Treasury bills, or T-bills, are sold in terms ranging from a few days to 52 weeks. Bills are typically sold at a discount from the par amount (also called face value). For instance, you might pay $990 for a $1,000 bill. When the bill matures, you would be paid $1,000. The difference between the purchase price and face value is interest. It is possible for a bill auction to result in a price equal to par, which means that Treasury will issue and redeem the securities at par value.
Rates & Terms
- Treasury bills are issued for terms of 4, 13, 26, and 52 weeks. Another type of Treasury bill, the cash management bill, is issued in variable terms, usually of only a matter of days.
- 4-week, 13-week, 26-week, and 52-week bills are auctioned on a regular schedule.
- Cash management bills aren’t auctioned on a regular schedule.
- Bills are sold at a discount. The discount rate is determined at auction.