Treasury bills

Treasury bills or T-bills refer to the interest bearing U.S government obligation sold at a weekly rate. The change in interest rates being paid on these obligations is often used as the Rate Index for Adjustable mortgage loans. In simple terms, it refers to short-term obligations of a government issued for time periods which are usually one year and less. The major feature of treasury bills is they do not carry any rate of interest and are usually offered at a discount on the par value.

Treasury bills are paid back at par on the stipulated date. In UK, they are usually 91 days and are offered at weekly tenders. In US, they are usually auctioned. T-bills are sold in denominations of $1,000 up to a maximum purchase of $ 5 million and usually have six months, three months and one month of maturities. They are issued via competitive billing processes at a discount from par.

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