Summary
Earlier this morning, the Treasury announced the outline of its August refunding operation. Next week, Treasury will conduct three auctions totaling $44.0 billion. These will refund approximately $18.6 billion in maturing debt, and raise $25.4 in new cash. Treasury also announced that it will reintroduce a 30-year bond to its auction cycle beginning next February.
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The Treasury's August refunding operation will consist of auctions next week of three new note issues -- three-, five- and 10-year maturities -- totaling $44.0 billion. These issues will refund roughly $18.6 billion of publically held debt maturing or called as 8/15, and raise $25.4 billion of new cash.
In addition to the public holdings, Federal Reserve banks hold $5.7 billion of maturing issues for their own accounts. The Treasury may refund these through the sale of additional amounts of the new securities.
By comparison, the Treasury's August 2004 financing involved the issuance of $51.0 billion in notes. That operation refunded about $28.8 billion of maturing debt, while raising $22.2 billion in new cash.
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AUGUST 2005 TREASURY REFUNDING OPERATION*
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Auction Amount 08/03 When-
Date (Bils.) Maturity Coupon Issued Yield
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08/08 $18.0 08/15/08 @ NA#
08/10 $13.0 08/15/10 @ NA#
08/11 $13.0 08/15/15 @ NA#
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$44.0
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*To refund $18.552 billion in maturing issues
and raise $25.448 billion in new cash. @Coupon
to be established through auction process.
#At 9:15 AM (ET) on 8/3, the current on-the-
run 3-year, 5-year and 10-year issues (3.750s
of 5/15/08, 3.875s of 7/15/10 and 4.125s of
5/15/15) were trading at respective yields of
4.08%, 4.15% and 4.32%.
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In May, the Treasury announced that it was considering reinstating a 30-year bond in its auction cycle. In this morning's press release, the agency confirmed that it had decided to do so, on a semi-annual basis, commencing in February of 2006.
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