US Tsy's $73.0 Bln Refunding To Raise $33.9 Bln Cash

--Treasury Ups Coupons Sizes Again; Will Add 2-Month Bill Later This Year

By Kevin Kastner

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

$73.0 billion will raise $33.9 billion new cash, Treasury announced Wednesday.

     For May, the Treasury Department said it will sell $31 billion 3-year notes

on May 8, $25 billion of 10-year notes on May 9 and $17 billion of 30-year bonds

on May 10. These issues will settle on May 15.

     The Treasury announced that it will further increase the auction sizes of

its coupon offerings over the next three months to offset the Federal Reserve's

changes to its reinvestment policy.

     The auction sizes of the 2-year and 3-year notes will be increased by $1

billion per month over each of the next three months. The sizes of the 2-year

FRN, 5-year, 7-year, 10-year, and 30-year securities will have their auction

sizes raised by $1 billion for their May issuance. In total, the Treasury said

these changes will result in $27 billion more in issuance over the next three

months. This followed a total increase of $42 billion in the previous quarter.

     Treasury also said it begin issuing a new 2-month bill later this year,

though details are still being worked out regarding the settlement dates. More

details, including the timing of the first auction of these new securities, will

be announced at a later refunding.

     Treasury also said it continued to consider an additional new offering of

its 5-year TIPS securities. Currently, the Treasury sells new 5-year TIPS once

per year in April, followed by reopenings in August and December. More details

will come at a later date.

     Finally, the Treasury said it will conduct another small buyback operation

in May to test the infrastructure. Again, they said that the operation should

not be seen as a predictor of future actions or policies.

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

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