Bloomberg News

U.S. 30-Year Bonds May Yield Record 2.725% at Sale, Survey Says

June 14, 2012

The Treasury’s $13 billion sale of 30-year bonds may draw a record low yield of 2.725 percent, according to the average forecast in a Bloomberg News survey of eight of the Federal Reserve’s 21 primary dealers.

The securities, which mature in May 2042, yielded 2.725 percent in pre-auction trading. Bids are due by 1 p.m. New York time. The yield at last month’s long-bond auction was 3.09 percent. The record low was 2.925 percent at the Dec. 14 sale.

The May 10 offering’s bid-to-cover ratio, which gauges demand by comparing the amount bid with the amount offered, was 2.73, versus an average of 2.66 at the past 10 sales.

Indirect bidders, a class of investors that includes foreign central banks, bought 33.8 percent of the bonds at the May sale, compared with 30.7 percent at the April auction. The average for the past 10 offerings is 29.6 percent.

Direct bidders, non-primary-dealer investors that place their bids directly with the Treasury, purchased 15.4 percent at last month’s sale. The average at the past 10 auctions is 16.9 percent.

Thirty-year bonds have returned 5.1 percent this year, compared with a 1.9 percent gain in the broader U.S. Treasuries market, according to Bank of America Merrill Lynch indexes.

Today’s auction is the last of three Treasury note and bond offerings this week totaling $66 billion. The U.S. sold $21 billion of 10-year debt yesterday at a record low yield of 1.622 percent and $32 billion of three-year notes on June 12.

The sales will raise $35.3 billion of new cash as maturing securities held by the public total $30.7 billion, according to the U.S. Treasury.

Primary dealers trade government securities with the central bank and are obliged to participate in Treasury sales.

To contact the reporter on this story: Cordell Eddings in New York at ceddings@bloomberg.net

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


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