Side-by-side
| Feature | Treasury bill | Marketable bond |
|---|---|---|
| Typical term | One year or less | More than one year |
| Return | Difference between purchase price and face value | Coupon interest plus repayment of principal |
| Main role | Short-term funding and cash management | Longer-term financing and maturity management |
| Interest-rate exposure | Reprices quickly as bills roll over | Locked for the term, then reprices at refinancing |
Outstanding debt is constantly maturing
A government does not normally save the full face value of every bond in a separate account until maturity. It manages a continuing debt program, using revenues, cash balances and new issuance to meet maturities.
This rollover is common in sovereign debt management. The risk is not that any refinancing exists, but that too much debt matures at an unfavourable time or at sharply higher rates.
Securities are assets to their holders
A federal bond is a government liability and an investor asset. Holders can include pension funds, financial institutions, investment funds, the Bank of Canada and investors outside Canada.
That does not cancel the public liability, but it explains why debt securities are also part of the financial system’s savings and collateral infrastructure.
Primary sources
Use the official publications below for the latest figures and accounting details.
- Government Securities and MarketsBank of Canada
- Debt Management PublicationsDepartment of Finance Canada