What are Sterling Treasury Bills? Are they like gilts?
A sterling treasury bill is a short-term (less than one year) UK government zero coupon bond. Treasury bills form an important constituent in the Debt Management Offices’s (DMO) cash management operations and an intrinsic component in the UK Government’s stock of marketable debt instruments, alongside gilts. As they are zero coupon bonds, treasury bills do not pay interest. They are instead issued at a discount to their face value with returns being made on maturity. Although not gilts there is very little risk attached to investing in treasury bills. Default risk on a government’s borrowings in its own currency is low enough to be regarded as zero. Because of their short term, or duration, their price is not very sensitive to interest rate changes. Treasury bills can be issued with maturities of 1 month, 3 months, 6 months or 12 months, although to date no 12 month tenders have been held. Treasury notes and Treasury bonds are terms often used to indicate non-UK gilt equivalents issued
