Treasury Bonds Information

Treasury bonds are issued in terms of 30 years and pay interest every six months until they mature. When a Treasury bond matures, you are paid its face value. The price and yield of a Treasury bond are determined at auction. The price may be greater than, less than, or equal to the face value of the bond.

Treasury bonds are sold in Treasury Direct (but not in Legacy Treasury Direct) and by banks, brokers, and dealers. Currently, on individuals can hold accounts in Treasury Direct.

Treasury bonds can be purchased by noncompetitive and competitive bids. With a noncompetitive bid, you agree to accept the interest rate determined at auction. With this bid, you are guaranteed to receive the bond you want, and in the full amount you want. With a competitive bid, you specify the yield you are willing to accept. Your bid may be: 1) accepted in the full amount you want if your bid is equal to or less than the yield determined at auction, 2) accepted in less than the full amount you want if your bid is equal to the high yield, or 3) rejected if the yield you specify is higher than the yield set at auction.

To place a noncompetitive bid, you may use Treasury Direct, or a bank, broker, or dealer. To place a competitive bid, you can use a bank, broker, or dealer.

Treasury bonds exist in either of two formats: as paper certificates (these are older bonds) or as electronic entries in accounts. Today we issue Treasury bonds in electronic form, not paper. Paper bonds can be converted to electronic form.

Treasury Bonds Summary:

The yield on a bond is determined at auction.

Bonds are sold in increments of $100. The minimum purchase is $100.

You can hold a Treasury bond until it matures or sell it before it matures.

In a single auction, an investor can buy up to $5 million in bonds by non-competitive bidding or up to 35% of the initial offering amount by competitive bidding.