Search
Search for an ETF or holding
Search for an ETF or holding
Updated 2mo ago.
Updated 2mo ago.
A Treasury bill is a short-term debt security (typically 1, 3, 6, or 12 months) issued by the Government of Canada. It is sold at a discount (below face value) and redeemed at full face value at maturity, with the difference representing the return. T-Bills are considered the safest investment in Canada as they are backed by the federal government.
The Government of Canada issues a 3-month T-Bill with a face value of $10,000. You buy it for $9,900. At maturity (3 months later), you receive $10,000. Your return is $100 (approximately 4% annualized). Rather than buying individual T-Bills, most investors use an ETF like CBIL.TO (CIBC Canadian T-Bill ETF, MER 0.13%) that invests in a basket of Canadian Treasury bills.
Treasury bills serve as the benchmark for the "risk-free rate" in Canada — it is the minimum return an investor should expect, since the risk of the Canadian government defaulting is essentially zero. They also form the basis of money market ETFs and influence interest rates on savings accounts and GICs. During periods of uncertainty, T-Bills (via ETFs) offer a safe haven with daily liquidity.