Treasury 30-Year Bond Sale May Yield 3.914%, Dealer Survey Says

The Treasury’s $13 billion sale of 30-year bonds may draw a yield of 3.914 percent, according to the average forecast in a Bloomberg News survey of 10 of the Federal Reserve’s 21 primary dealers.

The securities, which mature in November 2043, yielded 3.91 percent in pre-auction trading. Bids are due by 1 p.m. New York time. The yield at the last offering of long bonds, on Dec. 12, was 3.900 percent, the highest at an offering since the securities sold at 4.198 percent in July 2011.

The December sale’s bid-to-cover ratio, which gauges demand by comparing the amount bid with the amount offered, was 2.35, compared with 2.16 at the previous offering and an average of 2.38 at the past 10 auctions.

Indirect bidders, a class of investors that includes foreign central banks, bought 46 percent of the bonds at the December sale, the most since April 2011. The average at the past 10 offerings was 39.4 percent.

Direct bidders, non-primary-dealer investors that place their bids directly with the Treasury, purchased 12.5 percent of the securities at last month’s sale. The average for the past 10 auctions is 15.6 percent.

Thirty-year bonds have gained 0.8 percent this year, compared with little change in the broader U.S. Treasuries market, according to Bank of America Merrill Lynch indexes. Long bonds lost 15.1 percent in 2013, versus a 3.4 percent decline by Treasuries overall.

The auction is the final of three note and bond offerings this week. The U.S. sold $30 billion of three-year debt on Jan. 7 at a yield of 0.799 percent and $21 billion of 10-year securities yesterday at a yield of 3.009 percent.

The sales will raise $4.8 billion of new cash, as maturing securities held by the public total $59.2 billion, according to the U.S. Treasury.

Primary dealers trade government securities with the central bank and are obligated to bid in Treasury auctions.

To contact the reporter on this story: Daniel Kruger in New York at dkruger1@bloomberg.net

To contact the editor responsible for this story: Dave Liedtka at dliedtka@bloomberg.net

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