of mortgage-backed debt packaged by Fannie and Freddie. Underwriting standards were still strong then, he says.
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