Treasury Bills

Treasury bills are very safe short-term investments issued by the federal government and some provinces. These are also known as T-Bills. Treasury Bill is a negotiable debt obligation issued by a government. Treasury bills are impotent money market instruments. These are short-term government securities, which pay no fixed rate of interest. These are discounted securities and thus are issued at a discount to face value. The return to the investor is the difference between the maturity value and issue price. T-bills are issued through a competitive bidding process at a discount from par, which means that rather than paying fixed interest payments like conventional bonds, the appreciation of the bond provides the return to the holder.

Treasury bills are considered among the safest investments, especially when they have three months or less to maturity There are different types of Treasury bills based on the maturity period and utility of the issuance like, ad-hoc Treasury bills, 3 months, 12months Treasury bills etc.

It is highly liquid money market instrument. It has better returns especially in the short term. It has high degree of tradability and active secondary market facilitates meeting unplanned fund requirements. Treasury bills, notes and bonds are sold at auction and can be bought for more or less than the face value, depending on demand. They can also be resold on the open market, and the price can fluctuate further. The interest rate is paid every six months, and does not change throughout the term of the product