A short-term default is not expected to have any effect on GNMA MBS cash flows because of their collateralized nature, according to a new Barclays Capital report.

Barclays analysts said that while U.S. government and Treasury securities are in certain jeopardy in the event of a default, GNMA MBS avoid this fate due the fact that their principal and interest payments are based solely on the performance of underlying collateralized loans.

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