Jefferies' McCarthy and Simons add Tsy......>

US VIEW: Jefferies' McCarthy and Simons add Tsy debt "is currently" at

"statutory limit and Tsy is in the process of using "extraordinary measures" to

finance govt activities. The EMs include the suspension of SLGS issuance,

suspension of investments in the Civil Service Retirement and Disability Fund,

suspension of investment in the Exchange Stability Fund, and suspension of

investments in the G-Fund. We estimate that Tsy will be able to free up

approximately $250B in borrowing authority."

- They expect Tsy "will be able to conduct normal borrowing" thru end-Feb before

"EMs are exhausted" then "will have to" use "cash on hand to fund activities

while cutting auction sizes or suspending/delaying auctions" to "ensure that

settlements simply roll over maturing debt and do not raise new cash. During

Mar, Tsy is going to be sending out a significant amount of personal income tax

refunds so they will burn through that cash quickly." They "estimate the "drop

dead date" when Tsy runs out of cash as being late Mar," but that's "subject to

change" due to "incoming data related to cash flows"; but they eyed a "much

greater risk that it is brought frwrd" vs delay due to tax reform passage.