REPORT TO THE SECRFTARY OF THE TREASURY 

FROM THE U ,S, GOVERN.VE&T AND FEDERAL AGENCTE,S 

SECURITIFS COMKI??TEE OF THE 

PCGLIC SECL'RITIFS ASSOCIATION 

Mr, Secretary: 

Your Cornnittee bas net to review an* make reconnendatiinns 

concerninq Treasury finance durinq the first quarter of 1903. 

117 c~i"nir:itx~ t:!..'f? firmnrinij sriiedulf-. for t~F:4s crilartfr and 

i-ftr2,r. reviewin;. 2 pro-forr;,? financinq s::h~c?i.:lr: for r.kjc: Cetonc? 

qc1 rtcr we concl ii!!ri !-hat. p?st financinq prcact:icec an? scl:~;iuleii 

Lss.!i!s are suffiricnt kc> r:cet your needs, G?e discur:setl tile 

pr,s=lbility of cxpr:i?inq .;ither trhc four or five year note 

cSfei:inqc into nor'ii:iy cycles. I?e concltided tirt?t this actjon 

w:s nct new3er; at ti-tis tine but believe i.l rnay tre1.S I-c needed i,s 

vi r,ioqress into tl-c third cnlr~dsr quarter- Thc Ccmnitter 

bc:! i::veri tfiit tt-.? si7e of in?iViilrlal i SSUC-s S~OII?? he incr.(iil~-iiil v ,t8~s.i a::, ~;<;?sil~l(~ Pr?f.ore the freqccnncy cjf offeri r~cl?; i.s i,~;cr<?asc:<! 

Irn ncltcx? tbz t sc.vcr;i? otrart err aqr: hrc in L 3 t then 

be1 ieve-7 were the outsir3.r 1 irii ts for. the size of vat-ioils issiiis 
and in all cases these limits have been exceeded hy a substantial 

perceptage, We also would note the beneficial effects of the 

two week breathinq spell created hy the nuarter-end hunchinq of 

new issues into a "mini-refunding" week. 

As we exanined the pro-form financing schedules for the 

first half of 1983, howevrr, we were disturbed hy the relativelv 2 

high yroportion of rioney raised in the hill mrket, We attenI?teii 

to ease the situation sonewhat. hv increasinq amounts of lonqer 

hills anid wou1i1 urye Treasury whenever possible to reduce hill 

offerinijs if financinq needs fail short of projections. The 

Comcittee also discussed a potential reduction in investor denan6 

for hills due to lower interest rates am? the advent of the 

new money narket accounts at financial institutions, 

TSe Cornnittee continues to feel that debt extension and 

the fosterinq of an upwarij slopinq yield curve should he priniiry 

tenets of Trrasurv debt ~ina~enenk polic-. 

m5.: hillion 10 veal- cotes to naturc 2/15/93 
Shoiild Treasury opt for a smaller refunding, the Committee's 

preference by a vote of 15 - 8 would he to reduce the lonq kond 

by $250 nillioi. and the three year note by $500 nillion, The 

mincritv woi!Td reiiuce the ten year note hy $500 pillion, Icilvinq 

the three year note issue size at $6-5 billion, 

In regard to the lonq hond cfferinq, the Cor-tittee voted 

17 to 6 to reopen the 11/15/12 issue feeling it desirak!e to 

reopen issuer rather than add further clutter to the already 

lonn list of Trcas!!ry issues, The Connittee reconmends the 

uscal scheduli. of offerin? dates and that all isrues be soli3 

at auct.ion, The Coilnittee believes that the reopened long bond 

shw~ld i-e sold under the yield ailction technique finding tne 

present method of dollar price hiddin4 highly cumber, '2 one . 

