Treasuries

A government bond is an IOU issued by the central bank, which it guarantees to repay at a given date. In the US, these are referred to as Treasuries. They are divided into three types of marketable securities: Treasury bills, Treasury notes and Treasury bonds.

Treasury bills are short-term securities that mature at three, six or 12 months and cost less than their eventual worth or face value. Treasury notes mature two to ten years after they’re issued. Treasury bonds mature after up to 30 years. Both notes and bonds are coupon securities – that is, they pay interest every six months, plus a lump sum at maturity.

Treasury bonds issued by a stable country are generally seen as ‘safe’ investments.

Merryn

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