Treasury Bills: A Rapid and Flexible Solution for Short-Term Financing
Among the tools used by companies to finance short-term projects or manage urgent cash flow needs, treasury bills (BT) stand out as a rapid and flexible solution to respond to unforeseen events.
Issuers and Investors
Treasury bills are typically issued by companies with a good credit rating, having demonstrated solvability and economic stability. The list of issuers includes listed companies and large private enterprises. On the other hand, investors are mainly institutional players such as banks, collective investment vehicles, and insurance companies. Individuals can also invest in treasury bills through a bank acting as a guarantor.
Characteristics of Treasury Bills
A treasury bill is a nominative instrument that must be issued at par value. Its nominal value is a multiple of 50,000 dinars, and the interest rate is fixed and determined at the time of issuance. The duration of a treasury bill ranges from a minimum of 10 days to a maximum of 5 years (in multiples of 10 days, months, or years). Interest on treasury bills with a duration of one year or less is payable in advance, while interest on those with a duration of more than one year is payable at the end of each year and at maturity for the fractional year.
Risks and Rewards
Although treasury bills are considered high-quality debt securities, they are not risk-free. Investors who purchase them must assume the credit risk of the issuer. This is why interest rates are relatively high. We have an idea of the yield levels of treasury bills in Tunisia, as they are negotiable securities. For maturities ranging from 10 to 30 days, the weighted average rate (TMP) is 9.71%, while it is 5.29% for maturities between 30 and 90 days. This may seem illogical, but it is not excluded in the context of a free negotiation between the parties involved. For treasury bills with a lifespan between 90 and 180 days, the TMP is 11.20%. Between 180 and 360 days, the TMP is 10.58%. Finally, for maturities exceeding one year, the TMP is 12.25%.
Conclusion
Overall, treasury bills are a good financing option compared to bank credits or factoring for well-structured companies. In the context of a holding company, parent companies manage the treasury of their subsidiaries and finance themselves internally. For small and medium-sized enterprises (SMEs) that benefit from a bank guarantee for the issuance of treasury bills, it is better than short-term debt.