- Financina in the Balance of the Quarter 

Appende~' io this report are schedules containinq the 

Coilnittee fin?r!cinri I-(?commendations for the halano? of the! 

quarter. Tic ri:cor~.r?nciations fo!l0+7 past patterns of Treasury 

financi~? am? utilizi! cas!, manaccment hills a:: ti'<! ba3anci. 

wheel if nee?? over- or :.inder-stloot projections. A similar 

sci'e6r!lr is - t tric!-cx' for the scccwi q~arter. 

1; i G . T;: V: or 

Cha irmn 
Summary of January - March Quarter New Poney Flnancinq 

Already Raised or Announced 

Rentliar i;eeF.Zv Rills (includes 1/27 ki11) + 7-93 

Regular One-Tear Ri1l.s I + 2*2i 

2-Year Not.es + 2,62 

"?-Year Notes + 4-50 

20-Year Eorr-1% + 3-00 

less: Cash Planagenent Rillr; - 9.00 
Projected TreaRtiry Financing Schedule First Quarter 1983" 

(in billions of dollars) 

Maturinq New 

Xzsue Datr Security (privately held1 Bfferlng 

Issued or Arnoua 

January 4 

4 

6 

1 .? 

20 

2 0 

2 7 

25 

2 5 

3 l 

TO Be Dcre 

Februar'j 3 

10 

15 

17 

2 L 

'. 5 C . 

LP 

warci: 5 

7-year ncte 

20-year bond 

3-and 6-mcntb hills 

3-and 6-nonrb bills 

+an2 6-nonth !dis 

50-day cast mc:. hills 

1-year bili 

?-an6 6-montt, t.il1s 

e. />-day cask not, hills 

2-year note 

A+siirn:rg refundinq of 514.25 billion and end of quarter 

baia~ce $10.0 billicn, 

Maturinn amounrs for coupon issues are net of holdinq 

of foreign official investors. Projections assume addons of new issues to these investors will approximate 

of maturinfl securities. 
Prclected Treasury Financing ScheOule Second Quarter 1983 

(in billions of dollars) 

ISSUE Datc 

April 5 

Ma tiirlng New 

Security (privately held) Offer~nq Net 

l-year note 

20-year bond 

3-an3 6-nontt bills 

3-end E-7,ontt bills 

3-am3 6-nonth hills 

I-year bill 

Cash mqt. hills fls~ Otr.) 

3-an8 6-month hills 

Cash nqt. hills (li/6:8?! 

Cash nqt. hills (1st Otr,) 

?-awl h-r.r?rtb. hi!!:; 

5-1-cc r net? 

i-and -0. kills 

1-year bill 

?-an% 6-lonth k,ills 

Cash nqi. bill= 11zt 0tr.j 

3- C-m.-ntt; hills 

4-year octe 

2-year note 

3-nr:4 6-wmntk;s hills 

Fori.gi '3 R"1-onr 

To--i Ntt Eew Cash 

NOT?: End of Quarter Ealanee Assumptions $20.0 billion. 

Kmturing amrants for coupon issues inciuez foreign hoidlnq 

Additional cash manaqerne~t bills needed in April and June. 
REPORT TO THE SECRETARY OF THE TREASlJRY 

FROM THE U, S, GOVERNMENT AND FEDERAL, AGENCIES 

SECURTTTES COMMI'CTEF. OF THE 

PUBLIC SECURITIES ASSOCIATION 

Mr, Secretary: 

The piiriormance of the Treasury securities rnarke i: and, 

indeed the performance of the capital and money markets generally, 

during the last two quarters has been remarkable. Rack-to-back 

quarters of Treasury new money needs exceeding S55 billion have 

Seen financed, the huge year-end bulge in state and local needs 

was met and a substantial corporate calendar was accommodated-- 

all within a relatively stable interest rate environment. 

This performance in the First quarter of 1983 is even more 

reinarkable when viewed in the light of conti,nued :Lack of progress 

in reducing the size of projected Federal deii.cit. levels and 

substantial nerv?usness over money supply growth and a yeneral~ 

helief that the Federal Reserve has moved to a somewhat less 

accommodati.ve monetary policy. 

