July 17, 2020 / 4:32 PM / 21 days ago

U.S. Treasury seeks dealer input on possible Treasury auction tweaks

FILE PHOTO: U.S. Treasury Secretary Steven Mnuchin testifies before the House Small Business Committee at the U.S. Capitol in Washington, DC, U.S., July 17, 2020. Kevin Dietsch/Pool via REUTERS

(Reuters) - The U.S. Treasury has asked primary dealers for their input on whether it should make technical adjustments to its Treasury note and bond auction schedules in light of the massive run up in debt issuance to pay for COVID-19 emergency relief programs.

The Treasury on Friday said it also asked if dealers believe that the increased frequency of cash-management bill offerings are being well received and, as they are phased out, whether it should consider expanding benchmark bill offerings to include one of the CMB maturities.

The queries will be the focus of discussion between the Treasury and primary dealers ahead of their quarterly meeting later this month.

Widespread economic devastation arising from the coronavirus pandemic has spurred the Treasury to ramp up its debt issuance to record levels to support a variety of government stimulus programs.

The Treasury issued a record $2.75 trillion in net marketable debt in the fiscal third quarter of 2020, well over twice the total issuance for all of fiscal 2019. Total marketable Treasury debt was just shy of $19.9 trillion at the end of June, also a record.

U.S. Treasury Secretary Steven Mnuchin said Friday that the Trump administration supports adding more funds to the $660 billion “Paycheck Protection Program,” as well as allowing especially hard-hit businesses to apply for a second emergency loan.

Bills accounted for 87.2% of total Treasury debt issuance in the April-June period, the largest share since 2002. As a result, the average maturity of all U.S. Treasury securities in June dropped to 62 months, the lowest since December 2011. It has been 70 months in January.

Reporting By Dan Burns; Additional reporting by Ira Iosebashvili; Editing by Chizu Nomiyama and Steve Orlofsky

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