Bloomberg News

Fed Sells $8.87 Billion of Treasuries Under Operation Twist

October 06, 2011

(Adds last sales in the second paragraph.)

Oct. 6 (Bloomberg) -- The Federal Reserve sold $8.87 billion in Treasury securities maturing in less than one year as part of its plan to lower borrowing costs that’s become known as Operation Twist.

The central bank sold debt maturing from January 2012 to July 2012, according to the Federal Reserve Bank of New York’s website. Today’s sale is the first by the central bank under the program announced Sept. 21. Purchases began Oct. 3. The Fed last sold U.S. government debt in May 2008.

The Fed is replacing $400 billion of short-term debt in its portfolio with longer-term Treasuries in an effort to reduce borrowing costs further and counter rising risks of a recession. The central bank will buy securities with maturities of six to 30 years through June while selling an equal amount of debt maturing in three years or less. The central bank will buy Treasury securities 13 times a month and sell its holdings of U.S. government debt six times.

Policy makers also announced last month that it would switch the reinvestment of its holdings of maturing housing debt to mortgage-backed securities from Treasuries.

--Editors: Dave Liedtka, Dennis Fitzgerald

To contact the reporter on this story: Liz Capo McCormick in New York at emccormick7@bloomberg.net

To contact the editor responsible for this story Dave Liedtka at dliedtka@bloomberg.net


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