[–] Text Size [+]
TreasuryDirect (Logo)

Glossary of Terms

A   B   C   D   E   F   G   H   I   J   K   L    M   N   O   P   Q   R   S   T   U   V   W   X   Y   Z

ACH (Automated Clearing House)

A clearing and settlement system used for electronic financial transactions in participating U.S. commercial banks and institutions.

Allocation Percentage at High Rate

Percentage determined at auction to prorate and award securities accepted at the high rate, yield, or discount margin. When the total amount of bids tendered exceeds the public offering amount, bids at the highest accepted rate, yield, or discount margin are only awarded a portion of their bid based on this percentage.

Announce Date

This is the date when notification of an auction is made to the public. This notification states the terms and conditions of the securities to be auctioned, including the auction date, offering amount, and auction format.

Auction Date

This is the date on which the auction for a specific Treasury security is held.

Auction Format

Type of auction method used. Since 1980, the Treasury has used three types of formats to auction its marketable securities: single-price, multiple-price, and price-based.

  • Single-price - Investors making competitive bids specify the rate, yield, or discount margin they are willing to receive for the use of their funds. Successful bidders pay the price equivalent to the highest accepted rate, yield, or discount margin regardless of the rate, yield, or discount margin they bid. All Treasury securities auctions are now single-price.
  • Multiple-price - Investors making competitive bids specify the rate, yield, or discount margin they are willing to receive for the use of their funds. Successful competitive bidders pay the price equivalent to the rate, yield, or discount margin they bid.
  • Price-based - Investors making competitive bids specify the price they are willing to pay for the security. Successful competitive bidders are awarded securities at the price they each bid at the auction.

Average/Median Discount Margin (FRNs only)

In a single-price auction, 50 percent of the amount of accepted competitive tenders is tendered at or below the median discount margin. In a multiple-price auction, the average is the weighted average of all accepted competitive discount margins. In a price-based auction, it is the discount margin associated with the weighted average of all accepted competitive prices.

Average/Median Discount Rate (bills only)

In a single-price auction, 50 percent of the amount of accepted competitive tenders is tendered at or below the median rate. In a multiple-price auction, the average is the weighted average of all accepted competitive rates. In a price-based auction, it is the rate associated with the weighted average of all accepted competitive prices.

Average/Median Equivalent Yield (bills only)

In a single-price auction, 50 percent of the amount of accepted competitive tenders is tendered at or below the median yield. In a multiple-price auction, the average is the weighted average of all accepted competitive yields. In a price-based auction, it is the yield associated with the weighted average of all accepted competitive prices.

Average/Median Yield (notes, bonds, and TIPS only)

In a single-price auction, 50 percent of the amount of accepted competitive tenders is tendered at or below the median yield. In a multiple-price auction, the average is the weighted average of all accepted competitive yields. In a price-based auction, it is the yield associated with the weighted average of all accepted competitive prices.

BECCS (Bearer Corpora Conversions)

Allows holders of the principal portions, or corpora, of U.S. Treasury bearer securities that have been stripped of all non-callable coupons to convert their bearer principal securities to book-entry form. With the call of the last bond eligible for conversion to BECCS on November 15, 2006, the conversion program has ended.

CPI (Consumer Price Index)

A measure of the average change in prices of goods and services purchased by households over time.

CUBES (Coupons under Book-Entry Safekeeping)

Allows holders of stripped bearer coupons to convert them to book-entry form and makes them readily transferable. With the call of the last bond eligible for conversion to CUBES on November 15, 2006, the conversion program has ended.

Callable

A U.S. Treasury security that is subject to call before maturity.

As in the 31 CFR 358.1 .

Callable Coupons

The coupons associated with a callable security that are due after the date the security is subject to call.

As in the 31 CFR 358.1.

Commercial Book-Entry System

An indirect holding system where you hold your securities with your financial institution, government securities broker, or dealer. It is a multilevel arrangement that involves the U.S. Treasury, Federal Reserve System, banks, brokers, dealers, and other financial institutions.