.As we move into the sccon~l quarter of 1983, market psychology 

is brightened by signs of a calming in money supply growth rates 

aiid an economy on track wjth a forecast of gradual and hopefully 

sustainable growth, The reality of a parade of favorable price 

statistics is finally beginning to catch the attention of investors 

and, were it nut for this deficit overhang and resultant financing 

needs, there would be huildi ng pressures to squeeze sone nf the 

inflation premium out of the interest rate structure. 

The financing environment for the current quarter may be 

quite propitious. Private demands fur credit remain moderate and 

Invesiors9emani~s for fixed income securities are high--further 

stimulated hy the upward slope of the yield curve. rijhi.le many 

seers believe that these conditions may continue for a number of 

months, yoilr Committee believes that you should act bold1.y at this 

time to take advantage of the! present sihiiation. 'Phus, our 

rcco;xmendnt.ions for this refiinding and the halance of the quarter 

contemplate no retreat from the aqgressivc financing patterns of 

the last three quarters. 

rash Balances 

'The Com7iittc.e by 3 vcke of 1.6-7 recommends a .June 30 closing 

cash kal.~nce of $20 hi1 lion or somewhat higher. Our Eiinanciiq 

package for the cjuartrer would actually produce a closirq balance 

i?f S21 . 5 hi]. lion- 'i'l?e dissenti nq members ail iuoulii op"i_or a 
target June 30 cash balance of $24-$25 billi.on thus moving forward 

more of the third quarter's anticipated financing needsThe Committee concurs in a $20 bxllion target for the 

September 30 cash balance* 

----- The Current Refunding -- 

The discussion sixrounding our refunding recomrnenda tions was 

an unusually spirited one, You may be assured that the recomrnendations you are about to receive have been discussed and examined 

from all possible angles, The vote approving this recommendation 

was 18 to 5, To refund $5-2 hiLlion in maturing May 15 notes, we 

recommend the Treasury auction $15,5 billion of the following 

securities: 

$6.5 billion 3 year notes to mature 5/15/86 

$5-0 billioin 10 yedr notes to mature 5/15/93 

54-0 billion 29-1/2 year bonds to mature 5/15/2012 

(a reopening of an existing issue) 

$15 -5 billion 

These issues would be auctioned in the customary sequence on 

May 3, 4 and 5, The refunding would produce $10.3 billion in new 

cash, The Committee is not concerned about the resultant size of 

the issues created by adding $6*5 billion to the existing 5/15/86 

maturities or the reopening of the long bond, 

Committee members voting for this proposal ( 18) are confident 

as to its market reception and the distribution of issue sizes 

within the $15.5 billion 'recommendation, Those dissenting had a 

variety of reservations primarily relating to the size of issues 

within the $153 billion package. The most common alternative 

would involve the reduction of the three year issue by $500 million, 

adding that amount to the ten year. A small minority of those 

clissenting would transfer $500 million from the long bond to the 

ten year note. There were no members who felt that the overall 

amount of the refunding package should be smaller, 

Financing Over the -~ Balance of the Quarter 

Appended to this report is a schedule offering our recommendations for financing during the balance of the second quarter, As 

you will note, this schedule recommends adherence to your normal. 

pattern of offerings and in amounts the same as in the first quarter 

uf this year& With a $15.5 billion refunding and utilizing your 

current cash flow projections, this schedule of offerings produces 

a $21'5 billion cash balance at June 30- As we i,ndicated earlier, 

this is an acceptable level to the Committee. Should conditions 

make it possible to modestly reduce your: offeri.ngr, during the quarter, 

the Corninittee recommends reductions in regular weekly hills, 
Financing R-nd Thls Ouarter -- - -- -- 

You will also find appended to this report pro-forma financing 

schedules For the last two quarters of 1983* They, nt course, are 

very tentative hut are instructive, From them, the principal conclusion that can be reached is that it does not appear that there 

will he a need during 1983 for the introduction of new cycle notes, 

It seems likely that existing patterns with somewhat increased 

individual issue si.zes wi! l he sufficient t;o meet Treasury % needs. 

