U.S. Treasury to Sell $72 Billion in Long-Term Debt Next Week
The U.S. Treasury Department plans to sell $72 billion in its quarterly sales of long-term debt next week, as lower projected budget deficits have allowed the government to reduce borrowing.
The Treasury said it will auction $32 billion in three-year notes on Nov. 8, $24 billion in 10-year notes Nov. 9 and $16 billion in 30-year bonds Nov. 10. The total amount was in line with the median forecast in a Bloomberg News survey of bond dealers.
The Treasury also said it will add more frequent auctions of Treasury Inflation-Protected Securities, also known as TIPS, to improve liquidity in the market. The extra auctions are for five-year and 30-year TIPS and will be second reopenings of those securities.
The Treasury has been scaling back auction sizes, after expanding debt sales to finance annual budget deficits exceeding $1 trillion for the past two years. Bond dealers predict deficits of $1.214 trillion in fiscal 2011, $1.023 trillion in 2012 and $906 billion in 2013, according to a survey provided to the Treasury before this week’s announcements.
“Based on current fiscal forecasts, coupon auction sizes are likely to remain steady over the coming quarter,” said Mary Miller, the Treasury’s assistant secretary for financial markets.
To help manage short-term borrowing needs, the Treasury said it may issue cash-management bills in the current quarter.
Next week’s auctions of bonds and notes will raise $58.2 billion in new cash, with the rest of the proceeds going to pay off maturing debt, the Treasury said.
Notes, Bonds
The current quarter’s total long-term debt sales declined from the $74 billion in notes and bonds sold at the previous refunding in August.
In the runup to today’s announcements, The Treasury asked bond dealers about the outlook for bond-market liquidity, coinciding with a separate Federal Reserve survey on potential asset purchases from the central bank. The Fed is due to release its next monetary policy statement later today.
Earlier this week, the Treasury lowered its estimate for government borrowing from October through December as it continues to adjust its financing needs amid economic recovery.
Borrowing will total a net $362 billion in the current quarter, compared with an estimate three months ago of $380 billion, the department said. The Treasury also projected borrowing of $431 billion in the three months to March 31.
Auctions of long-term debt were projected to be smaller than the total of $74 billion sold in August, when the Treasury sold $34 billion in three-year notes, $24 billion in 10-year notes and $16 billion in 30-year bonds. The median forecast of 15 analysts surveyed predicted a $3 billion cut in three-year note sales, with the other two auction sizes unchanged.
To contact the reporter on this story: Rebecca Christie in Washington at rchristie4@bloomberg.net
To contact the editor responsible for this story: Christopher Wellisz at cwellisz@bloomberg.net.
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