Main Features of Treasury Bonds

• Treasury Bonds (T-Bonds), issued by the Central Bank of Sri Lanka (CBSL), are long-term debt instruments with maturities ranging from 2 to 25 years. These bonds carry minimal default risk, offer high liquidity, and pay fixed semiannual interest to holders.
• T-Bonds pay interest semiannually at a fixed rate throughout their term. Investors receive these coupon payments until maturity, along with the principal amount.
• Pricing Mechanism: The market price of a T-Bond may be above (premium) or below (discount) its face value of Rs. 100, depending on the prevailing market yield in comparison to its fixed coupon rate.
• Investment Benefits: Offering higher yields than many other fixed income instruments, T-Bonds allow investors to earn regular interest and potential capital gains through trading in the secondary market.
• Liquidity and Use: T-Bonds are highly tradable and can be easily sold in the secondary market, making them a flexible investment and widely accepted as collateral within the financial system.
• Income and Capital Gains Potential: With fixed semiannual interest payments and the potential for price appreciation, T-Bonds provide a reliable income stream and opportunities for capital gains for savvy investors.
• Collateral Value and Duration Options: These bonds are available in a broad range of maturities, catering to different investment horizons, and are recognized by banks and financial institutions as secure collateral.

Special Features

• T-Bond holders can borrow against their investment by using the bond as collateral at a predetermined interest rate. The loan period may be shorter than the bond's maturity. The applicable interest rate will depend on prevailing market conditions.
• If market interest rates fall below the yield at which you purchased the T-Bond, you may realize a capital gain by selling the bond.
• .T-Bonds are issued in a scripless format and do not come with physical certificates.
• T-Bond ownership can be easily transferred to another party. No. Interest earned from T-Bonds is exempt from Withholding Tax.
• If you are subject to income tax, earnings from T-Bonds will be considered part of your taxable income.
• All secondary market rates quoted by NSB FMC are inclusive of our service charges.