MINUTES OF THE MEETING OF THE

TREASURY BORROWING ADVISORY COMMITTEE 

OF THE BOND MARKET ASSOCIATION

May 2, 2000 

The Committee convened at 9:10 a.m. at the Treasury Department for the portion of the meeting 

that was open to the public. All members were present except Mr. Druckenmiller. The Federal 

Register announcement of the meeting and a list of Committee members are attached. 

Assistant Secretary for Financial Markets Lee Sachs welcomed the Committee and the public to 

the meeting. John Auten, Director, Office of Macroeconomic Analysis, summarized the current 

state of the U.S. economy (statement attached). Paul Malvey, Acting Director, Office of Market 

Finance, presented the chart show, updating Treasury borrowing estimates and historical debt and 

interest rate statistics. 

The public meeting ended at 9:40 a.m. 

The Committee reconvened in closed session at the Madison Hotel at 11:35 a.m. All members 

were present except Mr. Druckenmiller. Assistant Secretary for Financial Markets Lee Sachs 

gave the Committee the charge, which is also attached. 

The Committee began by discussing Treasury's experience with debt buybacks, noting that the 

buyback program to date has been highly successful, characterized by broad domestic 

participation, high cover ratios, and tight distributions of accepted offers. 

Regarding how the Treasury might adjust the buyback program going forward, it was the 

consensus of the Committee that any approach that reduces uncertainty while maintaining 

flexibility is in the interests of the Treasury. In general, the Committee expressed a preference for 

smaller, more frequent operations conducted over limited maturity ranges. It also recommended 

that the Treasury announce the intended buyback amounts on a quarterly basis, giving the 

markets an indication of the frequency of operations and the timing. 

Committee members noted that the frequency of operations, in conjunction with quarterly 

targeted amounts, would affect operation sizes. More frequent operations, for example, weekly or 

biweekly, would make the operation more routine, or less of an event. Also, smaller sizes ($500 

million to $2 billion depending on the frequency of operations) would be less disruptive to the 

markets and thus result in better offers - as long as sizes were not so small as to result in a loss of 

dealer interest. The Committee felt that smaller, more-frequent operation sizes required narrower 

maturity ranges for the operation, between 3 and 5 years and between 10 to 15 securities. 

Regarding the length of the announcement period, the Committee observed that it could probably 

be shortened to one day without affecting the program, particularly if Treasury were to adopt a 

regular buyback schedule. A one-day time lead would still be sufficient to allow overseas 

investors to participate. 

Finally, the Committee also generally believed that Treasury would have to conduct buybacks in 

other sectors of the maturity spectrum, and include callable issues. This was considered necessary 

because as the buyback program progressed, liquidity would eventually diminish in particular 

sectors which would affect offer prices. 

Next, the Committee considered what additional adjustments Treasury may need to eventually 

make to its financing schedule given the continuing improvement in the fiscal situation. The 

Committee reaffirmed its preference, made in previous meetings, that if the fiscal situation were 

to continue to improve, Treasury should consider eliminating the 52-week bill, as it is viewed as 
providing the least utility to Treasury and the market relative to other instruments. Following that, 

if further reductions in issuance are considered necessary, the Committee recommended that the 

frequency of 2-year auctions be reduced from monthly to quarterly. It was the consensus of the 

Committee that Treasury would probably not have to implement these adjustment before the end 

of FY 2000. 

Looking at the remainder of the April-June quarter, the Committee unanimously recommended a 

reopening of the 6-1/2% 10-year notes of 2/15/10 in an amount of $8 billion. Also by unanimous 

vote, the Committee recommended issuing $14 billion of a new 5-year note. The Committee 

noted that if the 5-year auction results in a yield between 6.500 and 6.624, the 5-year note would 

be a reopening of the outstanding 6-1/2% 5/15/05. The Committee's recommendation for 

financing for the remainder of the quarter and for the next quarter are included in the attached 

tables. 

Finally, some members of the Committee suggested that Treasury study the idea of establishing a 

facility that would permit bondholders to regularly swap their outstanding notes and bonds, 

within a particular maturity tranche, into newer, more liquid benchmark issues. Such a 

mechanism would enhance benchmark liquidity as well as overall market liquidity. 

The meeting adjourned at 1:07 p.m. 

The Committee reconvened at the Madison Hotel at 6:10 p.m. All members were present except 

Mr. Druckenmiller. The Chairman presented the Committee report to Undersecretary Gensler and 

Assistant Secretary Sachs. A brief discussion followed the Chairman's presentation, but did not 

raise significant questions regarding the report's content. 

The meeting adjourned at 6:25 p.m. 

Paul F, Malvey, Acting Director 

Office of Market Finance 

May 2, 1999 

Attachments 

Certified by: 

Kenneth M. deRegt, Chairman 

Treasury Borrowing Advisory Committee 

of the Bond Market Association 

Last Updated May 2, 2000 
May 2, 2000 

COMMITTEE CHARGE

The Treasury would like the Committee's specific advice on the following: 

• Given Treasury's experience to date with debt buybacks, what recommendations do you 

have regarding the program, specifically in terms of operation size, regularity, maturity 

range, and notice period? 

• Given the evidence of continued improvement in the fiscal situation, what 

recommendations does the Committee have regarding issuance sizes and frequencies? In 

particular, would the Committee recommend further adjustments in the frequencies of our 

auctions for 52-week bills or 2-year notes? 

