WASHINGTON – The U.S. Department of the Treasury is
offering $67 billion of Treasury securities to refund approximately $57.7
billion of Treasury notes maturing on August 15, 2014. This will raise
approximately $9.3 billion of new cash. The securities are:
A 3-year note in the amount of $27 billion,
maturing August 15, 2017;
A 10-year note in the amount of $24 billion,
maturing August 15, 2024; and
A 30-year bond in the amount of $16 billion,
maturing August 15, 2044.
The 3-year note will be
auctioned on a yield basis at 1:00 p.m. ET on Tuesday, August 12, 2014. The
10-year note will be auctioned on a yield basis at 1:00 p.m. ET on Wednesday, August 13, 2014, and the
30-year bond will be auctioned on a yield basis at 1:00 p.m. ET on Thursday, August 14, 2014. All of
these auctions will settle on Friday, August 15, 2014.
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, the October 30-year TIPS reopening auction, and
the monthly 2-year Floating Rate Note (FRN) auctions.
Projected Financing Needs
Over the last quarter, in
response to improvements in the fiscal outlook, Treasury reduced coupon
offering sizes in the 2- and 3-year maturity offerings. In total, these
cuts have reduced Treasury’s annualized borrowing capacity by $72
billion. Based on current fiscal forecasts, coupon auction sizes will
remain steady going forward. Treasury will continue to monitor projected
financing needs and make appropriate adjustments as necessary.
Treasury plans to address
changes in any seasonal borrowing needs over the next quarter through changes
in regular bill auction sizes and/or cash management bills.
last conducted a buyback operation in April 2002. Given that IT systems
have changed significantly in the 12 years since the last buyback operation,
Treasury believes it is prudent to regularly test the current IT infrastructure
to ensure that the existing buyback functionality remains operational.
expects to conduct a small-scale buyback of nominal coupons in the coming
quarter. Details regarding the test buyback, including size, eligible
CUSIPs, and settlement date, will be forthcoming. Test buyback
participation will only be open to primary dealers, as designated by the
Federal Reserve Bank of New York.
small-scale buyback operation should not be viewed by market participants as a
precursor or signal of any pending policy changes regarding Treasury’s use of
Position Report (LPR) Proposed Rule Update
On June 10, 2014, Treasury issued
a Notice of Proposed Rule Making (NPRM) to solicit public comments on proposed
amendments to the reporting requirement pertaining to very large positions in
certain Treasury securities. The Large Position Report (LPR) regulations
issued under the Government Securities Act Amendments of 1993 are designed to
provide Treasury with information to better understand the supply and demand
dynamics in the Treasury market. The proposed amendments are designed to
improve the information available to Treasury and to simplify the existing
reporting process for entities that are subject to the large position reporting
The comment period for the NPRM
closes on August 9, 2014. Treasury encourages market participants to
review the NPRM and provide any comments. A copy of the NPRM along with
information on how to submit comments can be found at the following link: http://www.gpo.gov/fdsys/pkg/FR-2014-06-10/pdf/2014-13482.pdf.
Cash Management Policy
Over the last 15 years, several events, such as the
terrorist attacks on September 11th and Super Storm Sandy, have
caused disruptions to the broader financial system and Treasury’s auction
capabilities. As such, Treasury believes that a review of Treasury’s cash
balance policy is an appropriate part of our overall risk management
process. Treasury will apprise market participants of any potential
changes in its cash management policy well in advance.
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 5, 2014.