Competitive Bid

A competitive bid is one in which the bidder, at a U.S. Treasury auction, specifies the discount rate, yield, or discount margin they wish to receive. Awards to a single customer may not exceed 35 percent of the total offering.

Corpus (Plural Corpora)

The principal portion of a U.S. Treasury bearer security.

As in the 31 CFR 358.1.

Coupon

A definitive bearer interest instrument associated with a U.S. Treasury bearer security.

As in the 31 CFR 358.1.

CUSIP

A unique nine-character combination assigned to each original Treasury security issue. They are provided by the CUSIP (Committee on Uniform Securities Identification Procedures) Service Bureau, which is operated by Standard & Poors for the American Bankers Association.

Dated Date

The date from which interest accrues for notes and bonds. The dated date and issue date are usually the same. In those cases where interest begins accruing prior to the issue date, however, the dated date will be prior to the issue date. An example is when the dated date is a Saturday and the issue date is the following Monday.

Definitive Security

A security held in paper form.

As in the 31 CFR 358.1.

Depository Institution

  1. Any insured bank, mutual savings bank, or savings bank as defined in 12 U.S.C. 1813, or any institution eligible to become an insured bank under 12 U.S.C. 1815;
  2. Any insured credit union as defined in 12 U.S.C. 1752, or any credit union eligible to become an insured credit union under 12 U.S.C. 1781;
  3. Any member as defined in 12 U.S.C. 1422; and
  4. Any savings association as defined in 12 U.S.C. that is an insured depository institution as defined in the Federal Deposit Insurance Act, 12 U.S.C. 1811 et seq., or is eligible to become an insured depository institution under that Act.

As in the 31 CFR 358.1.

Discount Margin (FRNs only)

The margin over the index that equates the present values of the assumed cash flows on a floating rate note to the sum of the price of and accrued interest on the floating rate note. The assumed cash flows are calculated based upon the index rate applicable to the dated date.

First Interest Payment Date (notes, bonds, FRNs, and TIPS only)

This is the date when the first interest payment is made. It is usually six months for notes, bonds and TIPS and three months for FRNs after the issue date of the security.

Floating Rate Notes (FRNs)

An FRN is a security that has an interest payment that can change over time.  As interest rates rise, the security’s interest payments will increase.  Similarly, as interest rates fall, the security’s interest payments will decrease. Treasury FRNs will be indexed to the most recent 13-week Treasury bill auction High Rate prior to the lockout period, which is the highest accepted discount rate in a Treasury bill auction.

High Discount Margin (FRNs only)

In single- and multiple-price auctions, the highest discount margin accepted and awarded. In a price-based auction, it is the discount margin associated with the lowest price accepted.

High Discount Rate (bills only)

In single- and multiple-price auctions, the highest rate accepted and awarded. In a price-based auction, it is the rate associated with the lowest price accepted.

High Equivalent Yield (bills only)

In single and multiple price auctions, the equivalent yield associated with the highest discount rate accepted and awarded. In a price-based auction, it is the equivalent yield associated with the lowest price accepted.

High Yield (notes, bonds, and TIPS only)

In single- and multiple-price auctions, the highest yield accepted and awarded. In a price-based auction, it is the yield associated with the lowest price accepted.

Interest Rate (notes, bonds, and TIPS only)

Annual percentage rate paid on the face value of the security.

Issue Date

This is the date when the securities are delivered to the investor in exchange for payment.

Lockout Period

A lockout period for floating rate notes is a period of time prior to the auction settlement or payment of interest. Any 13-week Treasury bill auction that takes place during this period will be excluded from the calculation of accrued interest for determining the settlement or interest payment amount.

Low Discount Margin (FRNs only)

In a single-price auction, five percent of the amount of accepted competitive tenders was tendered at or below this discount margin. In a multiple-price auction, the lowest discount margin accepted and awarded to competitive bidders. In a price-based auction, it is the discount margin associated with the highest price accepted at the auction.