• What recommendations does the Committee have with respect to: 

The composition of a financing to refund approximately $30.6 billion of outstanding 

debt, consisting of $27.8 billion of privately held notes and $2.7 billion of called bonds, 

on May 15 and to pay down approximately $8.6 to $10.6 billion of cash. 

The composition of Treasury marketable financing for the remainder of the April-June 

quarter, including cash management bills if needed. 

The composition of Treasury marketable financing for the July-September quarter. 

Any other topics related to Treasury's debt management program. 
Federal Register / Vol. 65, No. No. 66 / Wednesday, April 5, 2000 / Notices 

DEPARTMENT OF THE TREASURY

DEBT MANAGEMENT ADVISORY

COMMITTEE MEETING

Notice is hereby given, pursuant to 5 U.S.C. App. §10(a)(2), that a meeting will be held at the 

U.S. Treasury Department, 15th and Pennsylvania Avenue, N.W., Washington, D.C., on May 2, 

2000, of the following debt management advisory committee: 

The Bond Market Trade Association 

Treasury Borrowing Advisory Committee 

The agenda for the meeting provides for a technical background briefing by Treasury staff, 

followed by a charge by the Secretary of the Treasury or his designate that the committee discuss 

particular issues, and a working session. Following the working session, the committee will 

present a written report of its recommendations. 

The background briefing by Treasury staff will be held at 9:00 a.m. Eastern time and will be open 

to the public. The remaining sessions and the committee's reporting session will be closed to the 

public, pursuant to 5 U.S.C. App. ß10(d). 

This notice shall constitute my determination, pursuant to the authority placed in heads of 

departments by 5 U.S.C. App. ß10(d) and vested in me by Treasury Department Order No. 101­

05, that the closed portions of the meeting are concerned with information that is exempt from 

disclosure under 5 U.S.C. ß552b(c)(9)(A). The public interest requires that such meetings be 

closed to the public because the Treasury Department requires frank and full advice from 

representatives of the financial community prior to making its final decision on major financing 

operations. Historically, this advice has been offered by debt management advisory committees 

established by the several major segments of the financial community. When so utilized, such a 

committee is recognized to be an advisory committee under 5 U.S.C. App. ß3. 

Although the Treasury's final announcement of financing plans may not reflect the 

recommendations provided in reports of the advisory committee, premature disclosure of the 

committee's deliberations and reports would be likely to lead to significant financial speculation 

in the securities market. Thus, these meetings fall within the exemption covered by 5 U.S.C. 

ß552b(c)(9)(A). 

The Office of the Assistant Secretary for Financial Markets is responsible for maintaining records 

of debt management advisory committee meetings and for providing annual reports setting forth a 

summary of committee activities and such other matters as may be informative to the public 

consistent with the policy of 5 U.S.C. ß552b. 

Lee Sachs 

Assistant Secretary 

(Financial Markets) 

Dated: March 29, 2000 
Treasury Borrowing Advisory Committee 

of the Public Securities Association 

Chairman 

Kenneth M. DeRegt

Managing Director

Morgan Stanley Dean Witter & Co.

1585 Broadway

New York, NY 10036

Vice Chairman 

James R. Capra 

President

Capra Asset Management, Inc.

555 Theodore Fremd Avenue Ste. C-204

Daniel S. Ahearn

President

Capital Markets Strategies Co.

50 Congress Street, Ste. 816

Boston, MA 02109

Richard A. Axilrod

Managing Director

Moore Capital Management, Inc.

1251 Ave of the Americas, 53rd Fl.

New York, NY 10020

Edward J. Breslin

Managing Director

Chase Securities, Inc.

121 Plandome Court

Manhasset, NY 11030

Richard S. Davis

Senior Vice President -

Head of Fixed Income Investments

Metlife Investments

334 Madison Avenue, PO Box 633

Convent Station, NJ 07961-0633

Stanley F. Druckenmiller

Managing Director

Soros Fund Management

888 7th Avenue, Suite 3300

New York, NY 10106

Stephen C. Francis

Vice Chairman

Fischer, Francis, Trees & Watts, Inc.

200 Park Avenue

New York, NY 10166

Rye, NY 10580 

Lisa W. Hess

Managing Director

Zesiger Capital Group LLC

320 Park Avenue

New York, NY 10022

Gedale B. Horowitz

Senior Managing Director

Salomon Smith Barney

388 Greenwich Street, 39th Fl.

New York, NY 10013-2396

Timothy W. Jay

Managing Director

Lehman Government Securities, Inc.

200 Vesey Street, 9th Floor

New York, NY 10285

Thomas L. Kalaris

President

Barclays Capital Inc.

222 Broadway

New York, NY 10038

Wayne D. Lyski

Chairman & Chief Investment Officer

Alliance Fixed Income Investors

Alliance Capital

Management Corporation

1345 Avenue of the Americas

New York, NY 10105

Michael Mortara

Partner, Co-head, Fixed Income Division

Goldman-Sachs & Co.

85 Broad Street, 26th Floor

New York, NY 1000417

Joseph Rosenberg

Senior Investment Strategist

Loews Corp.

667 Madison Avenue

New York, NY 10021-8087

Morgan Stark

Principal

Ramius Capital Group

Chrysler Center

666 Third Avenue, 26th Floor

New York, NY 10017

Craig Wardlaw

Executive Vice President

Bank of America

Mail Code NCI 007-0606

Charlotte, NC 28255-0001

Mark B. Werner

Managing Director

JP Morgan Securities, Inc.

60 Wall Street

New York, NY 10260

Charles D. White

Managing Director

Wells Fargo

Mail Station S4753-040

3300 West Sahara Avenue

Las Vegas, NV 89102