Unaffiliated bonds RBC factors: Class 1 highest credit quality use 0.000 for US government bonds guaranteed by the US government. What is this factor for such bonds?

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Unaffiliated bonds RBC factors: Class 1 highest credit quality use 0.000 for US government bonds guaranteed by the US government. What is this factor for such bonds?

In RBC, the credit risk factor reflects the chance of default for the issuer. For the highest quality government securities backed by the US government, default risk is effectively zero, since the government guarantees repayment. Because there’s no meaningful credit risk to capture, the credit risk factor assigned to these bonds is zero, meaning they don’t add any credit-risk-based capital requirement. The other options would imply some nonzero default risk, which does not apply to US government bonds with full government backing.

In RBC, the credit risk factor reflects the chance of default for the issuer. For the highest quality government securities backed by the US government, default risk is effectively zero, since the government guarantees repayment. Because there’s no meaningful credit risk to capture, the credit risk factor assigned to these bonds is zero, meaning they don’t add any credit-risk-based capital requirement. The other options would imply some nonzero default risk, which does not apply to US government bonds with full government backing.

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