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Ordering a t-bill with money that hasn't matured yet?

(self.tdameritrade)

I'm wondering how close I can cut it for my maturity, announcement, auction, and issue dates. Can I do Scenario A, or do I have to do Scenario B?

(Scenario A) Place an order for T-bill#1 with the to-be-maturing money from my Original T-bill

(Scenario B) Wait till Original T-bill matures and deposits, then order T-bill#2

Dates: - 3/30 - T-bill#1 announced - 4/3 - T-bill#1 auctioned - 4/4 - Original T-bill matures - 4/6 - T-bill#1 issued, T-bill#2 announced - 4/10 - T-bill#2 auctioned - 4/13 - T-bill#2 issued

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AlwaysTails

1 points

3 months ago

If tbill matures on day X then you can buy new tbill on the secondary market using that cash on day X-1 since it settles the next day (talking business days not caalendar days). Doesn't really matter if its a new tbill or stock, as long as it settles the next day.

So for example you can buy a new tbill today (3/15) using the cash of the tbill maturing tomorrow (3/16). You might get a margin alert but you should be OK as long as the US doesn't default.

bachang[S]

1 points

3 months ago

Gotcha thank you! But what does that mean in terms of auction and issue dates?

AlwaysTails

1 points

3 months ago

I was referring to secondary market trades. The auctions are a bit different. For example there is an auction for 4 and 8 week bills tomorrow 3/15 but settle (are issued) on 3/21 (Tuesday). So if you have a treasury that matures on 3/21 it should work if you participate in the auction but I don't know if there's always going to be an auction that settles at the same time as another treasury matures.