IF. is also encouragi,ng to note that the Treasury hill component 

of your financing remains in the recommended 25-30% range thus continuing to augment the important principles of debt extension and 

the fostering of an upward sloping yield curve. 

Awards rn Bill Auctlons - 

In recognition of the great]. y i.ncreased size of Treasury bill 

offerjngs, the Committee unanimously recommends increasing noncompetitive awards to the Sl nillion level from $500,000 currently. 

Mr, Secretary, we commend you and your Treasury financing team 

for agqressive.Ly tackling the task of financi.ng unprecedented needs 

for Federal borrowing' Thus far, in the view of many; these needs 

have been filled wi. th surprising ease, This Committee stands ready 

at any the to he of service and we are ready for your quest-ions, 

Respectfully submitted, 
ISSUE ANALYSIS OF APRC1.-JUNE 0UAM'F:R NtN MONLY FINANCING REMAINING '1W 13E JXNE 

WF:EKI,Y 

BILLS ~~S~~I)iNG - 

PROJECJXD 

SIZE --- 

2-Year Notes: , -- 

(5/31 maturity) S 4.2 $ 7.8 

(6/30 maturity) S :4,1 S 7.5' 

5-Year Notes: 

(1st half of ,June) -0- $ 5-5 

4-Year Nates: 

(6/3Umatiirrty) S2,7 S 5.5 

POraIGV 

NEW C.%5H 

--- 

--- 

--- 

--- 

--- 

--- 

--- 

--- 

--"a 

--- 

+$ .5 

+$ -5 

+$ -3 

+s -5 

--- 

- CS -3 

Rireicly done ......... ".* 6.2 

+m 

Opmirx; Cash iin'ta~ce S 15-5 

Pefici t + Net of 

Forei(jn+State+local -36.0 

Cl ?r;lrq I'a+h Balance S - 21.5 -- 
ISSUE ANALYSIS OF JULY-SEPTEMBEQ QUARTEHEX YONEY FINANCING WAINING TO 4E DONE 

(5 Billions) 

FOREIGii YE2 CASH 

1-Year Bills: 

(7/14 maturity) $ 6.0 

(8/11 maturity) $ 6.3 

(9/8 maturity) $ 7,1 

2-Year Notes: 

(7/31 maturity) J 4.5 

(8/31 maturity) $ 4-8 

(9/30 maturity) $ U.8 

5-Year Notes: 

(First nalf of -0- 

Sept, ) 

4-Year Notes: 

7-Year Motes: 

(Firsr ~ali of -0- 

Jui~) 

20- Year Bonds: 

(First naif of -0- j 3.5 

July) Qefundf no : S 5.5 - $15.0 

c- JLOZ.? $223.0 
($ BILLIONS) 

PROJECTED FOREIGN NEX CASH 

MEEKLY BILLS OUTSTANOI:4G SIZE NEW CASH RAISED 

1 0/6/83 312.6 $13.6 --- +4 1.0 

10/13 $12-6 $13,6 --- A$ 1,0 

10/20 $12.6 S3,6 --- +$ 1 ,0 

10127 512-6 $1 3.6 --- A$ 1.0 

11/3 $12.6 $13.6 --- +$ 1.0 

71/10 $12-6 313,6 --- +$ 1.0 

11/17 $12-8 $13.6 --- 4-9 .8 

11/25 $12-8 $13.6 --- +S .8 

12/1 ~12.a $13.6 --- +$ '8 

12/8 $12.8 $13-6 --- +$ .8 

12/15 $12-8 $13-6 -- - +$ .B 

12/22 $12-8 $13.6 --- +$ .8 

12/29 $12.8 $13.6 --- +4 .B A$ 11.6 

I-Year Bills: 

