US Tsy's $62.0 Bln Refunding To Raise $14.7 Bln Cash

     WASHINGTON (MNI) - The Treasury Department's August quarterly refunding of

$62.0 billion will raise $14.7 billion new cash, Treasury announced Wednesday, 

but made no mention of ultra-long bonds in their statement.

     The Treasury had said at its May refunding that it was considering issuing

bonds with longer maturities than the current 30-year horizon, but said only

that it would make a further statement on it at a coming refunding meeting.

     The Treasury said it intends to maintain current coupon sizes over the

coming quarter, but also cautioned that it will need to raise auction sizes at

some point to meet the redemption of securities held by the Federal Reserve as

it seeks to drawdown its balance sheet. More details on Treasury's plans will be

announced once the Fed provides details, such as a starting date, for its

redemptions.

     The Treasury Borrowing Advisory Committee suggested that Treasury increase

its coupon issuance to borrowing needs at its November refunding, or possibly in

early-2018. It suggested keeping the Weighted Average Maturity of Treasury debt

the same or increasing over time, but said other tools should also be used in

addition to the WAM going forward.

     "The risk is that by using WAM as a single metric exclusively, the market

mistakenly infers that a mechanical increase in longer-term coupons is optimal.

It is not," TBAC said in its report to Treasury.

     For August, the Treasury Department said it will sell $24 billion 3-year

notes on August 8, $23 billion in 10-year notes on August 9 and $15 billion in

30-year bonds on August 10. Settlement for these issues is August 15.

     The Treasury urged Congress to pass a debt limit increase promptly, noting

that it could fund the government under the current limit until late-September.

     For the third quarter of 2017, Treasury Monday estimated it will borrow $96

billion, assuming a $60 billion cash balance at the end of September.

     For the fourth quarter of 2017, Treasury estimated it will borrow $501

billion, with a $360 billion cash balance at the end of December.

--MNI Washington Bureau; tel: +1 202-371-2121; email: kevin.kastner@marketnews.com

[TOPICS: MNUAU$,M$U$$$,M$$FI$]