WASHINGTON – The
U.S. Department of the Treasury is offering $72 billion of Treasury securities
to refund approximately $69.6 billion of Treasury notes maturing on August 15,
2013. This will raise approximately $2.4
billion of new cash. The securities are:
3-year note in the amount of $32 billion, maturing August 15, 2016;
10-year note in the amount of $24 billion, maturing August 15, 2023; and
30-year bond in the amount of $16 billion, maturing August 15, 2043.
The 3-year note will be auctioned on a yield basis at 1:00
p.m. ET on Tuesday, August 6, 2013. The
10-year note will be auctioned on a yield basis at 1:00 p.m. ET on Wednesday, August
7, 2013, and the 30-year bond will be auctioned on a yield basis at 1:00 p.m. ET
on Thursday, August 8, 2013. All of
these auctions will settle on Thursday, August 15, 2013.
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.
Given improvements in the fiscal outlook, Treasury expects
to gradually decrease coupon auction sizes over the coming quarter. The reductions in auction sizes will likely
take place in the 2- and 3- year sectors of the nominal coupon curve.
The magnitude of offering size reductions will depend on the
pace and extent of the fiscal improvement.
Treasury will continue to monitor projected financing needs and will
make adjustments as necessary.
Floating Rate Notes
Treasury published in the Federal Register today a final rule for the Floating Rate Note (FRN) program.
The FRN is the first new
product that Treasury has introduced since TIPS over 15 years ago.
As indicated at the May Quarterly Refunding, the FRN will complement
our existing suite of securities and help Treasury achieve its objective of
financing the government at the lowest cost over time.
that the first FRN auction will occur in January 2014. This timeframe should provide sufficient time
for market participants to adjust analytical systems and operational processes to
accommodate the new product. Treasury
will provide additional information regarding the potential sizes for the first
auction of FRNs at the November Quarterly Refunding.
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. On May 17, 2013, Treasury began employing
extraordinary measures in order to finance the government until Congress
authorizes an increase in the debt limit.
There are a number of factors including a strengthening
economy and the impact of sequestration on the timing of outlays, together with
the normal challenges of forecasting the payments and receipts of the U.S.
government months into the future, that make it impossible to provide a precise
estimate at this time on the duration of extraordinary measures. Based
on current projections of cash flows and extraordinary measures, it appears
Treasury will have room to continue financing government operations so that
Congress can address this when they return after Labor Day. As forecast
factors permit, Treasury will provide additional guidance regarding how long
extraordinary measures will allow the government to continue to borrow.
Treasury continues to urge Congress to increase the debt
limit in a timely fashion upon their return after Labor Day.
Please send comments and suggestions on these subjects or
others related to debt management to email@example.com. The next quarterly refunding announcement
will take place on Wednesday, November 6, 2013.