How to Acquire Treasury Bonds
Treasury Bonds are not issued like traditional securities, rather they are auctioned off. The price and yield of T-Bonds are determined at the time of auction. There are two types of bids for T-Bonds: Competitive and Non-competitive.
1. Competitive Bids – the bidder sets the rate or yield they want for the band then, one of three scenarios can occur:
a. Your bid may be accepted in the full amount if your bid is equal to or less than the yield determined at auction
b. Your bid may be partially accepted if your bid is equal to the high yield, or
c. Your bid may be rejected if the yield you specify is higher than the yield set by the auction.
2. Non-Competitive Bids – the bidder receives bonds for the entire amount they want to purchase, but they have to accept the rate or yield as it stands. If your goal is to purchase a bond regardless of rate, this is the right bidding option to use.
Treasury Bonds can be issued to individuals or businesses via a bank, broker, dealer or by using the online Treasury Direct website. However, at this time only individuals can have an account with Treasury Direct.