A treasury (treasury security) is a security (debt security) that is issued by a treasury department (e.g., US Treasury). It is an IOU made and issued by the government agency in charge of country-wide financial affairs. For holders/ investors, treasury securities (or simply treasuries) are considered one of the safest investments (if issued by a credit-worthy government) given that principal repayment and interest payment are backed by the full faith and credit of the government.

Treasury securities are primarily categorized according to their maturity. From shortest to longest maturity, the main types of these securities are:

• Treasury bills (T-bills).
• Treasury notes (T-notes).
• Treasury bonds (T-bonds).

T-bill is a type of treasury security that constitutes a short-term debt obligation in the form of a uniform security (fixed income security) issued and backed by a treasury department in a country. T-bills (treasury bills) have a a maturity of one year or less, i.e., usually for terms ranging from 4 to 52 weeks.

T-note is a mid-term debt obligation in the form of a uniform security (fixed income security) issued and backed by a treasury department in a country. T-notes (treasury notes) have a a maturity of more than one year and up to 10 years, i.e., usually for standard terms such as 2, 3, 5, 7, or 10 (from the issue date).

T-bond is similar to a T-note, with a long-term maturity trajectory. These bonds come with original maturities of either 20 or 30 years and typically offer the highest interest rate for holders. Interest payments are made twice a year.

Long-term treasuries include the 30-year T-bond and the 10-year T-note, and generally bear the highest interest rate payments of any treasury security because of the additional amount of risk embedded in any long-term holding. Any spike in inflation could reduce the value of the interest payments and the repayment of face value at maturity.

In all their types, treasury securities are sold at a discount or at par (face value). Investors can hold treasuries until maturity date or sell them before end of maturity.

Other types include those designed to provide for a specific feature that investors seek, especially on mid- to long-term, such as protection against inflation. To that end, treasury inflation protected securities (TIPS) are issued (usually for a term of 5, 10, or 30 years). Unlike standard treasury securities, where the principal is fixed, the principal of a TIPS can change, up and down, over its maturity. When the TIPS matures, if the principal is higher than its original level, the holder will receive the difference. If the principal is equal to or lower than the original amount, the investor will only get the original amount.