Press Releases


(Archived Content)



Good morning. I am pleased to be with you today to announce the February quarterly refunding. I will also take this opportunity to discuss some changes to the Treasury borrowing program, and to provide a status report on our continuing efforts to encourage saving and to broaden access to Treasury securities.

In 1992, the deficit stood at a record $290 billion, and the Congressional Budget Office was projecting that it would climb to $357 billion in 1998. Instead, last year we had the first budget surplus in a generation. Continuing this fiscal discipline, we are expecting a surplus of $79 billion for this fiscal year. If the President's programs are adopted, over the next 15 years, we will achieve the lowest level of publicly-held debt as a percentage of GDP since World War I. These forecasts are consistent with those of the Congressional Budget Office and private sector economists. Such fiscal and economic success continues to present a happy challenge -- the significant paydown of the public debt.

Changes in Treasury Market Borrowing

Our nation's improving fiscal conditions have already prompted us to make several adjustments to the Treasury market borrowing program. Over the past three years, we have reduced the issue sizes of various offerings, and we have adjusted issuance cycles and the instruments that we offer. For example, we announced in May 1998 that the Treasury would discontinue new issues of 3-year notes, and would reduce the frequency of 5-year notes.

Now, in view of the forecasts for continuing budget surpluses, we are instituting some further adjustments to the Treasury market borrowing program. In addition, I would like to discuss some other adjustments that are under consideration. These changes will reduce our borrowing in the context of promoting the three primary goals of Treasury's debt management: assuring sound cash management, achieving the lowest cost financing for the taxpayers, and promoting efficient capital markets. In particular, they will allow us to distribute the adjustments to our borrowing across the sectors and maturities of our securities.

First, the quarterly refunding will be an offering of $35 billion of notes and bonds, as compared to the last refunding of $38 billion. This reduction in borrowing will be accomplished by decreasing the size of the 5-year and the 10-year notes.

Second, the Treasury plans a modest reduction in the offering size of our 10- and 30-year inflation-indexed securities. The exact size of the next index auction will be announced on March 31. This reduction is consistent with the adjustments that we have been making in other sectors, as well as with our continued commitment to the indexed securities market. We believe that it will enhance the market for Treasury inflation-indexed securities.

Third, the Treasury is considering reducing the frequency of new issues of nominal 30-year Treasury bonds, and nominal issues of 2-year notes. Such reductions in the frequency of issuance would allow the Treasury to maintain its presence in these maturity areas, while providing sufficiently large issues to promote liquidity.

Terms of the February Refunding

I will turn now to the terms of the quarterly refunding. We are offering $35 billion of notes and bonds to refund $27 billion of privately held notes maturing on February 15, and to raise approximately $8 billion of cash.

The securities are:


  • A 5-year note in the amount of $15.0 billion, maturing on February 15, 2004.


  • A reopening, in the amount of $10.0 billion, of the 4-3/4% Treasury note maturing on November 15, 2008.


  • A 30-year bond in the amount of $10.0 billion, maturing on February 15, 2029.

These securities are scheduled to be auctioned on a yield basis at 1:00 p.m. Eastern time on the following dates: the 5-year note on Tuesday, February 9; the 10-year note on Wednesday, February 10; and the 30-year bond on Thursday, February 11. In the event the price of the 4 3/4% note is below $98.00 per $100 face amount at 9:00 a.m. Eastern time on February 10, the Treasury will announce a new 10-year note maturing on February 15, 2009. The auction would still be held on February 10, at 1:00 p.m.

As announced on Monday, February 1, we estimate that the Treasury will net redeem $5 billion of marketable securities during the January-March quarter. This estimate assumes a $20 billion cash balance at the end of March. Including the securities we are announcing today, we will have net redeemed $59 billion of marketable securities. (See the attachment for details.) The $54 billion that remains to be raised will be accomplished through regular issuance of Treasury bills and 2-year notes, as well as the issuance of cash management bills. We plan to issue two longer dated cash management bills in mid-February and early March, maturing after the April tax payment date, as well as one short-dated cash management bill to bridge the cash low point in early April.

Looking forward to the April-June quarter, we estimate that the Treasury will pay down between $105 and $110 billion of marketable securities, and end the quarter with a $40 billion cash balance.

Reduced Securities and Funds Transfer Fees

I would like to conclude with a few additional remarks.

First, as of Monday, February 1, we reduced fees for the transfer of Treasury securities in the commercial book-entry system. This was achievable due to efficiencies created by the Bureau of Public Debt's new National Book Entry System. The Federal Reserve funds transfer fee has been lowered as well. We estimate that the new fee structure will cut the market's costs by 24 percent this year.

Better Service for Small Investors

Second, I am happy to report that our inflation-indexed Series I savings bonds have been selling well since we began offering them in September 1998. As of January 31, we had sold $168 million in Series I bonds. In addition, I am pleased to report that our program for selling marketable bills, notes and bonds over the Internet and over the telephone has been successful. This Buy-Direct program, which we launched last fall, has accounted for about 27,000 security sales, worth $916 million, or 39 percent of all sales through Treasury DIRECT.

Thank you for your attention. The next quarterly refunding will be announced on May 5, 1999.


Including the securities that we are announcing today, we have paid down $59.0 billion in sales of marketable securities.


  • This was accomplished as follows:


  • raised $8.5 billion from the 10-year inflation-indexed note issued January 15;


  • paid down $10.6 billion in the 7- year note maturing January 15;


  • paid down $0.5 billion in the 2- year notes issued January 31;


  • will pay down a total of $ 34 billion in the 5- year notes maturing January 31, February 28, and March 31;


  • raised $0.3 billion in the regular weekly bills including those to be issued tomorrow;


  • paid down $5.8 billion in the 52-week bills issued January 7 and February 4;


  • paid down $25 billion in cash management bills which matured January 21; and


  • will raise $8 billion with the notes and bonds announced today.