Treasury Considers Bringing Back a Bond

WASHINGTON – Nearly four years since the U.S. Treasury Department stopped issuing the 30-year bond, officials said on May 4 they are reconsidering bringing them back. “We will examine if we have the flexibility to issue 30-year bonds while maintaining deep and liquid markets in our other securities and determine if nominal bond issuance is cost effective,” U.S. Assistant Treasury Secretary for Financial Markets Timothy Bitsberger said in a statement. Treasury stopped issuing new 30-year bonds in October 2001 as the government continued to buy back outstanding bonds and seek other alternatives to reduce its outstanding debt. A deficit of $427 billion is expected this year, according to White House officials. One of the reasons cited for bringing the bonds back include the effects of boosting issuance of longer-dated Treasury inflation-protected securities, or TIPS, which turned out to not be a good substitute to selling longer-dated nominal debt, officials said. Treasury last year began selling a 20-year TIPS bond, the longest maturity of debt it now sells. A final decision on whether to bring the bonds back will be determined in August in Treasury’s next quarterly refunding announcement.