Exchange-traded Treasury Bonds
Disclaimer: The information on this website does not constitute investment advice. You should obtain independent financial advice before buying Exchange-traded Treasury Bonds.
What are Exchange-traded Treasury Bonds?
Exchange-traded Treasury Bonds (eTBs) offer a convenient and readily accessible way to invest in Australian Government Treasury Bonds. eTBs are quoted and traded on the Australian Securities Exchange (ASX).
An eTB Holder has beneficial ownership of Australian Government Treasury Bonds in the form of CHESS Depositary Interests (CDIs). This means that as an eTB holder you will obtain all of the economic benefits (including coupon and principal payments) attached to legal ownership of the Treasury Bonds over which the eTBs have been issued.
A one unit holding of an eTB provides beneficial ownership of $100 Face Value of the Treasury Bond over which it has been issued.
Characteristics of eTBs
The Australian Government pays regular coupon interest and pays the principal at maturity.
You earn interest at a fixed rate for the life of the investment, payable six monthly.
You can buy or sell eTBs any time the ASX market is open.
Choice of maturities
There is a wide range of eTBs available. Refer to the List of eTBs.
Risks of eTBs
Listed below are some risks associated with investing in eTBs. You should consider these issues when deciding whether to invest in eTBs.
Changes in market price
The market price of eTBs will vary over time in response to a variety of influences, particularly in response to changes in the general level of interest rates. In general, if interest rates increase the price of an eTB will fall. Conversely, if interest rates fall the price of an eTB is likely to increase. If eTBs are purchased for a price greater than $100 or sold before their Maturity Date it is possible for capital losses to be realised.
Conversion by Australian Government
The Australian Government may at any time, subject to a minimum period of three months’ notice, convert holdings of eTBs to the underlying Treasury Bonds directly registered in the Commonwealth Stock Registry. If this occurred you would continue to receive the same Coupon Interest Payments and Face Value amounts you were entitled to with the eTBs but would not be able to sell your investment in Treasury Bonds on the Australian Securities Exchange (ASX). For example, the Australian Government could decide to convert holdings of eTBs to the underlying Treasury Bonds if the agreement between the Australian Government and ASX for the trading of Australian Government Bonds on the ASX is terminated.
Note: This is not an exhaustive list and risks will vary between investors. The Australian Government does not guarantee the investment performance of eTBs and will not compensate investors for investment losses.
How to invest in eTBs
You can buy or sell eTBs on the ASX in the same way as listed shares. For more information please see the web page titled How to invest.