TREASURY ACTING ASSISTANT SECRETARY FOR FINANCIAL MARKETS
MATTHEW RUTHERFORD AUGUST 2012 QUARTERLY REFUNDING STATEMENT

WASHINGTON – The U.S. Department of the Treasury is offering $72 billion of Treasury securities to refund approximately $54.2 billion of securities maturing on August 15, 2012.  This will raise approximately $17.8 billion of new cash.  The securities are:

 

The 3-year note will be auctioned on a yield basis at 1:00 p.m. EDT on Tuesday, August 7, 2012. The 10-year note will be auctioned on a yield basis at 1:00 p.m. EDT on Wednesday, August 8, 2012, and the 30-year bond will be auctioned on a yield basis at 1:00 p.m. EDT on Thursday, August 9, 2012.  All of these auctions will settle on Wednesday, August 15, 2012. 

The balance of Treasury financing requirements will be met with the weekly bill auctions, cash management bills, the monthly note and bond auctions, the August 5-year Treasury Inflation Protected Security (TIPS) reopening auction, the September 10-year TIPS reopening auction and the October 30-year TIPS reopening auction.

Projected Financing Needs

Treasury expects to keep note and bond auction sizes stable in the coming months.  Treasury believes that the current coupon issuance schedule and offering sizes for notes and bonds are adequate to address forecasted borrowing needs over the near term. 

Going forward, Treasury will continue to provide guidance to market participants regarding any changes in the fiscal outlook that might impact the government’s financing needs.

 

Floating Rate Notes (FRNs)

Treasury plans to develop a floating rate note (FRN) program to complement the existing suite of securities issued and to support our broader debt management objectives.  The first FRN auction is estimated to be at least one year away.  The timeframe reflects Treasury's best estimate for implementing required auction regulations and IT systems modifications.

In the coming quarters, Treasury will provide additional information on the details of the program.

Negative Bidding and Awards in Treasury Bill Auctions

Treasury is in the process of building the operational capabilities to allow for negative rate bidding in Treasury bill auctions, should we make the determination to allow such bidding in the future. Treasury encourages market participants to study their systems and report any operational issues that could arise from Treasury bill auctions settling at negative rates.

Debt Limit

The debt limit places a limitation on the total amount of money that the United States government is authorized to borrow to meet its existing legal obligations, including Social Security and Medicare benefits, military salaries, interest on the national debt, tax refunds, and other payments. The debt limit does not authorize new spending commitments. It simply allows the government to finance existing legal obligations that Congresses and presidents of both parties have made in the past.

Treasury expects the debt limit to be reached near the end of 2012.  However, Treasury has the authority to take certain extraordinary measures to give Congress more time to act to ensure we are able to meet the legal obligations of the United States of America. We expect that these extraordinary measures would provide sufficient “headroom” under the debt limit to allow the government to continue to meet its obligations until early in 2013.

Please send comments and suggestions on these subjects or others related to debt management to debt.management@treasury.gov.  The next quarterly refunding announcement will take place on Wednesday, October 31, 2012. 

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