U.S. Treasury to auction record $75 billion next week

자료: http://www.marketwatch.com/story/treasury-plans-to-sell-a-record-amount-of-debt-2009-08-05

Aug 5, 2009, 10:23 a.m. EST

By Greg Robb, MarketWatch

WASHINGTON (MarketWatch) -- The government's voracious appetite for capital was on display Wednesday as the Treasury Department announced plans to auction a record $75 billion in notes and bonds next week in its quarterly refunding auctions.

The department will auction $37 billion in 3-year notes, $23 billion in 10-year notes and $15 billion in 30-year bonds to refund $60.9 billion in maturing securities and raise $14.1 billion, the department said.

The size of the refunding auctions was in line with market expectations.

No new securities were added to the Treasury's offering mix as the Obama administration said it was content with the range of maturity points now offered.

With no new maturity points, financial markets should expect auction sizes to gradually increase.

Treasury has been on a hectic schedule to expand its auctions of government notes and bonds, which have doubled from 36 to 72 over the past year.

In a report to the Treasury, the borrowing advisory committee said the government's considerable funding needs are problematic for the longer end of the Treasury market.

"This year's double-digit-as-a-percent-of-GDP budget shortfall is unsustainable," the committee said.

Treasury Secretary Timothy Geithner has pledged to reduce government borrowing to a sustainable path once the economy returns to firmer footing. But the borrowing committee was skeptical of any near-term improvement.

"There is little support for a market shrinking in the deficit in the year ahead, as revenue trends likely will remain sluggish amid high unemployment and lingering capital losses and public spending will remain elevated as a share of the economy," the advisory committee said.

Analysts at Wrightson ICAP said the deficit would peak at $1.45 billion this fiscal year that ends on September 30, but recede only to $1.35 trillion next year.

There was a lot of focus on inflation-indexed securities, or TIPs, in the refunding documents. Treasury said it would gradually increase the issuance of these securities and was considering replacing the 20-year TIPs with 30-year TIPs.

The borrowing advisory panel suggested the Treasury hold more frequent auctions of inflation-indexed securities.

Decisions on TIPs will be made at the next refunding announcement in November.

The debt ceiling Congress set will need to be raised by the fourth quarter, the agency said.

According to the minutes of the meeting between the borrowing advisory committee and the Treasury, several members stated that despite a negative outlook six months ago, recent Treasury auctions have "gone much better than might have been anticipated."

Most members added the issuing amounts can increase for a number of securities.

"If done gradually, the 2-year note could be increased to nearly $50 billion for each offering, the 5-year could reach $45 billion, the 10-year could go up to $28 billion with re-openings of $25 billion each, and the 30-year could move to $20 billion with re-openings of $17 billion," the group recommended.

In this quarter, Treasury said it expects to borrow $406 billion. The balance of the funding will be met with weekly bills, monthly 52-week bills, monthly 2-year, 3-year, 5-year and 7-year notes, reopenings of 10-year notes and 30-year bonds in September and October and 5-year and 10-year TIP reopenings.

Treasury said it will issue cash management bills, including longer-dated varieties, in the quarter.