Low Discount Rate (bills only)

In a single-price auction, five percent of the amount of accepted competitive tenders was tendered at or below this rate. In a multiple-price auction, the lowest rate accepted and awarded to competitive bidders. In a priced-based auction, it is the rate associated with the highest price accepted at the auction.

Low Equivalent Yield (bills only)

In a single-price auction, five percent of the amount of accepted competitive tenders was tendered at or below the rate associated with this yield. In a multiple-price auction, the lowest yield accepted and awarded to competitive bidders. In a price-based auction, it is the yield associated with the highest price accepted at the auction.

Low Yield (notes, bonds, and TIPS only)

In a single-price auction, five percent of the amount of accepted competitive tenders was tendered at or below this yield. In a multiple-price auction, the lowest yield accepted and awarded to competitive bidders. In a price-based auction, it is the yield associated with the highest price accepted at the auction.

Maturity Date

This is the date on which the face value, or inflation-adjusted principal, of a security is paid to the investor. The security also stops earning interest on this date.

Mixed Cash Letter

A Cash Letter in which savings bonds can be commingled with other work types (i.e. commercial and government checks, non-cash items, and the like). The commingled Federal Reserve Check Mixed Cash Letter is then deposited at the local Federal Reserve Office for processing and crediting of the items.

Noncallable

A U.S. Treasury bearer security not subject to call before maturity.

As in the 31 CFR 358.1.

Noncallable Coupons

Coupons associated with a noncallable bearer security or coupons associated with a callable bearer security that are due on or before the date on which the callable bearer security is subject to call.

As in the 31 CFR 358.1.

Noncompetitive Bid

In a U.S. Treasury auction, a noncompetitive bid is one in which an investor agrees to buy a specified number of securities at the discount rate, yield, or discount margin set at the auction. The limit for noncompetitive purchases is $5 million for each security type and term, for each auction. This limit applies regardless of whether buying a bill, note, bond, FRN, or TIPS and regardless of what method used to make the purchase (TreasuryDirect, Legacy Treasury Direct, broker, or dealer).

Offering Amount

The amount of securities offered for purchase in a particular auction.

Original Issue Date (notes, bonds, FRNs, and TIPS only)

Date on which a specific note or bond was issued for the first time.

Price at Average/Median Discount Margin (FRNs only)

In a multiple-price auction, price associated with the weighted average discount margin of accepted and awarded bids. In a price-based auction, weighted average price of all accepted and awarded bids. Not applicable to single-price auctions.

Price at Average/Median Rate (bills only)

In a multiple-price auction, price associated with the weighted average rate of accepted and awarded bids. In a price-based auction, weighted average price of all accepted and awarded bids. Not applicable to single-price auctions.

Price at Average/Median Yield (notes, bonds, and TIPS only)

In a multiple-price auction, price associated with the weighted average yield of accepted and awarded bids. In a price-based auction, weighted average price of all accepted and awarded bids. Not applicable to single-price auctions.

Price at High Discount Margin (FRNs only)

In single- and multiple-price auctions, price associated with the highest discount margin accepted and awarded. In a price-based auction, the price associated with the highest accepted and awarded discount margin received at the auction.

Price at High Rate (bills only)

In single- and multiple-price auctions, price associated with the highest discount rate accepted and awarded. In a price-based auction, price associated with the highest accepted and awarded discount rate received at the auction.

Price at High Yield (notes, bonds, and TIPS only)

In single- and multiple-price auctions, price associated with the highest yield accepted and awarded. In a price-based auction, price associated with the highest accepted and awarded yield received at the auction. For Treasury Inflation-Protected Securities, the price provided is the unadjusted price associated with the highest yield accepted and awarded multiplied by the applicable index ratio for that security.

Price at Low Discount Margin (FRNs only)

In a multiple-price auction, the price associated with the lowest discount margin accepted and awarded. In a price-based auction, the price associated with the lowest accepted and awarded discount margin received at the auction. Not applicable to single-price auctions.

