LeoGlossary: On The Run (US Treasuries)

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Treasury securities that are most recent in issue, thus have the greatest liquidity. These are known as on-the-run. This is in contrast to off-the-run.

Since US Treasuries are used as collateral for short-term lending, the liquidity means the on-the-run securities trade at a premium. While Treasuries are high quality collateral in general, T-Bills are considered pristine. They tend to always be on-the-run.

With collateralization, lenders are always concerned with liquidity in case of a default. For this reason, they offer the best deals for on-the-run assets.



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