MINUTES OF THE MEETING OF THE 

PSA TREASURY BORROWING ADVISORY COMMITTEE 

OCTOBER 29 AND 30, 1991 

October 2 9 

The Committee convened at 9:00 a.m. at the Treasury 

Department. All members were present (see attached list). 

I gave the Committee an informational background briefing on 

Treasury's most recent borrowing estimates and historical 

information relevant to the refunding. The Treasury's estimates 

and background information were released to the public on 

October 28, 1991. 

The Committee also received a briefing by a Treasury staff 

member on recent events in the U.S. economy, which was followed 

by a question-and-answer period. Under Secretary Glauber then 

"chargedf1 the Committee to make recommendations on the November 

Treasury refunding and related matters (see attached charge). 

The meeting adjourned at 10:40 a.m. 

The Committee reconvened at 2:15 p.m. at the Madison Hotel; 

all members were present, except Stephen Francis, who was ill. 

The discussion began with a verbal consensus recommendation that 

the Treasury follow a regular financing plan and allow the cash 

balance to rise if borrowing needs proved to be less than 

anticipated. 

Prior to voting on the specific refunding package, the 

Committee briefly discussed, but did not vote on, each of the 

following ideas: (1) increasing the size of the overall 

financing package to $38.7 billion from the $38 billion offered 

in August; (2) cutting back the size of the long bond, by for 

example $1/2 billion, from the August level; and (3) announcing 

that the size-of the long bond would depend upon market demand. 

Once the size of the overall refunding package was decided 

unanimously, the Committee voted 11-5 to reopen the 7-7/8s of 

8/15/2001 and 13-3 to reopen the 8-1/8s of 8/15/2021. Reopenings 

were recommended to provide for larger, more liquid issues, which 

would be more difficult to squeeze. The recommended refunding 

comprises $14 billion of 3-year notes, $12 billion of 9-3/4-year 

notes, a reopening of the 7-7/8s and $12 billion of 9-3/4-year 

bonds, a reopening of the 8-1/8s. 

The financing plans that were recommended by the Committee 

for the rest of the October-December quarter and the JanuaryMarch quarter are included in the Chairman's report of 

October 30. Several members believed that the Treasury should 

give more emphasis to 52-week bills, a recommendation that was 

made formally in July. The Committee decided by consensus (no 
vote) that the appropriate levels of the Treasury cash balance 

are $30 billion on December 31 and $20 billion on March 31, the 

amounts used in Treasury's financing estimates. 

Members stressed the desire to have short when-issued 

trading periods between the announcement and settlement of 

Treasury auctions to reduce credit risk for market participants 

and the Treasury. It recommended that Treasury announce the 

November 2- and 5-year notes on November 20 for auction November 

25 and 26 (vote of 15-l), announce the February, May, August, and 

November 1992 midquarter refundings on February 5, April 29, 

August 5, and November 4 (unanimous), and recommended by 

consensus that Treasury announce the December 2- and $-year notes 

on December 13 or 16 (no vote). 

In a discussion of related matters, the Committee: (1) 

decided by consensus that the Committee's prohibition on members 

contacting their offices prior to the public announcement of the 

refunding would remain unchanged (no vote taken); (2) discussed 

some technical problems with the requirements that dealers who 

bid for customers report their customers1 positions in excess of 

$200 million and with written verification of large winning 

customer bids through dealers (no specific recommendations); and 

(3) suggested that there are credit risk questions that need to 

be better understood in connection with expansion of the number 

of government securities dealers that can bid for customers, 

announced by the Treasury on October 25. The sense of the 

Committee was that the technical matters should be brought up for 

discussion with Treasury officials, without specific 

recommendations at this time. 

The meeting adjourned at 4:30 p.m. 

October 30 

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

members were present. The Chairman presented the Committee 

report to Under Secretary Glauber. There was a question-andanswer period related to the Committee report. The meeting 

adjourned at 9:40 a.m. 

Attachments 

1 K. Ouseley, ~iredtor 

of Market Finance 

omestic Finance 

October 31, 1991