Treasury to sell more debt to deal with borrowing
Wednesday October 8, 11:18 am ET
By Martin Crutsinger, AP Economics Writer
Treasury says it will expand size of debt securities to deal with rising borrowing needs
WASHINGTON (AP) -- The Treasury Department, facing huge borrowing needs because of the government's $700 billion rescue program, said Wednesday it will increase the size of Treasury securities being sold to the public.
The Treasury said it would expand the number of Treasury securities which are currently being traded as a way to boost borrowing.
In a statement, the department said this will also deal with what it called "severe dislocations in the market." The demand for Treasury securities has soared during the current credit crisis as investors park their money in safe-haven, U.S. government-backed bills, notes and bonds.
Treasury's effort will be done through what is known as a "re-opening" of securities that the government has already sold. The first announcements Wednesday added $40 billion to four securities already being traded, including seven-year and 10-year notes. The increases were in $10 billion increments.
The Treasury statement said the move should address "acute, protracted shortages" in the Treasury securities markets.
Treasury said it would hold discussions with other government regulators including the Federal Reserve and with bond traders to search for remedies to ensure that Treasury securities sales don't get hit with the same stresses in the future .
