Treasury Bill (T-bill)

T-bills pay no coupon. Investors buy them below face value at auction or in the secondary market and receive par at maturity; the difference is the return. The US Treasury issues bills across several maturities up to 52 weeks, and they are quoted on a discount-rate basis as well as a bond-equivalent yield. Other governments issue similar short-term bills.

Funds hold T-bills as a liquid, low-risk place for idle cash, as eligible collateral for futures and swap margin, and as the cash leg of many hedge and credit strategies. Money market funds and treasury operations teams use them to manage liquidity against expected redemptions, capital calls or margin needs.

In fund accounting, the discount is accreted into income over the life of the bill, typically on a straight-line or effective-yield basis, so the carrying value approaches par at maturity. Prices are observable and usually Level 1 or Level 2. The main operational points are booking maturities and rollovers on time, reflecting bills pledged as margin as encumbered, and reconciling holdings at the custodian or broker where they are held.