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Archive for Tuesday, July 24, 2001

Four-week maturity offered on T-bills

July 24, 2001

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— Investors wary of the roller-coaster stock market and looking to park their money in a super-safe investment are getting a new option from the U.S. Treasury.

The Treasury Department said Monday that it would sell, beginning July 31, a new security that matures in just four weeks. The shortest Treasury maturity currently available to investors is a three-month bill.

Treasury said it would sell four-week bills on a regular, weekly basis each Tuesday afternoon.

The new security like the three-month and six-month Treasury bills will be auctioned in increments of $1,000 to make them attractive for individual investors. The return will be determined by the auction.

The four-week bills will be sold at a discount. The amount paid to investors at maturity reflects the difference between the price they paid for a bill at auction and the par, or face, value of the bill.

T-bills are considered by many to be the world's safest investment, backed by the full faith and credit of the United States.

Individual investors can bid in four-week bill auctions on their own via the Internet through the Bureau of Public Debt's Web site or by mail, Treasury officials said.

Investors also can place bids through banks or investment brokers.

"This is a good opportunity for small investors, given the growing uncertainties in the economic environment as well as the stock market," said Richard Yamarone, an economist with Argus Research Corp.

"This would be a perfect opportunity for those individuals who are more risk averse."

Treasury first announced in May that it planned to sell a four-week bill but needed time to work out details, which were released Monday.

In the first few months, Treasury plans to sell between $8 billion and $16 billion of the four-week bills. The new four-week bill will provide Treasury with greater flexibility in managing its cash needs, reduce its dependence on cash management bills and improve the cost efficiency of its short-term financing, Treasury said.

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