Treasury Assistant Secretary for Financial Markets Mary Miller August 2011 Quarterly Refunding Statement

The U.S. Department of the Treasury is offering $72 billion of Treasury securities to refund approximately $24.4 billion of privately held securities maturing on August 15, 2011.  This will raise approximately $47.6 billion of new cash.  The securities are:

• A 3-year note in the amount of $32 billion, maturing August 15, 2014;
• A 10-year note in the amount of $24 billion, maturing August 15, 2021; and
• A 30-year bond in the amount of $16 billion, maturing August 15, 2041.

The 3-year note will be auctioned on a yield basis at 1:00 p.m. EDT on Tuesday, August 9, 2011. The 10-year note will be auctioned on a yield basis at 1:00 p.m. EDT on Wednesday, August 10, 2011, and the 30-year bond will be auctioned on a yield basis at 1:00 p.m. EDT on Thursday, August 11, 2011.  All of these auctions will settle on Monday, August 15, 2011. 

The balance of Treasury financing requirements will be met with the regular weekly bill auctions, the monthly nominal coupon security auctions, the August 5-year Treasury Inflation Protected Security reopening auction, the September 10-year TIPS reopening auction and the October 30-year TIPS reopening auction.

Treasury may also issue cash management bills during the quarter.

Statutory Debt Limit

Treasury welcomes the enactment of the Budget Control Act of 2011, which authorizes, in stages, increases to the debt limit of $2.1 to $2.4 trillion (subject to the enactment of joint resolutions of disapproval).  Pursuant to the Act, the President submitted a certification to Congress on August 2, which had the effect of increasing the debt limit by $400 billion, to $14.694 trillion.  This increase will allow Treasury to continue borrowing so that the United States can continue to meet its obligations.  It will also enable Treasury, as required by law, to make whole the trust funds that were affected by the extraordinary measures announced on May 16, 2011.

Projected Financing Needs

Given current forecasts, Treasury expects to modestly decrease nominal coupon issuance in the coming months.  The total amount of offering size reductions will depend on the evolution of the fiscal outlook.

Today’s announcement does not affect Treasury’s previously announced plans to continue to gradually increase TIPS issuance.  Treasury expects to provide more guidance at the November quarterly refunding about the amount of TIPS issuance in 2012.

Supplementary Financing Program

In July the balance in the Treasury Supplementary Financing Program declined to zero. At this time, Treasury does not plan to resume auctions of bills under the SFP in the near term.  However, Treasury retains the flexibility to increase the size of the SFP in the future. Such a decision will be made in consultation with the Federal Reserve.

The next quarterly refunding announcement will take place on Wednesday, November 2, 2011.