Investment Information Page Treasury Securities Information
Treasury Notes: Rates & Terms
Notes are issued in terms of 2, 5, and 10 years, and are offered in multiples of $1,000.
Price and Interest
The price and interest rate of a Note are determined at auction. The price may be greater than, less than, or equal to the Note's par amount.
The price of a fixed rate security depends on its yield to maturity and the interest rate. If the yield to maturity (YTM) is greater than the interest rate, the price will be less than par value; if the YTM is equal to the interest rate, the price will be equal to par; if the YTM is less than the interest rate, the price will be greater than par.
Here are some hypothetical examples of these conditions:
| Condition |
Type of Security |
Yield at Auction |
Interest Coupon Rate |
Price |
Explanation |
| Discount (price below par) |
10-year Note
Issue Date: 8/15/2005 |
4.35% |
4.25% |
99.196069 |
Below par price required to equate to 4.35% yield |
| Premium (price above par) |
10-year Note reopening*
Issue Date: 9/15/2005 |
3.99% |
4.25% |
102.106357 |
Above par price required to equate to 3.99% yield |
Sometimes when you buy a Note, you are charged accrued interest, which is the interest the security earned in the current interest period before you took possession of the security. If you are charged accrued interest, we pay it back to you as part of your next semiannual interest payment.
For example, you buy a 10-year Treasury Note issued August 15, 2005 and maturing August 15, 2015. If August 15, 2005 fell on a Saturday, Treasury would issue the Note on the next business day, Monday August 17, 2005. Besides the purchase price, you would pay Treasury for the interest accrued from August 15 to August 17, 2005. When you get the first semiannual interest payment, it will include the accrued interest you paid.
If you buy a Note directly from us and pay by automatic withdrawal, we withdraw the amount determined at auction. If you buy directly from us and pay by means other than automatic withdrawal (in Legacy Treasury Direct), we send you either a refund or an invoice for a premium, if the price is different from the par amount.
If you are a TreasuryDirect customer, you should look at your Current Holdings, Pending Transactions Detail after 5 pm Eastern Time on auction day and check the price per $100 and accrued interest to determine the total price of the security. Next, make sure the source of funds you selected has sufficient funds to cover the total price. If you need to add funds to cover the purchase price, you have to do so before the issue date of the security.
If you buy from a bank or broker, please consult the bank or broker to learn payment arrangements.
Treasury Notes pay a fixed rate of interest every six months.
Options at Maturity - and Before
You can hold a Note until it matures, or sell it before it matures.
If you don't sell, here are your options at maturity:
- TreasuryDirect. Redeem the note or use its principal to buy another security.
- Legacy Treasury Direct. Redeem the note or reinvest its principal into another note.
- Bank or Broker. For your options, consult your bank or broker.
Auction Pattern
2-Year Note — Monthly
5-Year Note — Monthly
10-Year Note — February, *March, May, *June, August, *September, November, *December
* These are reopenings. In a reopening, we sell an additional amount of a previously issued security. The reopened security has the same maturity date and interest rate as the original security. However, as compared to the original security, the reopened security has a different issue date and usually a different purchase price.