Summary
Earlier this morning, the Treasury announced the outline of its November refunding operation. Next week, Treasury will conduct three auctions totaling $44.0 billion. These will refund approximately $38.7 billion in maturing debt, and raise $5.3 billion in new cash.
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The Treasury's November 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 $38.723 billion of publically held debt maturing or called as 11/15, and raise $5.277 billion of new cash.
In addition to the public holdings, Federal Reserve banks hold $8.631 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 November 2004 financing involved the issuance of $51.0 billion in notes. That operation refunded about $48 billion of maturing debt, while raising $3 billion in new cash.
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NOVEMBER 2005 TREASURY REFUNDING OPERATION*
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Auction Amount 11/02 When-
Date (Bils.) Maturity Coupon Issued Yield
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11/08 $18.0 11/15/08 @ NA#
11/09 $13.0 11/15/10 @ NA#
11/10 $13.0 11/15/15 @ NA#
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$44.0
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*To refund $38.723 billion in maturing issues
and raise $5.277 billion in new cash. @Coupon
to be established through auction process.
#At 9:15 AM (ET) on 11/2, the current on-the-
run 3-year, 5-year and 10-year issues (4.125s
of 8/15/08, 4.250s of 10/15/10 and 4.250s of
8/15/15) were trading at respective yields of
4.44%, 4.48% and 4.59%.
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In a press a press release issued on Monday (10/31), Treasury said the following:
"The Treasury Department announced today that it expects net borrowing of marketable debt to total $96 billion in the October-December 2005 quarter. The estimated cash balance on December 31 is $25 billion. On August 1, Treasury announced estimated net market borrowing of $97 billion this quarter and a December 31 cash balance of $25 billion. Adjusting for a beginning-of-quarter cash balance that was $6 billion higher than estimated in August, the current borrowing estimate is $5 billion higher than previously announced. The increase in anticipated borrowing is primarily the result of higher outlays partially offset by higher receipts.
"Treasury also announced that it expects net borrowing of marketable debt to total $171 billion in the January-March 2006 quarter. The estimated cash balance on March 31 is $15 billion."
In August, the Treasury announced that it was reinstating a 30-year bond in its auction cycle, beginning in February 2006. On this subject, the agency said the following in the press release it issued this morning detailing next week's auctions:
"In August, Treasury announced the re-introduction of regular semi-annual auctions of the 30-year nominal security beginning with a bond that will mature on February 15, 2036. Treasury will announce the details of the 30-year bond auction on February 1, 2006 and will hold the auction on February 9, 2006.
"To fit the re-introduction of the 30-year bond into our financing calendar we are revising the dates for the auction and issuance of 5-year notes. Beginning in February 2006, all monthly 5-year notes will be auctioned and settled late in the month with calendar end-of-month maturity and payment dates."
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