August 22, 2018 / 8:27 PM / a year ago

UPDATE 1-Foreigners buy more longer-dated U.S. bonds at refunding

    * Overseas allotment of 3-year supply falls to lowest since
    * U.S. fund managers buy record amount at three-year auction

 (Recasts to focus on purchases of longer-dated Treasuries, adds
details, background)
    Aug 22 (Reuters) - Foreign investors purchased more
longer-dated U.S. Treasuries at the $78 billion quarterly
refunding held in early August, suggesting some rebound in
appetite from this major group of bondholders, according to
government data released on Wednesday.
    Overseas appetite for Treasuries has not kept pace with the
increase in debt issuance from the federal government to finance
a widening budget deficit stemming from a massive tax cut passed
last December and a two-year spending deal enacted in February. 
    While foreigners bought more longer-dated securities earlier
this month, domestic fund managers stepped up their overall bond
purchases at the August refunding.  
    Overseas investors bought $5.792 billion of the $26 billion
in 10-year Treasury supply, more than double the $2.471 billion
they purchased in July, according to the Treasury Department’s
auction allotment data.
    This was the most 10-year note supply they bought in six
    Foreign buyers also purchased $1.741 billion of the $18
billion in 30-year bonds offered. This was the most 30-year
supply they took since March and greater than the $1.146 billion
at the 30-year bond sale in July.
    The 10-year and 30-year debt auctions were part of the
August refunding that repaid $38.2 billion to Treasury investors
and raised $39.8 billion in new cash for the government.
    The government sold $73 billion of Treasuries at the May
refunding, $5 billion below August's level.
    The Treasury also sold $34 billion in three-year notes at
the Aug. 7 refunding.
    Overseas investors bought $2.146 billion of the latest
3-year supply, the lowest level since February 2007 and down
from $3.973 billion they purchased the previous month, Treasury
data showed.
    Meanwhile, large U.S. investment managers bought $12.053
billion at the 10-year note sale, down from an all-time peak of
$13.353 billion the previous month.
    They bought a record-high $15.145 billion of 3-year notes,
up from the $11.106 billion they purchased the previous month.
    Large bond managers purchased $10.458 billion in 30-year
bonds earlier this month, up from $8.584 billion in July.

 (Reporting by Richard Leong; Editing by Dan Grebler)
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