Press Releases


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Good morning. I am pleased to be with you today to announce the August quarterly refunding. I will also discuss some changes in Treasury security offerings.

As many of you may recall, we announced two changes to the auction schedule in May: We eliminated quarterly sales of 3-year notes and decreased the frequency of auctions of 5-year notes. These changes are allowing us to respond to the improved budget situation, while promoting large, liquid Treasury issues, and ensuring adequate supply in the bill market. Today marks the first refunding announcement that reflects those changes.

I. Terms of the Quarterly Refunding

I will begin with the terms of the quarterly refunding.

We are offering $37 billion of notes and bonds to refund $27.8 billion of privately held notes maturing on August 15, and to raise approximately $9.2 billion of cash.

The securities are:


  • First, a 5-year note in the amount of $16.0 billion, maturing on August 15, 2003. This note is scheduled to be auctioned in the single-price auction format, on a yield basis, at 1:00 p.m. Eastern time on Tuesday, August 11.


  • Second, a reopening of the 5-5/8% note of May 15, 2008, in the amount of $11.0 billion. This note is scheduled to be auctioned in the multiple-price auction format, on a yield basis, at 1:00 p.m. Eastern time on Wednesday, August 12.


  • Third, a 30-year bond in the amount of $10.0 billion, maturing on August 15, 2028. This bond is scheduled to be auctioned in the multiple-price auction format, on a yield basis, at 1:00 p.m. Eastern time on Thursday, August 13.

As announced on Monday, August 3, we estimate that we will net redeem $45 billion of marketable securities in the July-September quarter. The estimate assumes a $40 billion cash balance at the end of September. This will be the first time since 1973 that we will pay down net market borrowing in the July-September quarter. Including the securities announced in this refunding, we have paid down $33.9 billion of cash from sales of marketable securities. (See the attachment for more details.)

We estimate that the Treasury will borrow between $10 and $15 billion in marketable securities during the October-December quarter, assuming a $20 billion cash balance on December 31. This would be the lowest October-December quarter net market borrowing since 1978.

II. Changes to Benefit Small Investors

Now, I would like to announce some good news for small investors.

First, as part of the Administration's effort to encourage more Americans to save and invest, Treasury is reducing the minimum purchase amounts for all Treasury bills, notes and bonds to $1,000. This change is effective with our next regular 13- and 26-week bill auction on Monday, August 10, 1998.

Now, Treasury bills and short-term notes will be easily within the reach of small investors. The minimum purchase amount for Treasury bills has been $10,000 since 1970, and that for 2-year notes has been $5,000 since 1974. A separate press release is available, describing this change in more detail.

Second, we are making it even easier for investors to buy securities with our new Buy Direct service for Treasury Direct customers. Beginning on September 16, 1998, in time for the weekly bill auction on September 21, Treasury Direct customers will be able to purchase securities over the Internet at the Bureau of the Public Debt's website. Starting in October, they will also be able to use a touch-tone phone. Again, more details are available in a separate press release.

II. Inflation-Indexed Securities

Next, I would like to turn to an update on the inflation-indexed program.

Last month, we held our seventh auction of inflation-indexed securities: a reopening of the 30-year indexed bond issued in April. We were pleased with the results of this auction, and we continue to be pleased with the development of the inflation-indexed market. As has been recommended by the Treasury Borrowing Advisory Committee, we are planning to sell a 10-year indexed note in October 1998.

The Treasury Borrowing Advisory Committee has recommended a regular quarterly auction schedule for indexed securities. We plan to announce, before the October auction, a regular schedule of indexed note and bond auctions for issue on January 15, April 15, July 15, and October 15.

Final rules on fungible indexed STRIPS were published in the Federal Register on June 30, and will become effective on March 31, 1999.

IV. Other Debt Management Changes

Finally, I would like to announce some technical changes.

First, we are shortening the when-issued trading periods for Treasury bills, other than cash management bills. The typical when-issued periods have been somewhat longer than needed for distribution and price discovery, and shorter periods will give the Treasury more time and additional information on short-term cash flows to fine tune the size of the offerings.

Accordingly, we are implementing a shorter standard cycle: All bill announcements will be on Thursday. Weekly 13-week and 26-week bill auctions will remain on Monday and will be settled the following Thursday. This will shorten the WI period by two weekdays. The monthly 52-week bill auction will move to Tuesday and will be settled on the following Thursday. This will shorten the WI period by four weekdays. These changes will be implemented with the regular weekly bill announcement on August 20.

Second, as I mentioned at the May press conference, we are considering extending the use of the single-price auction technique to the 10- and 30-year auctions in the regular quarterly refundings. We expect to make a decision on this matter in connection with the November refunding.

Thank you for your attention. The next quarterly refunding will be announced on October 28, 1998.



Including the securities announced in this refunding, we have paid down $33.9 billion in sales of marketable securities.

This was accomplished as follows:


  • raised $8.4 billion from the 30-year inflation-indexed bonds issued on July 15;


  • paid down $9.7 billion in the 7-year notes maturing July 15;


  • paid down $3.6 billion from the 2-year notes issued July 31;


  • will pay down a total of $35 billion in the 5-year notes maturing July 31, August 31, and September 30;


  • paid down $0.1 billion in the regular weekly bills including those announced yesterday;


  • paid down $3.1 billion in the 52-week bills issued on July 22; and


  • will raise $9.2 billion with the notes and bonds announced today.