US Treasury bonds (T-Bonds) are government debt securities issued by the US Treasury Department (US Treasury) through its Bureau of Public Debt. It is a government debt financing instrument. The maturity period is from 20 to 30 years. Treasury bonds have a coupon yield paid twice a year; the last coupon and an amount equal to the bond face value are paid on the maturity date. The nominal value of the Treasury bond is $ 100. Par amount is also $ 100.
The price and yield of a treasury bond in the initial placement are determined at an auction. The price can be more, less or equal to the par value of the bond. The price of a security with a fixed interest rate depends on its yield to maturity and the interest rate. If the yield to maturity (YTM) is greater than the interest rate, the price will be less than par; if YTM is equal to the interest rate, the price will be equal to the par; if YTM is less than the interest rate, the price will be higher than par. There are certain rules for initial placement according to which a participant can buy bonds worth up to $ 5 million at a single auction through non-competitive auction or up to 35% of the original bid by competitive auction.
As a calendar base for long-term treasury bonds, the base for calculating ACI and coupons - Actual/Actual is used. Treasury bonds are currently only issued electronically. Previously, the US government issued Treasury bonds in paper form. The last paper bonds matured in 2016.
For some bonds issued before 1985, the US Treasury reserved the right to use the Call offer and thereby repay the bond debt ahead of the schedule. The last time Call for Treasury Bond was executed in 2009. At the moment, no bonds of this type have call option terms.
Primary placements of “treasuries” take place in February, May, August and November. In the remaining months of the year, additional placements take place in existing bonds.