WASHINGTON – The U.S. Department of the Treasury is offering $72 billion of Treasury securities to refund approximately $49.6 billion of securities maturing on February 15, 2012. This will raise approximately $22.4 billion of new cash. The securities are:
- A 3-year note in the amount of $32 billion, maturing February 15, 2015;
- A 10-year note in the amount of $24 billion, maturing February 15, 2022; and
- A 30-year bond in the amount of $16 billion, maturing February 15, 2042.
The 3-year note will be auctioned on a yield basis at 1:00 p.m. EST on Tuesday, February 7, 2012. The 10-year note will be auctioned on a yield basis at 1:00 p.m. EST on Wednesday, February 8, 2012, and the 30-year bond will be auctioned on a yield basis at 1:00 p.m. EST on Thursday, February 9, 2012. All of these auctions will settle on Wednesday, February 15, 2012.
The balance of Treasury financing requirements will be met with the weekly bill auctions, the monthly note and bond auctions, the February 30-year Treasury Inflation Protected Security (TIPS) auction, the March 10-year TIPS reopening auction and the April 5-year TIPS auction.
Projected Financing Needs
Treasury expects to keep note and bond auction sizes stable in the coming months. Treasury believes that the current issuance schedule and offering sizes for notes and bonds are adequate to address forecasted borrowing needs over the near term.
In the coming weeks there will be a seasonal increase in borrowing needs ahead of the April 2012 tax season. Treasury plans to address this seasonal borrowing need through increases in regular bill auction sizes and cash management bills.
Going forward, Treasury will provide guidance to market participants regarding any changes in the fiscal outlook that might impact the government’s financing needs.
Treasury Inflation Protected Security (TIPS) Issuance in 2012
Over the past two years, Treasury has taken a number of steps to improve liquidity in the TIPS market, including increasing TIPS issuance, increasing the frequency of auctions, and moving 20-year TIPS to 30-year TIPS. These actions have been taken after extensive consultation with market participants.
Treasury expects to continue to gradually increase gross issuance of TIPS in 2012. The majority of the increase in TIPS issuance will likely occur in the 5- and 10-year tenors.
Debt Limit Increase
Under the terms of the Budget Control Act passed in August 2011, the statutory debt limit was increased by $1.2 trillion to $16.394 trillion on January 27, 2012. The recent increase allowed Treasury to restore all the accounts that were affected by Treasury’s use of extraordinary measures between January 4 and January 27.
Floating Rate Notes
Treasury continues to study the possibility of issuing Floating Rate Notes (FRNs). The Treasury Borrowing Advisory Committee suggested in its February 2012 charge that FRNs could complement Treasury’s current suite of products.
Treasury recognizes that FRNs may provide a number of benefits to government finance, and plans to announce a decision regarding whether or not to introduce an FRN product at the May 2012 Quarterly Refunding.
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 2, 2012.