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"The reduction seen in US government debt in the late 1990s has led to a redution in the supply of intermediate and long-term government bonds, and some concern has arisen over this fact. In the United States, some efforts have been made to promote the long-term debt of Fannie Mae and Freddie Mac as substitute benchmark bonds."

This comes from a passage connected to US treasury bond futures.

I cannot understand why Freddie Mac and Fannie Mae have been chosen as closest to government debt? Didnt one of them go bust in the recession making them not quite default free (as one usually assumes in US debt)?

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Fannie Mae and Freddie Mac bonds have long been viewed as having an implicit government guarantee, and though they received government support during the crisis, they never missed a payment to bondholders. This implicit guarantee was strengthened in July 2008 when Congress passed the Housing and Economic Recovery Act of 2008, which created a channel through which the Director of the Federal Housing Finance Agency could place them in conservatorship, which was done in September 2008. The GSEs remain in conservatorship today, and have access to lines of credit with the US Treasury. So while it's true that they still do not have an explicit guarantee today, it's easy to see why they're viewed as having a guarantee, at least implicitly.

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