U.S. Department of the Treasury

(Archived Content)

FROM THE OFFICE OF PUBLIC AFFAIRS

In the August Quarterly Statement, we described Treasury’s debt management mission and the actions we take to ensure that we meet our objective of lowest cost borrowing over time.  To achieve this objective, we seek to make our interactions with market participants transparent.  Below, we describe changes that will provide market participants with more information regarding auction outcomes and the issues actively under discussion by Treasury.  This additional transparency is consistent with our responsibilities as the financing arm of the U.S. government.  Additional transparency also promotes low cost financing by reducing the uncertainty in auctions and by ensuring that our decisions are made with the widest range of advice available.  

The current maturity structure and issuance pattern of the Treasury's offerings – based on large, liquid issuance of benchmark securities – is well placed to meet the likely path of borrowing needs over the coming years.  Given that the objective of debt management is to meet the financing needs of the federal government at the lowest cost over time, and considering the likely path of borrowing needs, there is nothing today that suggests that it would be necessary or appropriate to add maturity points beyond the range of our current offerings over the coming decade.
 
The Department of the Treasury announced its quarterly refunding needs and related financing changes today.  We are offering $40 billion of notes to refund approximately $2.8 billion of privately held bonds called or maturing on November 15, raising approximately $37.2 billion.  The securities are:

1. A new 5-year note in the amount of $22 billion, maturing November 15, 2007.
2. A new 10-year note in the amount of $18 billion, maturing November 15, 2012.

These securities will be auctioned on a yield basis at 1:00 p.m. Eastern time on Tuesday, November 5, and Wednesday, November 6, respectively.  The balance of our financing requirements will be met through 10-year inflation-indexed note, 2-year note and bill offerings.

Treasury may issue off-cycle cash management bills due to seasonal cash swings in early December and early January. 

Auction Performance Reporting

Included in the chart package released on Monday, October 27, 2002, is information on the average number of competitive bidders per month, broken down by bidders that submit bids directly and those that submit their bids through some other institution.  This information will be provided as part of future chart packages as well as information on progress towards our goal of consistently shorter results release times. 

Market Consultation

Prior to each quarterly refunding, Treasury seeks the individual advice of some of the Federal Reserve Bank of New York’s primary dealers.  We place a high value on this advice; advice elicited through questions composed by Treasury and submitted to dealers in the week prior to the quarterly refunding.  As part of our efforts to promote greater transparency, we will begin to post these questions on our website nine days prior to the release of our quarterly refunding statement.  Market participants and observers are welcome to respond to these questions via email at the address below.

Buyback Operations

Treasury will not be conducting buybacks this quarter.

Policy Issues Under Discussion

 Previously announced policy issues that remain under discussion include Treasury's efforts to:
• promote investor interest in inflation-indexed securities.
• reduce the costs associated with short-term fluctuations in cash balances. 
• study the effects of heightened volatility on debt issuance. 
Please send comments and suggestions on these subjects or others relating to debt management to debt.management@treasury.gov.