US Treasury to resume 52-week bill as deficit widens

By David Lawder

WASHINGTON (Reuters) - The U.S. Treasury said on Wednesday it will resume issuing 52-week bills after a seven-year break, as budget deficits swell due to slowing revenues and higher spending in a sluggish economy.

The Treasury, announcing its quarterly refunding plans, said it would sell $21 billion of 10-year notes <US10YT=RR> and 30-year bonds <US30YT=RR>. It also said it would pay down about $53 billion of maturing debt in the auctions next week.

The Treasury retired the 52-week bills in February 2001, when the United States was running budget surpluses after a decade-long economic expansion.

It is now adding the bill to its debt offering lineup just one year after it retired the 3-year note amid better-than-expected tax revenues produced by booming corporate profits and capital gains.

The Treasury also said the situation has turned swiftly around.

"Over the last several months, changes in economic conditions, financial markets, monetary and fiscal policy have impacted Treasury's marketable borrowing needs," the Treasury said in a statement. "Financial market strains have impacted the real economy, and the nation has experienced lower economic growth, lower receipts, and increased outlays."

The first of the monthly auctions of 52-week bills will be announced on May 29 and will be held on June 3.

The Treasury said it expected to increase bill and nominal coupon issuance over the remainder of the 2008 fiscal year, which ends Sept. 30, and will issue cash management bills in May, June, August and September, some of which may be longer-dated.