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About Government Securities
The government securities market comprises the issue, distribution, trading and redemption of treasury bills, notes and bonds. The arrangements and activities related to the issue and initial distribution of these securities constitute the primary market while the subsequent trading of securities is done in the secondary market.
What are Bonds and Treasury Bills?
Governments issue securities (bonds and treasury bills) to meet shortfalls between revenue and expenditure during the fiscal year, or to finance specific infrastructural projects. Governments may also issue savings bonds in order to provide private citizens with instruments through which they can save for future generations.
In Trinidad and Tobago, government bonds are issued for periods of more than five (5) years. During the life of the bond, the government pays interest to bondholders. The principal amount borrowed is returned either at the end of the period or over some specified period.
Treasury bills are issued to fund the short-term financing needs of the government. Unlike bonds, which are issued for a minimum of 5 years, treasury bills are offered for three months or six months.
Is it Safe to Invest in Government Securities?
Investing in Government bonds is one of the most secure types of investments available as the likelihood that the government will not repay its debt is very low. In fact, the obligations of the Government of Trinidad and Tobago meet internationally recognized investment grade standards. There are few entities that borrow locally that can boast of this status.
Who Can Buy Securities?
Anyone--individuals as well as groups such as Pension Funds, Financial Institutions and Non-Financial Institutions--can purchase treasury bills and bonds.