Main Features of Treasury Bills

• Treasury Bills are short-term debt securities issued at a discount by the government through the Central Bank of Sri Lanka (CBSL) and are widely considered a risk-free investment option due to the sovereign guarantee.
• Issued in tenors of 91, 182, and 364 days, Treasury Bills are sold through weekly competitive auctions conducted electronically by CBSL.
• Primary market participation in T-Bill auctions is facilitated exclusively through authorized Primary Dealers, who act as intermediaries between investors and the Central Bank.
• T-Bills do not offer periodic interest payments; instead, they are sold at a discount to their face value, allowing investors to earn the difference upon maturity.
• For example, if an investor purchases a 6-month Treasury Bill with a face value of Rs.50,000 at a discount rate of 9.00%, they would pay Rs.47,857.14 upfront and receive Rs.50,000 at maturity.
• The yields on Treasury Bills serve as a benchmark for short-term interest rates and influence pricing in other segments of the financial market.
• Given their zero credit risk and ease of conversion into cash, Treasury Bills are a preferred instrument among institutional investors, fund managers, and banks.
• The discount-based nature of T-Bills ensures that the investor's return is realized through capital appreciation rather than periodic income.
• Participation in the secondary market for Treasury Bills allows investors to buy or sell their holdings prior to maturity, enhancing their liquidity and marketability.

Special Features

• T-Bill holders may borrow against their investment by pledging the T-Bill as collateral at a predetermined rate. The loan duration may be shorter than the maturity of the T-Bill. Applicable borrowing rates will reflect prevailing market conditions at the time of borrowing.
• Capital gains are possible. If market interest rates fall below the yield at which you purchased the T-Bill, you may sell the T-Bill at a profit.
• Treasury Bills are issued in electronic (scripless) form, and no physical certificates are provided.
• T-Bill ownership can be transferred to another party with ease through the electronic system.
• Our experienced professionals will assist you in placing bids and provide guidance based on the latest market and economic outlook to help secure the most favorable yield.
• Interest income from Treasury Bills is exempt from Withholding Tax.
• If you are an income tax liable individual or entity, earnings from T-Bills must be declared for income tax purposes.