U.S. Treasury says it is exploring issuing 50-year bonds
By Wed, Oct 30, 2019
The numbers: The Treasury announced Wednesday it is exploring a range of possible new products including a new 50-year bond. No timetable was given for the decision. The department said it is also mulling bringing back the 20-year bond and a new one-year floating rate note tied to the Secured Overnight Financial Rate (SOFR) an alternative to the U.S. dollar London interbank offered rate (Libor).
What happened: Treasury made the announcement about possible new products when announced it will auction $84 billion in notes and bonds next week in its quarterly refunding auctions, unchanged from the previous auction in July.
The department will auction $38 billion in 3-year notes TMUBMUSD03Y, +0.34% on Nov. 5 and $27 billion TMUBMUSD10Y, +0.05% in 10-year notes on Nov. 6. The government will also sell $19 billion in 30-year bonds TMUBMUSD30Y, -0.16% on Nov. 7.
The offerings will refund about $60.5 billion of Treasury notes and other government paper and will raise $23.5 billion in cash.
Big picture: Large institutional traders have been pushing for a 20-year bond but have been more sceptical about 50-year debt.
In other news, Treasury said it intends to maintain coupon issuance sizes at current levels over the upcoming quarter. Analysts said they thought Treasury can maintain coupon auction sizes at current levels into 2020 and meet unexpected increase in financing needs with additional bill issuance.
The department said little about the Federal Reserve’s plan to buy $60 billion per bills per month.
A Treasury official said the Fed plan was at a “very early” stage and the department was monitoring it. The department was not making any changes to its bill offering as a result of the central bank program.
Market reaction: The yield on the 10-year U.S. Treasury note edged back to 1.829% in early trading from 1.835% late Tuesday
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