Gov't to sell Treasury security with variable rate

Print
Font Size:
Default font size
Larger font size

Posted: Wednesday, November 6, 2013 12:00 am

WASHINGTON (AP) - The government says that it will begin selling Treasury securities next year that have variable interest rates. It's the first new Treasury security in 17 years.

Treasury officials said Wednesday that the initial offering on Jan. 29 will be in a range of $10 billion to $15 billion. Auctions will occur each month. The securities will have a two-year maturity and the rate will be allowed to go up or down. It will be pegged to rates on three-month Treasury bills.

The government expects more investors will be drawn to the prospect of earning higher yields if rates go up. And it believes the attractiveness of the new security will offset any risk of having to pay more to borrow funds.

In the news release announcing the new Treasury security, Matthew Rutherford, Treasury's assistant secretary for financial markets, took a few moments to comment on last month's fight over raising the government's borrowing limit. He said the delay in raising the borrowing limit disrupted bond markets and increased borrowing costs to the government for newly issued Treasury bills.

Rutherford said Congress should not delay approving an increase in the borrowing limit before the next deadline of Feb. 7. On that date, the current suspension in the borrowing limit expires and Treasury will be forced to start using various book-keeping maneuvers to stop from breaching it.

© 2014 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.


loading...

SPOTLIGHT »

Inside Business
To submit an announcement for "Inside Business", click here. For questions call (402) 444-1371 or e-mail announcements@owh.com.

World-Herald Alerts

Want to get World-Herald stories sent directly to your home or work computer? Sign up for Omaha.com's News Alerts and you will receive e-mails with the day's top stories.