TALKING POINTS 

FOR THE 

FINANCING PRESS CONFERENCE 

JANUARY 31, 1990 

Today we are announcing the terms of our regular February 

quarterly refunding. I will also discuss the Treasury's 

financing requirements for the balance of the current calendar 

quarter and our estimated cash needs for the April-June 1990 

quarter. 

1. We are offering $30.0 billion of notes and bonds to 

refund $18.1 billion of privately-held notes maturing on 

February 15 and to raise approximately $11.9 billion of cash. 

The three securities are: 

-- First, a 3-year note in the amount of $10.0 billion 

maturing on February 15, 1993. This note is scheduled 

to be auctioned on a yield basis on Tuesday, 

February 6. The minimum denomination will be $5,000. 

-- Second, a lo-year note in the amount of $10.0 billion 

maturing on February 15, 2000. This note is scheduled 

to be auctioned on a yield basis on Wednesday, 

February 7. The minimum denomination will be $1,000. 

-- Third, a 30-year bond maturing on February 15, 2020, 

in the amount of $10.0 billion. This bond is scheduled 

to be auctioned on a yield basis on Thursday, 

February 8. The minimum denomination will be $1,000. 

We will accept noncompetitive tenders up to $1,000,000 for 

each of these issues. If the auction of 3-year notes results in 
an average yield of 8.25 

the Treasury will reopen 

1993. 

2 

percent to and including 8.37 percent, 

the 8-1/4 percent notes of February 15, 

2. For the current January-March quarter, we estimate a 

net market borrowing need of $41.6 billion, assuming a $10 

billion cash balance at the end of March. We may want to have a 

higher balance, depending upon our assessment of cash needs and 

market conditions at the time. 

Including this refunding, we will have raised $24.5 billion 

of the $41.6 billion in marketable borrowing in the January-March 

quarter. This was accomplished as follows: 

$2.8 billion of new cash from the 2- and 4-year notes 

that settled January 2; 

$3.0 billion of new cash from the 7-year note that 

settled January 16; 

$.5 billion of new cash from the 2-year note that 

settled today; 

$5.8 billion of new cash in regular weekly bills, 

including the bills announced yesterday; 

$0.4 billion of cash in 52-week bills issued 

January 18; and 

$11.9 billion of cash from the refunding issues 

announced today. 

$17.1 billion to be raised in the rest of the JanuaryMarch quarter could be accomplished through sales of regular 

13-, 26-, and 52-week bills, 2-year notes in February and a 5- 
3 

year, 2-month note in early March. Cash management bills may be 

necessary to cover the low points in the cash balance. 

3. We estimate a paydown in a range of $5 to $10 billion 

in market borrowing in the April-June 1990 quarter, assuming a 

$35 billion cash balance at the end of June. 

4. The Treasury market borrowing estimates that we are 

announcing today for the first half of calendar year 1990 do not 

include any allowance for financing the working capital needs of 

the Resolution Trust Corporation. Such working capital financing 

will be temporary in nature and will carry assets of problem 

savings and loans at current market value until they can be 

disposed of by RTC. 

A decision has not been made as to the method to fund RTC1s 

working capital requirements. The Treasury and the RTC Oversight 

Board have indicated to Congress that three options are under 

consideration. Each of these options would replace the current 

financing for the assets that are held by troubled thrifts with 

funds from an alternate source. Therefore, on balance, there 

will be no increase in the total demand for funds in the credit 

market as a result of the RTC working capital program. 

One of the three options is borrowing from the Federal 

Financing Bank, which obtains its funds from the Treasury. 

Although there would be no net change in the total demand for 

credit, Treasury's borrowing requirements would increase 

temporarily if the FFB option were selected. 
Neither of the other two options -- financing through the 

Federal Home Loan Banks and through brokered deposits -- would 

affect Treasury borrowing requirements directly. We expect a 

decision to be made on the funding for RTC working capital in 

mid-February. At that time, we will be in a better position to 

identify the impact of RTC working capital on Treasury borrowing 

requirements. 

5. We expect the financing needs of the Resolution Funding 

Corporation to continue to be funded in long-term maturities. 

REFCORP borrowing finances the losses of problem savings and 

loans with funds from thrift industry sources and Federal 

contributions. REFCORP long-term bond sales are tentatively 

scheduled for early in the first month of each calendar quarter 

and will continue until REFCORP uses its remaining $20.5 billion 

of borrowing authority. Assuming that we stay on a quarterly 

schedule, the next REFCORP bond sale tentatively will occur 

during the week of April 9, the same week as the Treasury 7-year 

note. 

6. The Treasury notes and bonds announced today will be 

eligible for conversion to STRIPS (Separate Trading of Registered 

Interest and Principal of Securities) and, accordingly, may be 

divided into separate interest and principal components.