How to Sell a T-Bill Before Maturity & Interest Rate Changes

Last updated Jul 3, 2020 0

Treasury bills are short-term investment bonds issued by the U.S. Treasury Department. The duration of a T-bill ranges from a few days to 52 weeks. Bills are purchased at a discount, with the coupon being worth more than the amount paid to buy it.

For example, a $1,000 T-bill may be bought for $990 just weeks before the maturity date. When the T-bill is redeemed on or after the maturity date, you will get the coupon value of $1,000. You can sell T-bills before the maturity date.

3 Steps to Sell a T-Bill Before Maturity & Interest Rate Changes

1. Determine the current interest rate conditions with the Treasury Department’s yield curve at USTreas.gov.

This is the best resource to see if T-bill rates have changed for respective T-bill time frames.

When you sell a T-bill prior to maturity, you are subject to what the market will pay for it. If interest rates have gone down, your T-bill may be worth more than the coupon value. Conversely, if interest rates have gone up, your T-bill may be worth less. If interest rates have remained unchanged, you should be able to get a pro-rated amount reflective of your original T-bill coupon.

2. Contact the Federal Reserve Bank of Chicago.

This is where T-bills are directly redeemed if you purchased them from TreasuryDirect.gov at a U.S. Treasury Bill auction. Fill out Form PD F 5179-1: Sell Direct Request. The FRB Chicago makes it available to brokers to bid on selling it to the highest bidder.

You are sent funds directly your bank account less a $45 fee.

Federal Reserve Bank of Chicago
230 South LaSalle St.
Chicago, IL 60604

3. Contact your broker if you purchased a T-bill directly through your brokerage account.

Request information regarding similar T-bills being sold to get an idea of what you can expect to receive. Confirm any brokerage fees, instruct them to sell the T-bill and wait for the settlement of funds.

Essentially the broker will find a buyer on the secondary market similarly to doing this direct. Some people maintain T-bills in their brokerage accounts for convenience of having all assets in one location.

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