Oct. 27 (Bloomberg) -- The U.S. Treasury will issue a net $363.4 billion of securities this quarter, up from $234.3 billion in the third quarter, a survey by the Securities Industry and Financial Markets Association showed.
Sales of notes and bonds are forecast to rise to $307.9 billion between October and December, 6.8 percent above last quarter’s net issuance of $288.3 billion. Bill issuance is forecast at $55.5 billion. The estimates are the median forecasts in a quarterly poll of SIFMA members representing primary dealers, the New York-based association said in a statement today. The 22 primary dealers trade government debt with the Federal Reserve and are required to participate in Treasury auctions.
The U.S. is seeking to increase the average maturity of its debt as it finances a $1.3 trillion budget deficit while borrowing costs are close to record lows. The percentage of so- called nominal coupons in the Treasury’s portfolio increased to 76 percent at the end of last quarter, above the average of 69 percent as the Treasury continues to extend the average maturity of outstanding debt, according to SIFMA.
Net bill will rise to $55.5 billion this quarter, from with $54 billion redeemed in the third quarter, the survey found.
Two-year notes are forecast to yield 0.24 percent at the end of the fourth quarter and 0.28 percent by March 31, according to the survey. The 10-year note is forecast to yield 2 percent in the fourth quarter and 2.25 percent in the first quarter of next year.
The main risks to the rise in yield levels are a stronger- than-expected economic recovery, a resolution of the European debt crisis, an increase in inflation and increased mortgage refinancing, the group said.
The Treasury is forecast to issue $30 billion of Treasury Inflation-Protected Securities this quarter, compared with the $36.7 billion in TIPS sold last quarter, according to the survey.
--Editors: Dave Liedtka, Ken Pringle
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