LT Treasury Face Values

[Tortoise]

I recently decided I'm going to convert my TLT holdings in my 401(k) brokerage into actual LT Treasury bonds to minimize that extra layer of paper between me and my bonds.  I've sold the TLT, so now I just need to buy the 30-year bond(s) at auction on Thursday.

Before I purchase my very first bond(s), however, I'd like to better understand one thing:  Can individual LT Treasuries take on any face value that is a multiple of $1,000?  Or are there only certain face values issued by the Treasury, perhaps round numbers like $1,000, $5,000, $10,000, $100,000, etc.?

More specifically, I plan to buy $47,000 worth of LT Treasuries.  But when I set up the order at my brokerage's online bond desk, it doesn't give me a way to enter quantities and face values separately--only a total dollar amount.  It seems like I have no way of knowing if I'm buying one big bond, several smaller bonds, or 47 separate $1,000 bonds.

If a single $47,000 bond (if such a thing exists) is a very uncommon face value, then would that make the bond significantly less liquid than, say, several bonds with face values of $5,000 and $1,000?  Or is the market for Treasuries so liquid that any bond--regardless of how common or uncommon its face value might be--can be sold quickly and at a similar bid-ask spread?

Sorry if this is a ridiculously simple question, but as a first-time LT Treasury buyer I'm a little bit mystified.

[WildAboutHarry]

Treasury bonds, notes, and bills are typically considered in $1,000 "face" value increments.  Since they are all paperless there isn't any problem in buying whatever number of increments you want.  You can later sell in $1,000 increments as well, regardless of the "face" value of the original purchase.

You can purchase (and presumably sell) in $100 increments from Treasury Direct.  I don't think brokerage houses allow this, though.

Note that some brokerages have minimum purchases at auction (Vanguard's is $10,000).  Note, too, that smaller amounts of Treasury Bonds may have relatively large transaction costs at any future sale, although bid/ask spreads for Treasury Bonds are usually quite small.

[Storm]

The way I do it through Fidelity is in 1,000 share increments.  The actual purchase price will be lower or higher than $1,000 based on the bond price.  If your goal is to purchase $47,000 worth of bonds, do a search on your fixed income section for all bonds timeframe 2039-2041 and find the ones you want to purchase that are not zero-coupon bonds (zero coupon are a little higher volatility) then calculate how many you can purchase based on the current price.  For example, if the current price is 102.50 then the most you can purchase is 45,000 shares (or 45x $1,000 bonds), which will give you bonds with a face value of $46,125.00.

Good luck!  There is not much you can do wrong here, other than purchasing a bond with zero coupon or the wrong maturity date.  The bond market is extremely liquid and price matches value at almost all times.  By that I mean that you will not end up over or underpaying for a bond because of market dynamics.

[Tortoise]

If your goal is to purchase $47,000 worth of bonds, do a search on your fixed income section for all bonds timeframe 2039-2041 and find the ones you want to purchase that are not zero-coupon bonds (zero coupon are a little higher volatility) then calculate how many you can purchase based on the current price.

Since I plan to buy the bonds at auction, however, my understanding is that one always pays exactly the face value of the bonds (plus any commissions and fees, which I think are zero in my case).  Bond prices that are higher or lower than their face value only apply to bonds bought and sold on the secondary market, correct?

[upside]

If your goal is to purchase $47,000 worth of bonds, do a search on your fixed income section for all bonds timeframe 2039-2041 and find the ones you want to purchase that are not zero-coupon bonds (zero coupon are a little higher volatility) then calculate how many you can purchase based on the current price.

Since I plan to buy the bonds at auction, however, my understanding is that one always pays exactly the face value of the bonds (plus any commissions and fees, which I think are zero in my case).  Bond prices that are higher or lower than their face value only apply to bonds bought and sold on the secondary market, correct?

I've bought bonds at auction twice. Neither time did I pay face value. One time I paid a premium and the other time I paid at discount.

[Tortoise]

Thanks for the info, everyone!

[WildAboutHarry]

Bonds/Notes at auction have a fixed coupon rate.  The market (the auction) then determines the actual interest rate the bond/note pays.  If the market decides a rate higher than the coupon is "right" then the bond sells at a discount.  If the rate is lower, then the bond/note sells at a premium.