Treasury Bills Q&A

 

What  are treasury bills?
Treasury bills are short-term, government-issued debt instruments. In Trinidad and Tobago, bills are issued for periods of 3 months or 6 months.

Who can buy treasury bills?
Any individual or company in Trinidad & Tobago can purchase Treasury bills.

Where can treasury bills be purchased?
Treasury bills can be bought and sold at the Domestic Market Operations department of the Central Bank of Trinidad & Tobago. Additionally, investors are free to trade between themselves or with brokers at negotiated prices.

What is the total value of treasury bills issued to the public?
At any given point in time there are 11 public issues of Treasury bills with a total face value of $800 million. There is a treasury bill maturing almost every week. As bills mature the government issues new ones. Each treasury bill issue is given a unique number by which it is identified.

How are tenders submitted?
Application forms are available at the Domestic Market Operations Department of the Central Bank  and also under Treasury Bill Application Procedures on this website. Individuals must present one form of valid national picture identification.

What is the minimum value of treasury bill that can be purchased?
The minimum denomination is $1000, increasing in multiples of $1000 thereafter.

Where can I find information on treasury bills?
The Central Bank regularly publishes information on Treasury bill auctions in the newspapers. Information on buying/selling discount rates is available at the Domestic Market Operations Department.

How are treasury bills traded?
Treasury bills are traded (bought or sold) on a discount basis. This means that the price of the bill is equal to its face value less the amount of the discount. For example, if you make an investment of $1000 in a 3-month bill at 0.40%, the transactions are as follows:
    You pay – $999.00
    In 3 months you receive - $1000.00

How is the amount of the discount on Treasury bills calculated?
To calculate the discount you need the following information:

  •  date of purchase
  •  date of maturity
  •  discount rate
  •  amount you wish to purchase

For example, if you wanted to purchase $1000 of Treasury bill issue number 1293 on November 08, 2010. This issue matures on January 19, 2011, and the discount rate is 0.35%. The number of days between the purchase date and the maturity date is 72.

The discount is calculated as follows:
Discount = Principal x Rate x Time / 100
               = (1000 x 0.35 x 72) / (100 x 365)
               = $0.69
The price is Face Value - Discount, or in this example:    $1000.00 - $0.69 = $999.31