Price at Low Rate (bills only)

In a multiple-price auction, price associated with the lowest rate accepted and awarded. In a price-based auction, price associated with the lowest accepted and awarded discount rate received at the auction. Not applicable to single-price auctions.

Price at Low Yield (notes, bonds, and TIPS only)

In a multiple-price auction, price associated with the lowest yield accepted and awarded. In a price-based auction, price associated with the lowest accepted and awarded yield received at the auction. Not applicable to single-price auctions.

SLGS

State and Local Government Series Securities, or SLGS, are offered for sale by Treasury to issuers of state and local government tax-exempt debt to help them comply with yield restriction or arbitrage rebate provisions of the Internal Revenue Code. The SLGS program was established following federal legislation enacted in 1969 restricting state and local governments from earning arbitrage profits by investing bond proceeds in higher yielding investments.

STRIPS (Separate Trading of Registered Interest and Principal of Securities)

A fixed principal note or bond, or a Treasury Inflation-Protected Security (TIPS), whose two components, interest and repayment of principal, are separated and the principal payment becomes a separate zero-coupon security.

Security Description

This is the length during which the security is outstanding and accrues interest. It is expressed in terms of days and weeks for bills and in months and years for notes, bonds, FRNs, and TIPS.

Security Type

The Treasury issues bills, notes, bonds, FRNs, and TIPS. Bills have a maturity of one year or less. Notes have maturity greater than one year but do not exceed ten years. Bonds have maturity greater than ten years. Floating Rate Notes (FRNs) have maturity greater than one year but do not exceed ten years. TIPS, the value of which is tied to the rate of inflation, have a maturity five years or greater.

Separately Sorted Cash Letter

Also called an EZ Clear Fine Sort Cash Letter. A Cash Letter that contains only eligible EZ Clear savings bonds. The EZ Clear Fine Sort Cash Letter is deposited at the local Federal Reserve Office. The deposit is only credited, NOT processed by the local Federal Reserve Office.

Series (notes only)

Description used to identify securities by maturity date. The series consist of a letter and the year it matures.

Spread (FRNs only)

The fixed amount over the life of a floating rate note that is added to the index rate in order to determine the interest rate of the floating rate note. The spread will be determined in the auction of a new floating rate note and is expressed in tenths of a basis point (i.e., to three decimals). Additionally, the spread will be equal to the high discount margin at the time a new floating rate note is auctioned.

Standard Interest Payment (notes and bonds only)

The amount of interest paid semiannually to investors for each $1,000 Treasury note or bond they own.

Stripped Bearer Securities

Securities that have been converted into zero-coupon bonds, with the various maturities matching the payment dates of the coupon and the redemption date of the principal amount.

TAAPS

The U.S. Treasury's official internet-based tender submissions application, which provides financial institutions direct access to the U.S. Treasury's marketable securities auctions.

TRADES (Treasury/Reserve Automated Debt Entry System)

TRADES is another name for the Commercial Book-Entry System. See Commercial Book-Entry System for a detailed definition.

TIPS (Treasury-Inflation Protected Securities)

Securities whose principal is tied to the Consumer Price Index. TIPS pay interest every six months, based on a fixed rate applied to the adjusted principal. Specifically, each interest payment is calculated by multiplying the adjusted principal by one-half the interest rate.

Total Amount Accepted

The sum of all bids accepted for a specific security on auction day. It also includes any amounts accepted from the Federal Reserve Banks for their own accounts and for foreign and international monetary institutions.

Total Amount Tendered

The sum of all bids received for a specific security on auction day. It also includes any amounts received from the Federal Reserve for their own accounts and for foreign and international monetary institutions.

Treasury Buybacks

Unmatured marketable Treasury securities periodically purchased back by the U.S. Treasury.

Treasury Reopenings

When additional amounts of previously issued securities are issued again rather than selling new issues of those securities. The reopened securities have the same maturity date and interest rate; however, as compared to the original securities, the reopened securities have a different issue date (which creates a shorter overall term), and usually, a different purchase price.

Zero-Coupon Bonds

Treasury securities that do not make periodic interest payments.