Risk free rates, T-Bills, Benchmark bonds

* result of student questions to- and requests from our service *

This week a student came up with question if she could find t-bills (treasury bills) in Datastream, or at least risk free  investment instruments. The only thing that I could think of, at the time, were benchmark bonds (interest rates section) But Benchmark bonds got a 10year life span, and most risk free rates (invetsments) are based on short term investments.
This set me investigating.
In this post I will pay attention to all of the risk free instruments.

Risk free interest rates

The risk free rate for a given period is taken to be the return on government bonds over the period. This is because a government cannot run out of its own currency, as it is able to create more as necessary.Any other investment should produce greater returns than the risk free rate. The extra return (the risk premium) reflects the extra risk” 

When things are considered risk free, you can almost bet on it they're government backed. 
The investment bears no credit risk and has a limited re-investment risk. Although turn out may be lower than risky investments, the money back guarantee makes them popular.

But for currencies where no liquid treasury bill market exists, interbank rates such as LIBOR or EURIBOR rates can be used.
Currencies with liquid repo-markets where the general collateral is a long-term government bond (10y benchmark), those are alternative for 'risk-free'. The number of currencies is limited.

In practice:  (annualised) yield on 3-month treasury bills 

DATASTREAM:  
Interest Rates
Step by step looking for (90-days) treasury bills
Open menu in Datastream AFO (Excel)

Select Interest Rates

 Looking voor t-bills 66 hits

Important note:  looking for t-bills results in another set of hits than looking for treasury bills: 166 hits

Using the Criteria Search option:

(top bar)


Searching for t-bills: 59 hits; searching for treasury bills: 163 hits

So, there is a discrepancy between how you look for.

Benchmark Bonds: 143 hits

Using criteria search: also 143 hits

Creating lists over the risk free rates:

Datastream code LTRXXBMK where XX is the country code. For example, LTRUKBMK is the UK list, with TRUK3MT the 3 month rate, TRUK5YT the 5 year rate etc.

Datastream country codes (ISO Alpha is two characters and Num is two digits)
So, the result (Static search) for Netherlands would be: LTRNLBMK:

These are the country Risk Free rates - Mnemonics

Later more on Libor and Euribor