Aug 15

Money Market Securities on Fixed Income Investing

T-Bills, Commercial Paper and Bankers’ Acceptances

Treasury bills (T-Bills) and other money market securities such as commercial paper and bankers’ acceptances are considered to be the safest segment of the fixed income market.

Issued at a discount, T-Bills are short-term debt securities issued or guaranteed by federal, provincial or other governments. The stated interest rates for T-Bills are fixed when issued, but values fluctuate based on changes to the central bank rate. A T-Bill’s return is calculated based on the difference between the price paid and the par value (also known as the denomination or face value). T-Bills mature at par (typically 90 or 180 days) and do not pay fixed interest payments like most bonds.

Unlike T-Bills, commercial paper and bankers’ acceptances are issued by corporations. A commercial paper is a negotiable promissory note with a term of a few days to a year and is not generally secured by company assets. A bankers’ acceptance is a short-term promissory note bearing the unconditional guarantee (acceptance) of a major chartered bank. Bankers’ acceptances offer superior yields to T-Bills, with higher quality and liquidity than most commercial paper issues.

To learn about the funds we offer that invest primarily in T-bills and other money market securities, see:

RBC Canadian T-Bill Fund
RBC Canadian Money Market Fund
PH&N Canadian Money Market Fund
RBC Premium Money Market Fund
RBC $U.S. Money Market Fund
PH&N $U.S. Money Market Fund
RBC Premium U.S.$ Money Market Fund