Press Releases


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Good morning. I am pleased to be with you today to discuss the government's refunding needs for the current quarter. In addition, I will be making a few announcements with respect to other aspects of Treasury's debt management.

Debt Paydown

On Monday, Treasury announced that we expect to pay down an estimated $187 billion of outstanding marketable debt during the April-June quarter. When the additional paydown of $57 billion that is currently estimated for the July-September quarter is considered, we expect to have paid down $252 billion in marketable Treasury debt for the fiscal year.

Debt Buybacks

Since our last quarterly refunding announcement, we have successfully completed our buyback operations for the January-March quarter, purchasing $9 billion par amount of securities. We continue to be pleased with the results of our buyback operations.

In February we announced that we expect to conduct buybacks in the current April-June quarter of approximately $9 billion par amount. We now expect to slightly increase the amount of buybacks this quarter to approximately $10 billion.

Additionally, today we are announcing that we expect to conduct buybacks of approximately $10 billion par amount of securities in the July-September quarter.

4-Week Bill

One of Treasury's primary debt management goals is efficient cash management. This task has been made more challenging in recent years due to the increasing volatility of Treasury's cash balances. This volatility has been due to an increase in tax receipts, an increase in government expenditures, and a reduction in the frequency with which we issue debt as we have responded to growing budget surpluses.

Traditionally, the Treasury has adjusted its short term bill issuance in response to expected cash needs, and has issued cash management bills to cover periods of cash shortfall. Due to the greater volatility of our cash balances over the past few years, however, we have increasingly relied upon the use of cash management bills. Increasing the issuance of cash management bills is not the most cost-efficient means of financing our short-term cash needs. In addition, the Treasury's Borrowing Advisory Committee has recommended that we move to the regular issuance of a new short-term bill.

Consequently, we are planning to introduce a 4-week bill before the end of this fiscal year. This will provide Treasury with greater flexibility in managing our cash needs, reduce our dependence on cash management bills, and improve the cost-efficiency of our short-term financing. We will provide further details on the introduction of the 4-week bill at a later date.

35 Percent Rule

In the November 2000 refunding announcement, Treasury indicated we were studying potential changes to the application of the 35 percent rule to our auctions. This rule currently limits the sum of a bidder's net long position plus its competitive awards to 35 percent of the auction amount. In the case of a reopening, holdings of the outstanding security are counted in the calculation of a bidder's net long position. The Borrowing Advisory Committee has also recommended that we revise the manner in which we apply this rule.

During the upcoming quarter we will be releasing for public comment a proposed change to the rules that limit the size of awards in Treasury's auctions. We look forward to receiving comments from market participants on this issue and will review all responses carefully as we address this issue going forward.

Terms of the May Refunding

I will now turn to the terms of the May Refunding. We are offering $22 billion of notes to refund approximately $21 billion of privately held notes and bonds maturing on May 15, borrowing approximately $1 billion. The securities are:

  • A 5-year note in an amount of $13 billion, maturing May 15, 2006.
  • A re-opening of the 5% 10-year notes issued in February 2001, maturing February 15, 2011, in an amount of $9 billion.

These securities will be auctioned on a yield basis at 1:00 pm eastern time on Tuesday, May 8 and Wednesday, May 9, respectively.

As announced on Monday, we estimate that we will have a $60 billion cash balance on June 30 and a $60 billion cash balance on September 30. We expect to issue cash management bills this quarter to bridge seasonal low points in our cash position.

In keeping with Treasury's traditional practice, we will continue to announce any changes to our debt management policy at our quarterly refunding press conferences. Our next quarterly refunding announcement will take place on Wednesday, August 1.