The funding agreement backed note market (FABN) is a unique financial market that provides investors with an opportunity to invest in a low-risk, high-yield asset class. The FABN market is backed by funding agreements, which are contracts between insurance companies and their policyholders. These agreements are essentially promises by insurers to pay a fixed interest rate on policyholder funds, and these agreements support the issuance of a particular type of security known as funding agreement backed notes.

Funding agreement backed notes are debt securities that offer investors a fixed rate of return, typically slightly higher than that of government bonds and CDs, with very low default risk. These notes are issued by insurance companies and backed by their funding agreements, which provide a guarantee of principal and interest payments. This means that investors receive a reliable, stable income stream through the life of the note.

FABNs are particularly attractive for investors seeking a predictable income stream with minimal risk. Because these securities are backed by highly rated insurance companies and funding agreements, they are considered very safe investments. Additionally, these notes offer a slightly higher rate of return than traditional fixed-income securities, making them an attractive option for income-seeking investors.

The FABN market is relatively small but has grown steadily in recent years. It is estimated that there is currently around $300 billion of outstanding funding agreement backed notes in the market, with new issuances occurring on a regular basis. While FABNs are not traded on public exchanges, they are available to institutional and individual investors through broker-dealers.

In conclusion, the funding agreement backed note market is a unique and attractive investment option for those seeking a low-risk, high-yield asset class. These securities offer a predictable income stream and are backed by highly rated insurance companies and funding agreements, providing investors with a reliable and stable investment opportunity. While the market is relatively small, it has grown steadily in recent years and is likely to continue to do so in the future.