Fixed income
Treasury bonds
A Treasury bond is a long-term fixed-interest instrument issued by the US Treasury Department, and forms part of the range of government securities issued by the US national government.
Treasury bonds, usually referred to as T-bonds, have maturities exceeding 10-years, for example 20 or 30 years. Treasury debt securities with maturities of 1-10 years are referred to as notes. Bond holders receive a semi-annual coupon and the repayment of the principal – also known as the face value – upon maturity.
Treasury bonds are issued in the primary market through auction sales, and are marketable – in other words, they can be traded in the secondary market.
Consistently at the forefront of credit management
Considered very low risk
Treasury securities, such as Treasury bonds, Treasury bills, Treasury notes and Treasury Inflation-Protected Securities, are backed by the US government and are thus considered to be virtually free of credit risk.
Because of their low-risk status, the yield on US Treasuries generally is lower than that offered by other bonds, such as bonds issued by countries with a weaker credit rating than the US, or bonds issued by companies.
Furthermore, the yield on US Treasuries is often treated as a proxy for risk-free interest rates, the theoretical idea of the return on an ideal, perfectly liquid bond that carries no credit risk.