What Are Treasury Bonds?

Treasury bonds are debt securities issued by the Federal Government of the United States under the auspices of the US Treasury Departments.  Treasury bonds, commonly referred to as Treasuries and simply T-Bonds, are loans made to the US Federal Government by individual investors, funds, and foreign governments.  Treasury bonds are an essential instrument to the operation of the US economy as it allows the US government to borrow money to function.  Treasuries are long term loans in the world of bonds, with a maturity date between 20 to 30 years.  During this amount of time the lender, meaning the purchaser of the T-Bond, will receive an interest payment known as a coupon amount.  The interest will be stipulated for the Treasuries being issued and must be paid by the Federal Government over the life of the Treasury Bonds.  Treasury bonds have face values that can be anywhere from $100 to $1,000 each.  This is the amount stipulated to be paid at the maturation date of the Treasuries and is in addition to the interest paid out over its lifetime.


Treasury Bonds: Essential And Safe

Treasury bonds have been essential to the operation of the US economy since World War 1.  During this time the federal government saw a need to replenish cash stores for the war time effort.  The T-bonds achieved just this and have been used ever since.  Treasury bonds are not only good for the US economy but also considered one of the most secure locations to invest money.  While the interest rates paid out in the form of coupons are not always very high, they are backed by the US government all but guaranteeing repayment.  Corporate bonds pay significantly higher interest but are both riskier as they are only as guaranteed as the corporation who issues them, but their interest payments are also subject to federal income taxation.

Related posts:

1. What are Government Bonds?
2. What Are Interest Bonds?
3. What Are Tax Free Bonds?
4. What Is A Treasury Bond?
5. What Is A T-bill?