|
Negotiable
Financial Instruments > This page
Treasury Bills
Treasury Bills
Treasury Bill Issues
Auctioning New Bills
(Member section)
Investment Characteristics (Member
section)
Default Risk (Member
section)
Liquidity (Member
section)
Taxes (Member
section)
Minimum Denomination (Member
section)
Investors (Member
section)
Yields (Member
section)
Yield Calculation
(Member section)
Yield Spreads (Member
section)
Yield Curves (Member
section)
Special Factors Affecting Individual Bill Yields
(Member section)
Secondary Market (Member
section)
Treasury Bills
Treasury bills are short-term securities issued by the U.S. Treasury.
The Treasury sells bills at regularly scheduled auctions to refinance
maEagle Tradersg issues and to help finance current federal deficits.
It also sells bills on an irregular basis to smooth out the uneven flow
of revenues from corporate and individual tax receipts. Persistent federal
deficits have resulted in rapid growth in Treasury bills in recent years.
At the end of 1992 the outstanding volume was $658 billion, the largest
for any money market instrument.
Treasury
Bill Issues
Treasury bills were first authorized by Congress in 1929. After experimenting
with a number of bill maturities, the Treasury in 1937 settled on the
exclusive issue of three-month bills. In December 1958 these were supplemented
with six-month bills in the regular weekly auctions. In 1959 the Treasury
began to auction one-year bills on a quarterly basis. The quarterly auction
of one-year bills was replaced in August 1963 by an auction occurring
every four weeks. The Treasury in September 1966 added a nine-month maturity
to the auction occurring every four weeks but the sale of this maturity
was discontinued in late 1972. Since then, the only regular bill offerings
have been the offerings of three- and six-month bills every week and the
offerings of one-year bills every four weeks. The Treasury has increased
the size of its auctions as new money has been needed to meet enlarged
federal borrowing requirements. In 1992 the weekly auctions of three-
and six-month bills both ranged from $10.2 billion to $12.5 billion, and
the four-week auctions of one-year bills ranged from $12.8 billion to
$15.0 billion.
In addition to its regularly scheduled sales, the Treasury raises money
on an irregular basis through the sale of cash management bills, which
are usually "reopenings" or sales of bills that mature on the
same date as an outstanding issue of bills.
Cash management bills are designed to bridge low points in the
Prior to 1975, the Treasury raised
funds on an irregular basis through the sale of tax anticipation bills.
Nelson (1977) provides a description of these bills.
Treasury's cash balances. Many cash management bills help finance the
Treasury's requirements until tax payments are received. For this reason
they frequently have maturities that fall after one of the five major
federal tax dates. Sixty issues of cash management bills were sold in
the decade from 1983 through 1992. Of these, 29 had maturities of less
than one month, 21 had maturities between one month and three months,
and 10 had maturities between three months and one year.
Auctioning
New Bills
Weekly offerings of three- and six-month Treasury bills are typically
announced on Tuesday. The auction is usually conducted on the following
Monday, with delivery and payment on the following ......................
More
information is provided in the Member Area
Recommended further reading:
Treasury
Bills: How Marketable Treasury Securities Really Work
Treasury Bills, Notes &Bonds
Treasury Bills: U.S. Treasury Securities
Books
on Financial Instruments
|
