What Are Treasury Bills?

Treasury Bills or T-Bills are short-term, government bonds that typically mature within a year’s time. They are called Treasury Bills because they originate from the the Bureau of the Treasury (Kawanihan ng Ingatang-Yaman) under the Department of Finance (Kagawaran ng Pananalapi) of the Philippine  government.

The Bureau of the Treasury regularly issues T-Bills for the sole purpose of financing the debt of the Philippine government. T-Bills are considered highly stable investments because they are based on the stability of the government of the Philippines. A government default or overthrow is unlikely, which is why these government securities are considered stable.

T-Bills are short-term in nature and typically have three maturity periods: 91 days, 184 days, and 384 days. 91-Day T-Bills mature in 91 days from the issue date. For example, Treasury Bills belonging to the series PIBL0311I197 were auctioned in 9/19/2011 had an issue date of 9/21/2011 and a maturity date of 12/21/2011. Similarly, 182-Day T-Bills and 364-Day T-Bills have a maturity date of 182 days and 364 days respectively.

How Do You Invest In Treasury Bills?

You cannot buy T-Bills directly from the government. These securities are sold by the government at auction to the highest bidder and only licensed Government Securities Dealers (GSEDs) can participate in this auction.  After the dealer buys the securities from the government, they can then sell it to their clients for a commission. If you are a client of a GSED, you can then buy the T-Bills from that GSED. There will be a minimum investment amount, and a 20% withholding tax will be applied to the earnings.

Just to give you an idea, here are some of the well known GSEDs and their minimum placements for Treasury Bills (as of October 1, 2011):

Government Securities Dealer Minimum Placement Call
Banco de Oro Unibank, Inc. P100,000.00 858-3085 to 87
Bank of Commerce P10,000.00  
China Banking Corporation P200,000.00 (632)885-5626 to 30
Land Bank of the Philippines P100,000.00 522-00-00 locals 7257 to 7270
Philippine National Bank P500,000.00 (632)526-3019 to 26

Why Invest In Treasury Bills?

Treasury Bills are fixed-income instruments with the backing of the government. Thus, they are considered as “zero-risk”. Moreover, T-Bills offer better returns than time-deposit bank accounts. Thus, if you have funds that you need to park for the short-term, Treasury Bills can be a good fit for you.