Fixed-rate discount Treasury bills (BTFs) are similar to short-term Treasury bonds. They have an initial maturity of less than or equal to one year.
Market Overview
The maturity of BTFs is expressed in weeks. The most frequently issued maturities are 13, 26 and 52 weeks. Bills with maturities of 20-24 weeks can be issued as half-year bills and bills with maturities of 48-52 weeks can be issued as one-year bills.
BTFs have a par value of €1 and are issued every week by auction according to a quarterly schedule published by AFT in advance. This schedule specifies the maturities of the bills that will be auctioned during the quarter. Unscheduled issuance of certain BTFs with shorter than standard maturities may take place to meet the State’s cash requirements. Generally speaking, a quarterly BTF, a half-year BTF and a one-year BTF are normally issued each week.
To ensure the fungibility of new and existing issues, the maturities of new bills are aligned on those of previously issued bills. In 2016, the market featured between 22 and 25 different BTFs at any time.
Auctions
The market is informed every Friday at 11am of the BTFs that will be auctioned the following Monday. To ensure that there is sufficient flexibility to meet market demand, AFT announces the amounts that will be auctioned, including the range for each issuance to be auctioned.
Bids of at least one million euros are expressed as a money-market straight-line yield to three decimal places, with ticks of 0.5 basis points, and as the exact number of days out of 360 (ACT/360). BTFs are discounted Treasury bills. The pro-rated discount is applied to the par value of the bill when the bill is issued. Therefore no coupon payments are made.
As of Monday 6 October 2014, settlement of BTF auctions has been at T+2 to bring primary market settlement dates into line with secondary market settlement dates.
Trading
BTF purchases on the secondary market are governed by the same rules that govern primary market purchases. Trades are based on a money-market straight-line yield to three decimal places, with ticks of 0.5 basis points, and the exact number of days out of 360 (ACT/360). Since 2 April 2012, the settlement date for BTFs on the secondary market is T+2, instead of T+1 as before.