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U.S. Treasury will keep shifting to longer-dated debt

FILE PHOTO: A sign marks the U.S Treasury Department in Washington, U.S., August 6, 2018. REUTERS/Brian Snyder

(Reuters) - The U.S. Treasury Department said on Wednesday it will continue a shift to longer-term notes and bonds as it issues debt to fund measures to offset the impact of the COVID-19 epidemic.

The spending plan matches expectations that Treasury would push more of its debt on to the longer end of the Treasury curve, after relying heavily on shorter-term debt to finance a record $2 trillion of stimulus in the second quarter of this year.

Treasury announced on Monday that it plans to borrow $617 billion in the fourth quarter. That figure “reflects an assumption that legislation authorizing an additional $1 trillion of spending will be enacted,” Brian Smith, Treasury’s deputy assistant secretary for federal finance, said in an emailed statement on Wednesday.

“Consistent with our prior guidance, Treasury continues to shift financing from bills to longer-dated tenors, using long-term issuance as a prudent means of managing the debt maturity profile and limiting potential future issuance volatility,” he added.

It is not clear how future government outlays will be affected by Tuesday’s presidential election, which has not yet produced a winner. The Treasury has been raising extra money to fund trillions of dollars in coronavirus-related economic aid allocated by Washington.

Reporting by Ross Kerber; Editing by Paul Simao

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