(10/6 maturity) $ 7.0 $ 8.0 --- +$ 1-0 

(11/3 maturity) $ 7-0 3 a.0 --- +$ 1.0 

(12/1 maturity) S 7.0 S 8,O --- +$ 1.0 

(12/29 maturity) $ 7.1 $ 8.0 --- +S .9 +$ 3.9 

?-Year Notes: 

(10/31 matur~ty) $ 4-8 +$ .S +$ 3-7 

(11130 maturity) S 4.8 +$ .5 +$ 3.7 

(12/31 maturity) $ 4.9 +$ .5 +$ 3-7 +J 11,l 

5-Year Notes: 

(First half of -0- 

Dec,) 

&-Year Nates: 

(12/31 maturity) S 2-4 

7-Y ear Votes : 

(First half of 

Oct-) -0- 3 5.3 

20-Year Bonds: - 

("irst naif c~f !let.)-0- s" 3-5 
REPORT TO TI3E SECRETARY OF THE TREASURY 

FROM THE U*S, GOVERNMENT AND FEDERAL AGE!UCIES 

SECURITIES COMMITTEE OF THE 

PUBLIC SECURITIES ASSOCIATION 

July 27, 1983 

Mr, Secretary: 

Record levels of Treasury financing have been absorbed 

by the markets durjhg the last two quarters of 1382 and 

the first quarter of 1983 with little difficulty* In the 

yuarter just past total net market borrowing of $41-5 billion 

was accomplished with few signs of strain until the minifinancing conducted in late June. It is probably fair to 

say that the distribution of those issues was difficult and 

did add to the upward rate pressures already existent at 

that time. 

In recent weeks, markets have in general been under 

pressure related to fears associated with a much stronger 

recovery than anticipated and Ml growth that continues 

outside of target ranges. The Federal Reserve's resetting 

of boundaries for MI produced an initial market rally that 

was quickly reversed as second quarter GNP statj.stics became 

known and additionbl dimensionfng of the degree of the 

recovery k strength took place. 

While private demands for credit remain weak, markets 

now seem to be more concerned about an eventual clash between 

private and public financing needs, This, more than worries 

about renewed inflation, may be responsible for the substantial 

weakness demonstrated in the longer sector of the market in 

recent weeks, In short, Mr, Secretary, we are now moving into 

a period where the fact of outsized public borrowing needs 

will be brought up against the reality of strong recovery and 

at least some evident snugging in monetary policy, The 

environment will be less propitious, the financing task even 

more challenging , 

Fortunately, and with foresight, Treasury financing 

policies during recent quarters have been conducted with an 

eye to maximizing the extension of the public debt, minimizing 

the use of bills and aggressively expanding the size of issues, 

While this Committee recommends continuance of these policies, 

we also believe that j.n the period ahead a more "gentle touch" 

nay at times be desirable, The job must he done, however, 

and we believe that policies followed over the last few 

quarters are appropriate to the future, 
It is with the foregoiny thoughts in mind that the 

Committee presents its reconimendationsCash Balances 

Cash balance targets of $20 billion on September 35 and 

$15 billion on December 31 were unanimously voted by the 

Committee. Net market borrowing of $8 billion in the current 

quarter and $5 billion in the fourth quarter will be eliminated 

by these reductions in cash balances, Considering the 

financing burden in the next three quarters, however, the 

Committee views the recoininended levels as minimum levels to 

be exceeded if events permit, 

- The Current Refunding 

The Committee, after much debate, recommends a $16 billion 

refunding package which will raise $9-4 billion in new money. 

