I'm considering (non-competitively) purchasing a 52-week Treasury bill through Treasury Direct. As I understand, the purchase price is reduced by the discount rate and therefore is always less than the face value of the bill. So that if I purchase a bill for $1000 at 5% discount, I would expect to pay $950.
However, TreasuryDirect gives the following information when purchasing a bill:
I understand that the total cost for my security purchase will bedetermined at auction through competitive bidding, and that the finalcost of the security will not be known until after the auction resultsare announced. I agree to pay the full purchase price, which could beless than, more than or equal to the principal amount I indicatedabove and that full payment must be made on the security's Issue Date.
Could someone please explain to me how the full purchase price could be equal or more than the principal amount say if I purchased $1000 and the discount is 5%?
Edit: As per comments below, here's a plot of the 1-year treasury rate that shows near zero return during height of covid. It briefly became negative at one point in March, 2020.
