The U.S. Treasury Department issues Treasury securities of varying maturities to finance government debt. The yield on these securities is determined through a public auction process, where securities are offered for sale to institutional and retail investors. The purpose of the auctions is to obtain financing from financial markets at the most competitive cost.
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Treasury securities can be marketable and non-marketable. Marketable securities are issued for the meeting the financing requirements of the federal government. These debt instruments can be also be traded on the secondary market. The secondary market for Treasury securities is one of the most liquid in the world. This series seeks to provide an overview of the auction process for marketable Treasury securities.
The US Treasury Department raised approximately $2.67 trillion at 267 auctions held in 2013. The US Treasury Department offers five types of marketable Treasury securities:
To read more about Treasury auctions, move on to Part 2 of this series.