There were 15 votes in favor of this amount with 6 members 

opting for a $15,5 billion refunding. There was discussion 

of a $16-5 bi.llion package but it was rejected as it was 

thought that this was not the time to surprise the market by 

exceeding general expectations, Those opting for the 

$15.5 billion level were mindful of the late June signs of 

less market demand and felt a nod in the direction of less 

new issue supply might improve conditions at least in the 

short term, A review of the financing needs ahead and general 

expectations that the environment is unli.ke1y to improve in 

the near future won the day for $16 billion in the current 

ref u~ndinq, 

The Committee 

$6.5 bll 

$5,5 bil 

recommends the follow~ng refundrng package: 

lion 3 year notes to mature 8/15/86 

lion 10 year notes to mature 8/15/93 

$4.0 billion 30 year bonds to mature 8/15/2013 .- - (with the usual 25 year call feature) 

$16.0 bi,iJ.ion 

The above version of a $26 billion refunding was also approved 

by 1.5 votes. Six members would prefer $7.0 billion of 3 year 

notes and $5,0 billion of 10 year notes. The discussion here 

centered on the market" preference for 3 year versus 10 year 

notes and the need where possible to foster an upward s1.ope 

to the intermediate and longer term portions of the yi.eld curve. 

The Committee recor~nmends the three issues be sold at 

auction on Tuesday, Wednesday and Thursday oE next. week. 
The Committee also recommends that the one year bill 

auctlon be pushed off to the ureek fullowiny the refunding and 

sold on Tuesday, August 9. 

Financing Over the Balance - of the Quarter -- 

Appended to this report is a schedule offering our 

recommendations for frnancl ng during the balance of the thlrd 

quarter. 

The schedule contains no surprises and contemplates 

issue sizes approximating those already tested in previous 

periods, If followed, the pro forma schedule will result in 

a bill component of less than 20% of net new financing which 

is well. within our recommended guidelines of 25-308- 

One important conclusion reached by the Committee rn 

discussing future financing was to recommend a cap of 

$8.0 billion on the size of new offer~nys of 2 year notes 

feeling that amounts above this size were lrkely to exert an 

outslzed effect on market rates, 

aFinancing in the Fourth Quarter - 

Also appended to th~s report is a pro forma financing 

schedule for the fourth quarter that would produce net market 

borowing of almost $60 blllion, It contemplates the use of 

$8 billron in cash management bills, If needs exceed 

$60 billion, additional cash management bllls could be sold, 

$12 billion were issued rn Lhe fourth quarter of 1982. 

The most important conclusion to be gained from examining 

the fourth quarter financing schedule is that it does not 

appear that there will be a need to institute an additional 

note cycle, The Committee feels it important to look ahead 

at this possibility as the market should be notified in 

advance of the initiative to institute a new cycle, 

-- When Issued Tradlng 

The Committee is highly concerned about potential problems 

associated with when issued trading in Treasury securities 

and the potential attempts to regulate this activity or 

centrally monitor such trades, 

We believe strong considerat-inn shou1,cl be yj.ven to 

shortening the time between the annnunccinent oE issues and 

their se"L.L.iement dates, We believe that two or three days 

notice of an intended offering prior to its auction is 

sufficient and that final settlement might well be moved up a 

full week after an issue is auctioned, 
Were this done, the potential for abuses would be sharply 

reduced and the benefits accruing to Treasury from pre-auction, 

when issued trading would be preserved, 

- The Committee" ----- Rate Forecast 

Your Committee was asked in a meeting by a prominent 

Treasury official for its views on the outlook for interest 

rates, There beiny no response, we have subsequently caucused 

and offer the following: Projections at 12/31/83. 

Short term rates (as defined out to one year): 

Lo we r 6 members 

Higher 12 members 

Unchanged 3 members 

Long Term rates (as defined 20-30 years): 

Lower 5 members 

Higher 14 inembers 

Unchanged 2 members 

With that bit of whimsy, I close this report. 

We are ready for your questions, 

David G, Taylor 

Cha irrnan 
hEPORT TO THE SECRETARY OF THE TREASURY 

FROM THE U. S. GOVERNMENT AND FEDERAL 

AGENCIES SECURITIES COMMITTEE OF THE 

PUBLIC SECURITIES ASSOCIATION 

ii;- - 3 -, ,

Mr, Secretary, 

As a preamble to this report, your Committee can offer 

little to augment or interpret the facts of the current 

financing environment, Factors have combined to smooth the 

way for continued successful Treasury sorties into the market, 

Lower than expected net new borrowing needs have of 

course been a factor as have projections showing that lower 

than anticipated financing needs have continued into the 

current quarter. 

