MINUTES OF THE MEETING OF THE 

TREASURY BORROWING ADVISORY COMMITTEE 

OF THE PUBLIC SECURITIES ASSOCIATION 

October 31 and November 1, 1995 

October 3 1 

The Committee convened at 11:45 a.m. at the Treasury 

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

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

Napoli, and Rosenberg. The Federal Reaister announcement of the 

meeting and a list of Committee members are attached. 

Deputy Assistant Secretary for Federal Finance Darcy 

Bradbury welcomed the Committee and the public to the meeting. 

Deputy Assistant Secretary for Economic Policy Daniel Sichel 

summarized the current state of the U.S. economy. Jill Ouseley, 

Director, Office of Market Finance, discussed charts, which had 

been released to the public on October 30, 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. 

November refundinq 

The Committee reconvened in closed session at the Madison 

Hotel at 2:10 p.m. The members were present who had attended the 

public briefing. Deputy Assistant Secretary Bradbury gave the 

Committee its Charge, which is also attached. The Committee 

first discussed the size of the November midquarter refunding 

within the context of the Treasury's estimate of a $61.5 billion 

net market borrowing requirement during the October-December 1995 

quarter. 

Committee members reviewed a financing proforma, also 

attached, prepared by the firm of one of the members, which 

included a November mid-refunding consisting of offerings to the 

public of $18.5 billion of 3-year notes and $13.5 billion of 10- 

year notes. The Committee voted unanimously to recommend these 

amounts, each of which is $0.5 billion above amounts offered in 

the August 1995 refunding. The Committee also approved 

unanimously a recommendation that the Treasury issue cash 

management bills maturing on December 21 and January 25. 

Before deciding to recommend a financing schedule for the 

January-March period, the Committee discussed the question that 

was posed in the Charge regarding changing regular Treasury 

security offerings to increase their size (at the current 

frequency) or to increase their frequency at reduced size 

beginning in the January-March quarter. 
The Committee referred to the discussion in its August 2, 

1995 report to the Treasury in which it recommended increasing 

the frequency of the 10- and 30-year issues, and reducing their 

size from the most recent offerings. Since Treasury borrowing 

requirements currently estimated for FY 1996 have declined from 

earlier estimates, the Committee does not believe both actions 

are necessary. They voted to recommend that, beginning in early 

1996, the Treasury increase the frequency of 30-year bond 

auctions to four times per year at a minimum size of $10 billion 

each (10 votes), rather than to recommend that the Treasury 

increase the frequency of 10-year note auctions to 8 times per 

year at a minimum size of $10 billion (6 votes). There were a 

number of members, however, who indicated that they could support 

increasing the frequency of the 10-year notes. 

The Committee then decided by consensus to recommend the 

financing plan that was labeled Alternative I in the proforma 

financing tables that had been provided by a member. 

The Committee briefly discussed Treasury issues of 

inflation-indexed bonds and floating rate notes, both of which 

have been debated extensively in previous Committee meetings. 

Given uncertainties surrounding enactment of an increase in the 

debt limit, however, the Committee did not make any specific 

recommendations. 

The Committee consensus was that November 10 is the latest 

day that the Treasury can unconditionally announce that it will 

proceed with auctions of 3- and 10-year notes for issuance on 

November 15. If these securities needed to be announced later 

than November 10, it would be preferable to announce cash 

management bills for settlement on November 15 and delay auctions 

of 3- and 10-year notes. 

Regarding the debt limit-related portion of the Charge, 

Committee members reported that the market does not expect the 

Government to default on its obligations and therefore has 

reacted only minimally to the debt limit debate to date. They 

agree, however, that defaulting on the Government's debt 

obligations would be horrific and long lasting. 

The meeting adjourned at 4:00 p.m. 
November 1 

The Committee reconvened at 9:00 a.m. at the Treasury in 

closed session. All members were present, except Messrs. Capra, 

Corzine, Kessenich, Napoli, and Rosenberg. The Chairman 

presented the Committee report (copy attached) to Under Secretary 

for Domestic Finance John D. Hawke and Deputy Assistant Secretary 

Bradbury. 

In response to questions, the Committee discussed the length 

of time required to sell securities, if action on legislation to 

increase the statutory debt limit is delayed. They also 

discussed the portion of the report concerning the consequences, 

if the Government were to default on Treasury securities. 

The meeting adjourned at 9:30 a.m. 

3 ' 1 K. d*- Ouseley, Di tor 

0 fice of ~arket ~iwce 

lBfoestic Finance 

November 1, 1995 

Attachments 

Certified by: , 

Stephen C. Francis, Chairman 

Treasury Borrowing Advisory Committee 

of the Public Securities Association 

November 1, 1995