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Mnuchin's Ultra-Long Bonds Threaten Stripping Business at Banks

  • A 50-year obligation would rival 30-year zero-coupon bonds
  • Strips’ bid-offer spread is wider than that on whole bonds
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Mnuchin Says Ultra-Long Bonds Could Make Sense

As Steven Mnuchin’s U.S. Treasury studies the merits of bonds maturing in 50 years or longer, there’s one group on Wall Street that’s hoping officials will close the books on the idea.

Ultra-long debt could very well save money for taxpayers in the long run. But it threatens dealers who run the $250 billion market for zero-coupon Treasuries, known as Strips, said five current and former dealers, who requested anonymity either because they’re not authorized to speak publicly, or because they didn’t want to be quoted discussing their competition.