The calming of money supply growth rates and the apparent 

modest shading of monetary policy toward a bit more reserve 

availability have been very helpful in shaping investor 

attitudes at least in the short term. 

Still there lingers the fear amony many that the strong 

economy will eventua-ly produce private credit demands that 

will collide with public needs for funds, Some observers 

would say the current respite may eventually make its collision 

more dramatic. 

There is, however, a strongly held point of view that 

with money under control, inflation confined to reasonable 

levels and prospects that'the robust pace of the recovery may 

be reduced--stability and even some modest decline in rate 

levels may be forthcoming in future months, 

In cons~deriny financing strategy under the dual benePits 

of stable market conditions and lower than expected cash 

needs, the Committee feels that there is opportunity to 

further address the structure of the debt by continuing to 

lengthen maturities and at the same time, continue to foster 

an upward sloping yield curve which will further auqmen'c the 

attractiveness of longer maturity Treasury securities, 

Thus, itn our recommendations, you will note the thread of 

continued aggressive use of coupon issues and the reduction of 

bill offerings where mssible, in fact, the Committee b~lieves 

that as the amount of net market borrowings is reduced (in 

concert with declining deficits), that net additions to the debt 
be sought. through coupon offerings leaving the bill component 

of the debt relatively stable, 

Treasury Cash "- Balances 

Because of the manner in which settlement dates fall on 

the December and March quarter-end financings, the Committee 

believes that cash balance goals at December 31 and March 31 

should be set at $10 billion. This provides adequate working 

cash on those dates and balances are substantially augmented 

immediately after both quarter ends, 

The Current Refunding 

The Committee after a thorough discussion and a vote of 

18-3 with one abstention recommends the fol1owing package to 

refund $5,9 billion in maturing November 15, 1983 securities: 

$6.25 billion 3 year notes to mature 11/15/86 

$5,5 billion reopened 11 7/8% notes of 8/15/93 

$4.25 billion reopened 12% bonds of 8/15/2013 

$16.0 billion 

It is deemed desirable to reopen the latter two issues and 

current price premiums are not ludged to be onerous to 

investors' interest in the issues. 

We recommend that these issues be sold on a yield auction 

basis in the usual order during the week of October 30. 

Financing Over the Balance of the Quarter 

Appended to that report is a schedule offering our 

recommendations for financing during the balance of the fourth 

quarter. The financing schedule contemplates no net new 

financing in regularly offered bills, the modest use of cash 

management bills and the bulk of your financing needs met 

through the use of coupon issues, This recommendation is 

consistent with the financing strategy set forth earlier in 

this repcrt, 

Financing in the First Quarter of 1984 

Also appended to this report is a suggested financing 

schedule for the first quarter of 1984, This plan would 

raise $55 billion in new money, approximately 25% in bills and 

75% in coupon offerings, 
The financing plan would limit 2-year note offerings to 

our suggested cap of $8.0 billion and - not require the 

introduction of a new cycle note. 

Offerings of 20 Year Bonds 

Prom time to time the Committee has revisited the 

question of the advisability of the utilization of 20 year 

bonds as a financing vehicle, This questioning arises as the 

20 year bond generally sells at a high level against the 

yield curve and does not enjoy a relatively high level of 

aftermarket trading activity. 

In past discussions, the Committee has concluded that in 

spite of these drawbacks, the heavy needs of the Treasury 

mandate the use of all appropriate and available slots. 

Furthermore, there is a demand for 20 year bonds and those 

that purchase these generally appear to hold them for investment 

rather than for trading purposes. 

