U.S. Treasury bonds

From MarketsWiki
Revision as of 15:38, 15 October 2008 by RobLuke (Talk | contribs)

Jump to: navigation, search

Template:Infobox Midpage Need Sponsor Right Treasury bonds (T-bonds) are 30-year debt securities issued regularly by the federal government that pay a fixed interest rate (coupon) every six months until maturity and are consirdered amongst the world's safest securities. Because they are used as collateral by large financial institutions, Treasury bonds have recently become harder to tarde and borrow due to the credit crisis

Fact check

The U.S. Treasury auctions off Treasury bonds four times per year in February, May, August and November, usually in minimum denominations of $1,000, although investors can purchase a minimum of $100-worth in multiples of $100 up to a maximum of $5 million through Treasury Direct.[1] They pay interest every six months until maturity, when investors are paid their face (par) value, or they can sell before the bonds mature. The interest income is subject to federal income tax but exempt from state and local income taxes. T-bonds maturing in May 2038 with a coupon of 4.5% were recently trading at a price of 103.26 and yield of 4.27.[2]

Locking up quality

The U.S. Treasury decided recently to release an extra $20 billion in Treasury bonds to unclog bottlenecks in the troubled short-term interbank lending and corporate debt markets, where they are borrowed for use as collateral.[3] But as credit markets have frozen and T-bond prices have risen, banks and other institutions have become increasingly unwilling to lend T-bonds, while borrowers have taken to refusing to give them back, prompting Treasury to boost supply.


  1. Treasury Bonds. U.S. Treasury.
  2. U.S. Treasuries. Bloomberg.
  3. U.S. Treasury Seeks Relief in More Bonds. Wall Street Journal.