MINUTES OF THE MEETING OF THE 

TREASURY BORROWING ADVISORY COMMITTEE 

OF THE PUBLIC SECURITIES ASSOCIATION 

April 30 and May 1, 1996 

The Committee convened at 11:35 a.m. at the Treasury 

Department for the portion of the meeting that was open to the 

public. All members were present, except Mr. Kessenich, Mr. 

Lodge, and Mr. Rosenberg. The Federal Reuister announcement of 

the meeting and a list of Committee members are attached. 

Assistant Secretary for Financial Markets Bradbury welcomed 

the Committee and the public to the meeting, Assistant Secretary 

for Economic Policy Gotbaum summarized the current state of the 

U.S. economy. Paul Malvey, Senior Economist, Office of Market 

Finance, discussed charts, which had been released to the public 

on April 29, updating Treasury borrowing estimates and providing 

statistical information on recent Treasury borrowing and market 

interest rates. 

The public meeting ended at 12:15 p.m. 

Mav refundinq 

The Committee reconvened in closed session at the Madison 

Hotel at 2:30 p.m. The members were present who had attended the 

public briefing. Assistant Secretary Bradbury gave the Committee 

its Charge, which is also attached. 

The Committee began by considering the attached proforma 

financing plan for the April-June quarter that had been prepared 

in advance by one of the members, using the market borrowing 

estimates that were released by the Treasury on April 29. The 

Committee voted unanimously to recommend that the Treasury issue 

$19.0 billion of 3-year notes, $14.0 billion of 10-year notes, 

and $16.0 billion of cash management bills maturing June 20 in 

the May refunding. The Committee also foresees that the Treasury 

will need to issue more short-term cash management bills for the 

period from early June until after the June 15 tax payment date. 

Freuuencv of new 10- and 30-vear security auctions 

The discussion of the overall Treasury financing plan for 

the July-September quarter was deferred until after the Committee 

discussed the question in the Charge pertaining to increasing the 

frequency of new issues of 10-year notes and 30-year bonds. The 

Committee discussed concerns that the sizes of each tranche of 

10-year notes and 30-year bonds would be relatively small, if the 

Treasury does not increase its annual issuance in those 

maturities. 
The committee unanimously agreed to recommend that the 

Treasury auction a minimum of $10 billion of 30-year bonds in 

each of the February, August, and November midquarter refundings, 

and auction a minimum of $10 billion of 10-year notes in July, 

August, October, and November and that the Treasury auctions of 

10-year notes in February and May be $12 billion each. This 

schedule is designed to provide a greater amount of, and thus 

promote market liquidity in, each 10-year note auctioned in the 

first half of the calendar year. This combination of changes 

would not significantly increase Treasury borrowing in longer 

maturities .compared with what it otherwise would have been. 

Julv-Sewtember borrowina plan 

The Committee discussed an overall approach to funding for 

the July-September quarter, displayed in the attached draft 

proforma. The Committee voted by 11 to 4 to recommend that the 

Treasury not increase the sizes of new issues of 2-, 3-, and 5- 

year notes materially over the near term and rely more heavily on 

bill financing in order to balance any increase in longer term 

issuance. 

Volatility of bill issuance 

The Committee overall view was that the market had reacted 

in a benign manner to variations in bill financing that were 

necessitated by the debt limit impasse, which extended from the 

fall 1995 through March 1996. The Committee consensus was that 

the Treasury had done what it needed to do in the debt limit 

situation, but, for cash management in more normal times, the 

Treasury should maintain relatively stable regular weekly bill 

auction sizes. 

The meeting adjourned at 4:10 p.m. 
The Committee reconvened at 8:30 a.m. at the Treasury in 

closed session. A11 members were present, except Mr. Kessenich, 

Mr. Lodge, Mr. Rosenberg, and Mr. Stark. The Chairman 

presented the Committee report (copy attached) to Under Secretary 

for Domestic Finance John D. Hawke and Assistant Secretary 

Bradbury. 

In response to questions, the Committee expanded on the 

discussion in the Committee report regarding the sizes of t36 10- 

year notes and the 30-year bonds, which the Treasury has decided 

to offer more frequently. 

The meeting adjourned at 8:50 a.m. 

11 K. Ouseley, Direct La- r 

ffice of Market Finance 

May 1, 1996 

Attachments 

Certified by: 

Richard 

d L*L 

Kelly, 

c. J 17 

Ch irman 

Treasury Borrowi g Advisory Committee 

of the Public Securities Association 

May 1, 1996