US Treasury announces new debt sale
August 3, 2005
The US Treasury announced on Wednesday that it would resume auctions of 30-year government bonds early next year. It had stopped issuing the 30-year paper in 2001, a time of budget surpluses.
Treasury said it was resuming issuance of the longer-dated bonds in order to give the government more options in its borrowing, made necessary by the government’s current deficit.
Dealers have asked for the return of 30-year bonds. The Chicago Board of Trade reacted to the announcement by saying that the bonds would be a benefit to investors by providing a secure long-term investment alternative.
In announcing the upcoming issuance of the new bonds, Treasury Secretary John Snow said from Brazil that they would be auctioned twice a year and that the auctions would be of modest size. Assistant Secretary Timothy Bitsberger said that $20 billion to $30 billion of the bonds would be sold each year, and that the first auction would come some time in the first three months of 2006.
The first of the new bonds to be sold will mature in February 2036. In another announcement related to government bonds, the Treasury Department said that it would sell only $44 billion in 3-year, 5-year, and 10-year bonds next week, below the $46 billion it had expected to sell due to a better short-term deficit outlook.