Treasury bills and government bonds

6 min read · Before you start: Lessons on interest, inflation and risk · Updated 26 October 2026

Key terms in this lesson: volatility · emergency fund · fixed deposit · coupon (all defined in the glossary)

When a government needs money, it borrows by selling debt. Treasury bills and bonds are loans that you make to the government. They are often called low-risk, but low risk is not no risk. This lesson explains how they work so you can judge them for yourself.

Treasury bills (T-bills)

The Central Bank of Trinidad and Tobago explains that T-bills are short-term debt issued by the government. Key points from its public information:

Bills run for 3 months, 6 months or 1 year, and new ones are issued regularly as old ones mature.
They are sold at a discount. You pay less than the face value and receive the full face value at maturity. The difference is your return.
Any individual or company in Trinidad and Tobago can buy them. Individuals can apply through the Central Bank's Domestic Market Operations department with one valid national photo ID, or trade through brokers.
The minimum purchase is TT$1,000, with further purchases in multiples of TT$1,000.

The Central Bank's own example is a TT$1,000 three-month bill at a 0.40 percent discount. You would pay TT$999.00 and receive TT$1,000.00 at maturity.

Working out the return

Suppose you pay TT$980 for a 6-month bill that pays TT$1,000. Your gain is TT$20 on TT$980, or about 2.04 percent over six months. Doubling that gives roughly 4.1 percent a year as a simple estimate. Comparing returns is easier over the same period.

Government bonds

A bond lasts longer, often many years. Typically it pays a fixed amount of interest at regular intervals (the coupon) and returns the face value at maturity. Bonds can usually be sold before maturity at the market price.

Why bond prices move

Bond prices and market interest rates move in opposite directions. If new bonds start paying higher interest, an older bond with a lower coupon becomes less attractive, so its price falls. If rates fall, older bonds with higher coupons become more valuable. If you hold to maturity, you still get the promised payments, but you cannot assume the price you can sell at before then.

The risks

Interest-rate risk: prices of existing bonds fall when rates rise. Longer bonds move more.
Inflation risk: if prices rise faster than your return, buying power falls. T-bill rates have often been low, so compare them with inflation.
Credit risk: a government can fail to pay, though this is considered less likely for a government borrowing in its own currency.
Liquidity risk: selling before maturity may be harder or less favourable than expected.
Not insured: these are investments, not deposits, so deposit insurance does not apply to them.

Other government securities in the news

Budget 2027 materials mention government savings bonds in denominations of TT$1,000, TT$5,000 and TT$10,000 with fixed rates, and retail government securities for individuals from TT$5,000, according to PwC. The Ministry of Finance statement also says a further national investment bond issue ("NIF 3") will be launched "in the coming months". Minimums, rates and who can buy were not fully stated in the summaries we read, so use the Central Bank and Ministry of Finance announcements for the details when they are published.

Where they fit

T-bills are used for money you will need within a year and want to hold in a low-volatility form. Bonds suit people who want regular income and can hold to maturity. Neither replaces an emergency fund you can reach the same day. See risk, return and diversification.

Questions to ask

What is the maturity date, and do I need the money before then?
What are the current rates at the latest auction? The Central Bank publishes results.
What fees does a broker charge, if I use one?
How does the return compare with inflation and with a fixed deposit?

Run your own figures with the savings growth calculator on the tools page.

Key ideas: T-bills are sold at a discount and pay face value at maturity. Bonds pay interest and their prices move with rates. Low risk is not no risk. Check current rates and fees before you invest.

Where sources differ, go to the source. Auction results, rates and purchase rules change. Read the official information and decide for yourself what applies to you. Useful places: Central Bank: what are treasury bills?, Central Bank of Trinidad and Tobago.

Test yourself

Quick check 1 of 3

How is a T-bill sold?

Quick check 2 of 3

According to the Central Bank, what is the minimum T-bill purchase?

Quick check 3 of 3

What usually happens to the price of an existing bond if market interest rates rise?

Not financial advice. This lesson is general education only. See our editorial policy and disclaimer.