Treasury Bill is a discount security issued by the Ministry of Finance of Georgia with maturities up to one year which is sold at discount, for less the principal value. Discount rate is determined on an auction. On the maturity date of a Treasury Bill, the owner of the security receives the principal from the Ministry of Finance. The difference between the purchase price and the principal is the owner's income.

Treasury Bills are issued in a dematerialized form denominated in the national currency. In other words, there is no Treasury Bill in the form of printed paper, but the information about Treasury Bills is stored as records in the electronic registry of a bank.

Treasury Bills are issued by the Ministry of Finance of Georgia.

Treasury Bills are sold via auctions. Auctions are conducted by multiple price method. On multiple price method auctions investors bid on the rate of return (yield) they would like to receive on their investments. Winning bids are satisfied according to the yields. Bids with lower yields are satisfied first until the whole issue is sold on the auction.

აუქციონს ატარებს საქართველოს ეროვნული ბანკი ელექტრონული სავაჭრო სისტემის მეშვეობით. აუქციონს წარმართავს საქართველოს ეროვნული ბანკის საბაზრო ოპერაციების ჯგუფი, რომელიც შედგება ეროვნული ბანკის თანამშრომლებისგან. საბაზრო ოპერაციების ჯგუფი არის სპეციალურად შექმნილი პროფესიონალთა გუნდი, რომელიც ატარებს ეროვნული ბანკის ყველა მონეტარულ ოპერაციას და ასევე სახაზინო ვალდებულებების აუქციონებს.

Government security like any other financial instruments can be purchased by individual or legal entity via commercial bank on the primary or secondary market. For this purpose, buyer should apply to the commercial bank whoever will offer the best terms and conditions and open securities custody account.

Everyone can participate on the primary auction. Interested parties should apply to commercial banks or brokerage companies. Commercial banks can make bids on behalf of their clients. If clients’ bids are satisfied securities are transferred to the clients’ private accounts.

Minimum one security can be purchased on the primary auction. Nominal value of one security is GEL 1000. In this case client should make non-competitive bid. Non-competitive bids are exactly for small investors where they can buy securities at the weighted average price that is determined on the primary auction. Once auction is over, non-competitive bids are satisfied first, with higher priority than competitive ones.  25 % of the issue is "reserved" for non-competitive bids that assures small investors that their bids are almost guaranteed to be satisfied.

If client want to make competitive bid the minimum amount is 50000 GEL. Competitive bids are for big investors who have better understanding of the market and are able to decide independently what can be the winning price in the auction. Of course, in this case the risk that bids are not satisfied is greater.

In order to participate in an auction, a client should contact a commercial bank. According to relevant regulation, a commercial bank is obliged to have procedures in place on Treasury Bill operations, which includes standard contracts, service fees and application forms. Clients fill out application forms according to procedures and the commercial bank purchases Treasury Bills for its clients on auctions.

Commercial banks have the obligation to segregate their own and clients bids and make them apparently. Banks are forbidden to use the information from their clients’ bids in the process of making their own bids. Banks should establish robust procedures to make sure that the above mentioned information isn’t available to be used by bank when making their own bids on the auction to by the government securities. This is also provided technically via Bloomberg system where banks own and clients’ bids are made separately. Commercial bank’s employee making bank’s bid can’t see the client’s bid and vice versa. So far the fact that bank’s bids are satisfied while their clients’ are not has not taken place.

Commercial banks have the obligation to segregate their own and clients bids and make them separately. Banks are forbidden to use the information from their clients’ bids in the process of making their own bids. Banks should establish robust internal procedures as to assure that the client information will not be used by bank in own bid decision making process. Such segregation is also provided technically via Bloomberg system where banks own and clients’ bids are made separately. Commercial bank’s employee who makes bank’s own bids can’t see the client’s bid and vice versa. So far the fact that bank’s bids are satisfied while their clients’ are not has not taken place.

The owner of a security can be any individual or any entity, including commercial banks and resident and/or non-resident individuals and companies. Securities can have a nominal owner - market intermediary, which is granted a written ownership rights (to buy, sell, pledge) of a security by the owner of the security.

In order to purchase a security on the secondary market one should contact a commercial bank.

Main activities of the secondary market are repo operations. In 2015 year total turnover of repo transactions amounted nearly 4.5 billion GEL, which is more than the double of total portfolio stock of government securities (1.7 billion GEL). This information is available on the NBG web-site. Furthermore, NBG accepts government securities as a collateral in its liquidity providing operations to banking sector and that ensures high level of liquidity of mentioned securities.

In case of liquidity need, clients can pledge these securities with commercial banks and take short term loan from them with interest rate close to NBG policy rate. In other words, clients can use government securities to manage their liquidity as commercial banks use to do so far.

The income from government securities is not taxed.

The income of a Treasury Bill which is held to maturity is equal to the difference between its principal and purchase price. If the security is sold before the maturity, then the income is equal to the difference between the sale price and the purchase price.

Competitive bids participate in an auction and are satisfied according to the prices indicated in them; non-competitive bids do not participate in an auction and are satisfied with the weighted-average price on the auction. The minimum volume of one competitive bid equals GEL 50,000 and each non-competitive bid's volume must not exceed GEL 20,000.

The Ministry of Finance announces the issue calendar for the next three months prior to the beginning of the quarter. The issue calendar contains information regarding the dates of issuance, the term of each security and its volume. The Ministry of Finance publishes the information concerning the conduct of auctions 5 days prior to the auction in the media and on its web page.

General information about the auction results are published on the websites of the Ministry of Finance and NBG on the auction day.

Commercial banks are responsible for informing their clients whether their bids won or not.

The market prices of securities might be listed on the websites of commercial banks.

The price of one Treasury Bill is calculated as follows: