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I submitted an order on Fidelity to purchase a newly issued 4-week t-bill. The order went through and I got a t-bill that matures in 4 weeks. However, after looking it up by CUSIP on treasurydirect.gov (link), I noticed that it was issued a few months ago and has a 119-day term instead.

Could someone please clarify what might be happing here? Did Fidelity purchase this bill on a secondary market instead of the newly issued bill?

Machavity
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A. Shultz
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2 Answers2

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Fidelity may have sold you a bill that expires 4 weeks from your order date instead of a newly minted bill. It is not uncommon to trade "off-the-run" treasury bills that have identical yields as newly minted bills that mature on the same date.

However, looking for that CUSIP on TreasuryDirect shows bills of different "Security Term" with the same CUSIP. Since they all have the same maturity date and do not pay a coupon (you instead buy them at a discount), they are fundamentally equivalent. There should be no material difference in the yield you get from the bill you purchased and one that you would have gotten from TreasuryDirect or through another broker that had the same expiry date. US Treasury debt is incredibly liquid (trades a lot) so there's generally very little difference across brokers.

So it's entirely possible that you did get a newly-issued 4 week bill that has the same CUSIP (and pays the same amount) as one issued 2 months ago.

Put another way - investors should be agnostic about a bill that was issued 3 months ago and has one month until maturity and a newly issued bill that has one month to maturity. Otherwise one could buy the cheaper one, short the expensive one and get a risk-free profit ("arbitrage").

D Stanley
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The other answer is actually misleading. No, Fidelity didn't sell you off-the-run bills. What you got is indeed a newly issued T-bill. There's a term for this: reopening.

https://www.treasurydirect.gov/auctions/reopenings/

Here's what happened

  1. UST sold $60B of 912797KQ9 in Mar, as a 17wk bill expiring 7/23.
  2. UST reopened and sold another $80B 912797KQ9 in May, as an 8wk bill. Same term. (This increased the total outstanding to $140B.)
  3. UST reopened again and sold yet another $70B in Jun, this time as a 4wk bill. (Total outstanding is now $210B.) You bought some of those.
Community
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xiaomy
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