Treasuries offer exceptional liquidity and are backed by the U.S. government—but coupons are often lower and cash-flow is typically semiannual. Private notes can offer higher coupons, monthly cash-flow, and defined maturities, but are generally held to maturity (no daily trading). Your choice hinges on the value of liquidity versus income visibility.
Key differences at a glance
| Factor | Private Notes | Treasuries |
| Income | Often monthly or quarterly distributions | Semiannual coupon payments |
| Yield | Typically higher vs gov’t bonds (structure-dependent) | Lower credit risk; market yields vary with rates |
| Liquidity | Generally non-tradable; hold to maturity | Highly liquid secondary market |
| Volatility | No daily mark to market | Market prices fluctuate with rates |
| Tax | Interest usually taxed as ordinary income (consult your advisor) | US Treasury interest often state/local tax-exempt |
| Horizon | Defined term (e.g., 12–36 months) | Broad choice of maturities (T-Bills to long bonds) |
Always consider tax implications and your time horizon.
When notes may make more sense
- You want monthly or quarterly income for budgeting and a date-certain maturity.
- You’re comfortable trading daily liquidity for higher coupons.
- You plan to ladder across 12–36 months and reinvest as rungs mature.
When Treasuries may make more sense
- You prioritize liquidity and the ability to sell anytime.
- You value state/local tax benefits on Treasury interest.
- You’re sensitive to credit risk and want U.S. government backing.
Example allocations (illustrative only)
- Income-tilted: 70% private notes ladder (12/24/36), 30% T-Bills for liquidity buffer.
- Liquidity-tilted: 40% private notes ladder, 60% short Treasuries for optionality.
Smart comparison checklist
- ☐ Net, after-tax yield (Treasuries may have state/local benefits)
- ☐ Cash-flow cadence (monthly/quarterly vs semiannual)
- ☐ Horizon & liquidity (hold to maturity vs tradable)
- ☐ Rate-path sensitivity (Treasury prices move; notes focus on scheduled payments)
- ☐ Implementation (funding cutoffs vs auction/secondary purchase timing)
FAQs
Are private notes riskier than Treasuries?
Yes—Treasuries have unique credit characteristics. Private notes can compensate with higher coupons and monthly income; evaluate structure and documents.
Can I blend both?
Many investors do—notes for income visibility, Treasuries for liquidity and potential tax benefits.
What about reinvestment?
With a note ladder, maturing rungs can be rolled at current terms. Treasury ladders work similarly via auctions/secondary market.
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Compliance & disclosures
For accredited investors only (notes). This content is informational and not investment, legal, or tax advice. All investments involve risk, including loss of principal. Review all product documents and consult your advisor about tax treatment.
