UINUTES OF TEE IIEETINO OF THE 

TREASURY BORROWIblO ADVISORY COMMITTEE 

OF Tftl PUBLIC SECURITIES ASSOCIATION 

JAUUARY 31 ZWD FEBRUARY 1, 1995 

Januarv 31 

The Committee convened at 11:30 a.m. at the Treasury 

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

public. All members were present, except Mr. Capra, Ms. 

Kenworthy, Mr. Kessenich, and Mr. Stark. 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 to the meeting. Assistant 

Secretary for Economic Policy Alicia Munnell gave a summary of 

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

Office of Market Finance, presented Treasury borrowing estimates 

and statistical information on recent Treasury borrowing and 

market interest rates. The borrowing estimates and other 

information in chart form had been released to the public on 

January 30, 1995. 

The portion of the meeting open to the public ended at 12:05 

p.m. 

The Committee reconvened in closed session at the Madison 

Hotel at 2:15 p.m. The members listed above, Ms. Bradbury, and 

Ms. Ouseley were present. Ms. Bradbury gave the Committee its 

Charge, which is also attached. The Committee first discussed 

the size of the cash balances on March 31 and June 30 and agreed 

by consensus to the estimates of $20 billion for March 31 and $35 

billion for June 30 assumed by the Treasury. A draft proforma 

that had been prepared by a member of the Committee (attached) 

was used during the discussion. 

Februarv refunding 

The Committee next agreed by consensus to recommend a 3-part 

midquarter refunding, consisting of $17 billion of 3-year notes, 

$12 billion of 10-year notes, and $11 billion of long-term bonds, 

for a total of $40 billion. The Committee then turned its 

attention to the Treasury's request for recommendations on 

reopening the most recently offered 10- and 30-year securities. 

The Committee voted by 14 yeas and 2 abstentions to 

recommend that the Treasury a new 10-year note. A new note was 

preferred to reopening the 7-718% note of November 15, 2004, 

largely because a heavy volume of issues already mature on 

November 15, 2004. 
The Committee turned to a discussion of whether to recommend 

reopening the 7-112% bond of November 15, 2024. The consensus 

was that there is no shortage of the 7-112% bond in the cash or 

collateral market. The Committee did not believe that the 

Treasury would achieve meaningful savings from issuing a new 30- 

year bond, but thought that there is a need in the STRIPS market 

for more long-term bonds with May and November coupons. Nine 

members voted to recommend a new 30-114 year bond to mature on 

May 15, 2025, while 6 voted to reopen the 7-1/2% bond, and 1 

voted for a new 30-year bond. 

The Committee consensus was that the cash management bill to 

be sold as part of the refunding should mature on April 20, after 

the April individual tax payment date. 

Financina schedule throuah June 

The consensus was that the Treasury can leave the 2- and 5- 

year notes at the size of the most recent offering in February 

and March and vary the bill sizes to finance the rest of the 

Treasury's borrowing needs in the January-March quarter. Another 

cash management bill is expected in early March, also to mature 

on April 20. 

The Committee consensus view is that the Treasury can meet 

its April-June borrowing requirements by leaving the coupon sizes 

unchanged and reducing bill sizes to allow for the announced 

paydown of $5 to $10 billion during the quarter. The possibility 

that cash management bills will be needed to bridge the cash low 

point in June was also foreseen. 

post 1995 borrowina att tern 

The Committee discussed and agreed by consensus to recommend 

that, as a general debt management principle, the Treasury 

stabilize the maturity distribution of the debt by continuing to 

issue securities across the maturity spectrum. The Committee 

consensus opposed increasing the frequency of 52-week bill and 3- 

year note offerings, favoring instead increasing the frequency of 

10-year notes or 30-year bonds and possibly introducing a new 

instrument, such as a floating-rate note with a final maturity in 

a range of 2 to 5 years. 

Mav 1995 refundina meetinq 

Planning ahead, Committee members agreed to discuss the 

concept of regular offerings of Treasury inflation-indexed bonds 

at its regular quarterly meeting in connection with the May 1995 

refunding. 

The meeting adjourned at 4:10 p.m. 
February 1 

The Committee reconvened at 9:05 a.m. at the Treasury in 

closed session. The 16 members who attended the January 31 

meeting were present. The Chairman presented the Committee 

report (copy attached) to Deputy Secretary Frank N. Newman and 

Deputy Assistant Secretary Bradbury. 

A discsussion of the refunding recommendations, especially 

the recommendation that the Treasury issue a new 30-1/4 year 

bond, followed the reading of the Committee report. There was 

also discussion of the Committee's view that the Treasury should 

issue more securities that mature in 10 or 30 years in order to 

prevent the the average life of the marketable debt from 

declining (and the proportion maturing within two years from 

increasing) substantially further. 

The meeting adjourned at 9:35 a.m. 

@. ice of dsewtor Market Fi ahce 

V Finance 

ebruary 1, 1995 

Attachments 

Certified by: 

Treasury Borrowing Advisory Committee 

of the Public Securities Association 

February 1, 1995