Treasury bills

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Treasury bills (T-bills) are government-issued short-term debt securities with a range of maturities of one year or less, sold at auction at a discount to their face value. U.S. T-bill prices and yields form a benchmark security level for other forms of short-term debt such as commercial paper and the LIBOR interbank rate.

U.S. T-bills are auctioned by the U.S. Treasury on a regular weekly schedule and sold in maturities 4 weeks, 13 weeks, 26 weeks and 52 weeks, while cash-management T-bills are auctioned as needed and generally carry maturities of only a few days.[1] Other Treasury securities like Treasury notes and Treasury bonds sell for face value but carry a coupon, or interest rate.

Flight to might

The interest rate on T-bills in most economies, including America's, is determined by the discount they are sold to their face value at Treasury auctions. As the 2008 credit crisis diverted more global investment capital into the safe haven of U.S. Treasury debt, smaller nations like the Philippines[2] and Croatia[3] have seen the price of their short-term T-bills bid down - and yield consequently bid up - to unacceptable levels, forcing their governments to reject the outcomes.

Uncle TED

The difference between the U.S. T-bill yield and that for the LIBOR interbank overnight lending is called the TED Spread. In mid-October, 2008, the previously rapidly expanding TED Spread narrowed slightly to 422 basis points, after previously hitting 459, on news of another U.S. Treasury rescue plan for banks.[4]



  1. Treasury Bills. U.S. Treasury Department.
  2. Philippines Government rejects bids for 91-day T-bills. The Philippines Star.
  3. Croat T-bill auction fails to raise target amount. Reuters.
  4. US 3-month T-bill rate vs Libor narrows to 422 bps. Reuters.