In our discussion at this meeting, there was a discernable 

movemen? in sentiment toward taking a less positive view of 

20 year bond financing, n suggestion that would be met 

with favor by many Committee members would be to begin phasing 

out 20 year financing in favor of more 30 year financing 

where demand is more consistent and pricing more favorable. 

The additional point was raised that this would move greater 

weight to the important mid-quarter refunding* 

We believe that this matter might receive more study on 

the part of Treasury staff and could be an item that the 

Committee could contemplate further at a future or special meeting, 

When Issued Trading 

The Committee commends the Treasury for its announced 

intention to shorten the when issued trading period in 

connection with its security offerings, We understand the 

operational problems that this may present initially and 

individual members are available for consultation if needed, 

Changes in Securities Accounting for Banks 

The Committee believes that recently promulgated changes 

by the Office of the Comptroller of the Currency concerning a 

change from settlement date to trade date accounting fore 

securities and treating commitments on a gross rather than a 

net basis may have a detrimental effect on the viability of 

the Treasury market, 
These changes, it would appear, would result in a substantially greater use of capital by bank dealers and may 

well reduce bank secondary market activity, 

We urge that appropriate officials in Treasury review 

these changes in relation to their potential effect on the 

market for Treasury securities, 

Respectfully submitted, 

David G, Taylor 

Chairman 
TREASURY MARKET BORROWING -- 3CTDBER-DECEMBER 1983 

(In Elllions of Dollars) 

2%. Cam~?ted --. or .?&nnounced throuqh October 24, 1983 

Bills 

Amount Foreign Amount New 

Of fered -- Add-Ons Maturing - Cash 

Weekly Bllls 48.1 - 49,9 -1.8 

52-Week Bills 15.5 - 14-0 +1 . 5 

Cash Management - - - - - - - - 

Subtotal 63,6 - 63-9 -.3 

2-Year Note 

7-Year Nore 

20-Year Bond 

Subtotal 

TOTAL 
'TnEASURY NARKET BORROWING 

OCTOBER-DECEMBER 1983 

(Tn hillions of dollars) 

- B, To BC Announced After October 24, 1983 -- 

AMOUNT FOREIGN AMOUNT 

WEEKLY BILLS OFFERED ADD-ONS MATURING 

52-WEEK BILLS 

12/1 8.0 

12/29 8.0 

CASH MANAGEMENT 

December 

Subtotal 

NEW 

CASH 

COUPONS 

2-Year Mote 8.0 35 4-8 3.55 

5-Year Note 6.0 - - 6.0 

Nov. 15 RefundLng 16,O - .4 5 , 9 10.50 

Subtotal 29.75 .75 10.8 20-05 

- TOTAL 159-35 ~75 136.8 25.25 

NOTE: Assumes $i0,0 billion cash balance on December 30, Also 

$5.0 billion of cash management bills may be needed in 

early December, which will be repaid before month end. 
ISSUE 

--m u~AIKATED TREASURY MARKET BORROWING 

JANUARY-MARCH 1984 

(In billions of dollars) 

AMOUNT FOREIGN AMOUNT 

OFFERED -- ADD-ONS MATURING 

--- BILLS 

Weekly Eills* 166,8 

52-Week BillshX 24-0 

Cash Management 10.0 

Subtotal 207.0 186.9 

COUPONS 

2-Year Note# 

4-Year Note 6.25 -3 2.4 

5-Year Note 6.0 - - 

7-Year Note 5.3 - - 

20-Year Bond 3% 8 - - 

Feb 15 Refunding - 17.0 - -3 - 4,5 

Subtotal 62-85 1-5 22.7 

GRAND TOTAL 269.85 1,5 209 = 6 

NOTE: Assumes a balance of 10.0 on March 30. 

NEW 

- CASH PERCENT 

"Assumes offerings of $12-8 in January and thereafter, 

**Assumes offerings of 8,O in January, February and March, 

t Assumes offerings of $8.0 in December, January and February.