What Is a Cash Management Bill (CMB)?

The term cash management bill (CMB) refers to a short-term security sold by the U.S. Treasury. The maturity of a CMB can range from a few days to three or four months. Unlike other 澳洲幸运5官方开奖结果体彩网:Treasury Bills (T-Bills), CMBs are typically not sold on a regular 🌜basis because they are only offered when the government has a low cash balance. As such, the money raised through these issues is used by the Treasury to meet any temporary cash shortfalls and provide emergency funding. They are normally sold to institutional investors because they come with a high minimum investment requirement.

Understanding Cash Management Bills (CMBs)

When the U.S. Treasury's cash balances are down, it may need to raise money for a few days. In order to boost its 澳洲幸运5官方开奖结果体彩网:cash reserves, it often resorts to selling very specific securities, which are known as cash management bills. These bills are very short-term debt instruments. The🍸y have maturity dates that range from seven to 50 days, although it isn't uncommon for maturities to go up to three or four months.

The cash management bill is among the most flexible instrument offered by the U.S. Treasury. That's because it can be issued when needed. In fact, cash management bills can be issued on any business day with as little as one day's notice. This is in contrast to the regular schedule that the Treasury follows when it issues other bills, notes, and bonds, which allows the department to have lower cash balances and issue fewer long-term notes.

CMBs are issued inඣ both fungible and non-fungible forms:

• A 澳洲幸运5官方开奖结果体彩网:CMB is fungible when its maturity date coincides with the maturity of an existing T-bill issuance.
• In the case of non-fungible CMBs, participation by primary dealers is not compulsory as it is for fungible CMBs or for regularly scheduled T-bills or bond issues.

These debt instruments tend to pay higher yields than bills with fixed maturities, but their shorter maturities lead to a lower overall interest expense and may eliminate interest payments entirely in some circumstances. They have minimum denominations of $100 and must be purchased in increments of $100. But there's one stipulation: CMBs are usually only accessible to 澳洲幸运5官方开奖结果体彩网:institutional investors becaus🌜e there's usually a minimum purchase of $1 million required.

They may be issued before 澳洲幸运5官方开奖结果体彩网:income tax payments are received or before the government has to make a large payment of some sort.

Special Considerations

Although the government doesn't normally issue CMBs on a consistent basis, it has done so regularly since 2020 in order to meet the needs of its cash reserves following the COVID-19 pandemic. According to the Treasury, the 17-week CMB has been a regular offering since April 2020. Weekly issues have ranged in size from $30 billion to $40 billion. The department relied heavily on these bills after the Coronavirus Aid, Relief, a🐭nd Economic Security (CꦐARES) Act went into effect, and demand for the 17-week CMB remained strong.

In its August 2022 quarterly refunding statement, the Treasury Department confirmed that it intends to move the 4-month, (or 17-week) cash management bill (CMB) to benchmark status, with the first auction planned for October 19, 2022.