Treasury bill - Financial definition
Concise definition of the term Treasury bill
Short term negotiable discount securities issued by the government of the United States.
Comprehensive definition of the term Treasury bill
Treasury bills, or simply T-bills, are issued with initial maturities of 4, 13, 26 or 52 weeks.
Characteristics
| Interest payment | T-bills are issued and traded with discount interest. |
| Day-count convention | Act/360 |
| Face value | 100 USD |
| Quotation mode | Quotation in discount rate. Calculation formula : r = (N - P) / P x (360 / d ) x 100 where :N = Face valueP = Priced = Number of days to maturity |
| Rating | US government securities are not subject to ratings by rating agencies. |
Issuance
T-bills are issued by auction. The issuance of new securities for each maturity takes place at weekly auctions, at different dates for each maturity.
Cash Management Bills (CMB)
When the situation requires it, the US Treasury can issue so-called Cash Management Bills (CMB). Like T-bills, these securities are issued by auction. The difference resides in the fact that they are issued for irregular amounts and maturities (frequently less than 3 weeks). When a CMB has a maturity date which coincides with that of a regular T-Bill, it is called «on cycle» and is considered as the reopening of that T-bill, thus having the same CUSIP code.
When the CMB's maturity date does not match with that of any regular T-bill, it is called «off-cycle» and has a distinct CUSIP code.