Government Securities Discounting
Turning Islamic treasury bills and other government securities into cash
The government pays part of what it owes contractors and suppliers with Islamic treasury bills (Akhza) and other government securities instead of cash. We help you turn them into money on the best terms: we price them at today's market yield, compare selling on Farabourse, a repo, pledging them with a bank and holding to maturity against your own cost of funds, and stay with you through execution.
When clients call us
- A government body or state client paid you in treasury bills or other government securities instead of cash
- You need cash now and the securities mature months or years from now
- You are not sure whether selling, a repo or holding to maturity costs you least
- The securities sit in the company's trading account and you do not know the steps to sell or pledge them
What we do
- Pricing
- Today's price, yield to maturity and the net cash each route puts in your hands.
- Route comparison
- Sale on Farabourse, a repo, a bank pledge or holding to maturity, compared against your own cost of financing.
- Market sale
- Working with your broker on timing and splitting the sale for a better price.
- Repo and pledging
- Cash today without selling the securities, and negotiating rate and haircut with the bank or counterparty.
- Using them against obligations
- Using the securities to settle or secure obligations where the rules for that issue allow it.
How we work
- ReviewThe securities you hold, their maturities and your cash needs.
- CompareNet cash and true cost of each route.
- ExecuteSale, repo or pledge through the broker or bank.
- Follow upSettlement and a plan for the remaining securities.
Common questions
At what price can government securities be sold?
The market sets the price, usually below face value; the further the maturity and the higher market yields, the bigger the discount. We work out the net cash for each route before you decide.
Is it better to sell or to hold?
If your cost of financing is higher than the securities' yield to maturity, turning them into cash usually pays; if it is lower, consider holding or a repo.
Do you buy the securities yourselves?
No. We are independent advisers; sales go through your broker and the market.
Talk to a partner
Tell us about your situation. A partner replies within one working day.
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