WASHINGTON – The U.S. Department of the Treasury is offering $64 billion of Treasury securities to refund approximately $80.6 billion of Treasury notes maturing on February 15, 2015. This will result in a debt pay down of approximately $16.6 billion. The securities are:
- A 3-year note in the amount of $24 billion, maturing February 15, 2018;
- A 10-year note in the amount of $24 billion, maturing February 15, 2025; and
- A 30-year bond in the amount of $16 billion, maturing February 15, 2045.
The 3-year note will be auctioned on a yield basis at 1:00 p.m. ET on Tuesday, February 10, 2015. The 10-year note will be auctioned on a yield basis at 1:00 p.m. ET on Wednesday, February 11, 2015, and the 30-year bond will be auctioned on a yield basis at 1:00 p.m. ET on Thursday, February 12, 2015. All of these auctions will settle on Tuesday,February 17, 2015.
The balance of Treasury financing requirements will be met with the weekly bill auctions, cash management bills, the monthly note and bond auctions, the February 30-year Treasury Inflation Protected Security (TIPS) auction, the March 10-year TIPS reopening auction, the April 5-year TIPS auction, and the regular monthly 2-year Floating Rate Note (FRN) auctions.
Projected Financing Needs
Over the last quarter, in response to improvements in the fiscal outlook, Treasury reduced coupon offering sizes in the 2- and 3-year maturity offerings. Based on current fiscal forecasts, coupon auction sizes will remain steady going forward. Treasury will continue to monitor projected financing needs and make appropriate adjustments as necessary.
Treasury plans to address changes in any seasonal borrowing needs over the next quarter through changes in regular bill auction sizes and/or cash management bills.
Cash Balance Policy
At the August 2014 Refunding, Treasury stated that it was reviewing its cash balance policy as part of an overall risk management process in light of several events that have occurred over the last 15 years, such as the terrorist attacks on September 11th and Super Storm Sandy, which have caused disruptions to the broader financial system and Treasury’s auction capabilities.
Treasury believes that holding a higher cash balance is prudent and continues to actively study this idea.
The debt limit places a limitation on the total amount of money that the United States government is authorized to borrow to meet its existing legal obligations, including Social Security and Medicare benefits, military salaries, interest on the national debt, tax refunds, and other payments. The debt limit does not authorize new spending commitments. It simply allows the government to finance existing legal obligations that Congresses and presidents of both parties have made in the past.
The Temporary Debt Limit Extension Act suspended the debt limit through March 15, 2015. If Congress fails to increase or further suspend the debt limit by March 15, Treasury can take certain extraordinary measures to continue to finance the government on a temporary basis.
Extraordinary measures will allow the government to continue to meet its obligations for a period of time after March 15. That said, it is impossible to provide a precise forecast as to how long the extraordinary measures will last. Treasury will provide greater clarity at a later date regarding how long extraordinary measures will allow Treasury to continue to borrow.
Please send comments and suggestions on these subjects or others related to debt management to firstname.lastname@example.org. The next quarterly refunding announcement will take place on Wednesday, May 6, 2015.
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