Papua New Guinea central bank and government securities
An overview of Papua New Guinea’s central bank and government securities, including treasury bills, inscribed stock and central bank bills.
The Bank of Papua New Guinea in Port Moresby. Credit: BAI
The Bank of Papua New Guinea, PNG’s central bank, sells central bank and government securities to the public, banks and other financial institutions.
The government securities are Government Treasury Bills (Tbills) and Government Inscribed Stock (IS), sold through an auction.
The central bank securities are Central Bank Bills (CBBs), sold through an auction, and Treasury Bill and Treasury Bond Tap Facility (TBill and TBond Tap), sold over the counter.
Government Treasury Bills
Treasury Bills (Tbills) is a discounted paper or security issued by the Government. It is a short-term debt instrument with current maturities of 182 and 364 days. By issuing Treasury Bills, the Government borrows cash from investors and promises to repay with interest at a nominated maturity term agreed upon.
Investing in Treasury Bills is open to the general public. This includes financial institutions, non-financial institutions and individuals.
The Bank of PNG conducts the Treasury bills auction every Wednesday, from 9.00am to 11.00am. The minimum amount needed to participate at the auction is K100,000 with additional purchases in multiples of K10,000.
Inscribed stock
Inscribed Stock (IS) is a medium-to-long-term debt instrument or a kina-denominated bond with maturities of more than one year (currently 3, 6, 11, 13 and 17 years). Unlike Treasury bills, an Inscribed Stock is a loan to the Government that earns interest semi-annually and is repayable on the maturity date. Inscribed Stock is traded at a price unlike the Treasury bill, which is traded at a yield.
Investing in Inscribed Stock is restricted to registered bidders only. These include licensed financial institutions such as commercial banks, finance companies, savings and loans companies, insurance companies and superannuation funds.
Inscribed Stock is available for purchase at the Bank of PNG through a closed auction. Bids must be in shield envelopes and are dropped into an auction box made available at the Financial Markets Department (BPNG) counter. The auction is conducted on the third Tuesday of each month from 9am -12pm, at the Bank of PNG in Port Moresby. The minimum amount needed to participate is K100,000 and in multiples of K10,000 thereafter. The requirements for investing are the same as Treasury bills.
Central Bank Bills
The features of Central Bank Bills (CBBs) are similar to Treasury Bills. They are a short-term discounted paper with fixed maturities of 28, 63, 91 and 182 days, redeemable at par on maturity. The Bank of PNG has the discretion to set the amount to be issued/sold together with the terms/maturities. Interest rates or yields for CBBs purchased through an auction are determined by the investors when bidding. Investing in CBBs is restricted to only Commercial banks and other deposit-taking institutions.
Eligible investors can invest in CBBs by purchasing through an auction which is conducted every Wednesday (weekly) from 9am – 11am, at the Bank of PNG. All CBB investors must obtain a Registered Bidder status with the Bank before investing. Investors outside of Port Moresby can also purchase or invest in CBBs. Rates or yields are determined by investors themselves through bidding.
Treasury Bill and Treasury Bond Tap Facility
The Treasury Bill (Tbill-tap) and Bond (Tbond-tap) Tap Facility is a tool used by the Bank of PNG to influence interest rates and achieve price stability. Both are issued over the counter to investors at a pre-determined price or yield.
Tbill-tap is a discount bill with terms less than 1 year of maturity. It is purchased at a discounted price, accruing interest daily until it reaches full face value on maturity.
Tbond-tap is a fixed income bond that pays coupon interest on a six monthly basis over the term of the bond. It has maturities of 2 years or more and can be purchased at par or face value on maturity.
Any member of the general public can invest with a minimum amount of K5,000.
Trading is conducted on Mondays to Fridays from 10 am – 2 pm at the Bank of PNG, Port Moresby. Investors outside of Port Moresby can also purchase or invest in the T-bill and T-bond tap facility.
Further information
Investments Team
Bank of Papua New Guinea
Ph: +675 322 7200
Email: investments@bankpng.gov.pg
www.bankpng.gov.pg
