MINUTES OF THE MEETING OF TEE 

TREASURY BORROWING ADVISORY COMMITTEE 

OF THE PUBLIC SECURITIES ASSOCIATION 

AUGUST 1 AND 2, 1995 

Ausust 1 

The Committee convened at 11:50 a.m. at the Treasury 

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

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

Corzine, Lakefield, 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. 

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, discussed charts, which had 

been released to the public on July 31, updating Treasury 

borrowing estimates and providing statistical information on 

recent Treasury borrowing and market interest rates. 

The public meeting ended at 12:20 p.m. 

Ausust refundinq 

The Committee reconvened in closed session at the Madison 

Hotel at 2:50 p.m. The members were present who had attended the 

public briefing, except Mr. McKnew. ..Deputy Assistant Secretary 

Bradbury gave the Committee its Charge and drafts of Treasury 

borrowing calendars for August through October 1995, which are 

also attached. The Committee first discussed the size of the 

August midquarter refunding within the context.of the Treasury's 

estimate of a $26 billion net market borrowing'requirement during 

the July-September 1995 quarter. 

Committee members proposed a choice of two potential 

refunding options. Their refunding recommendation (by an ll-to3) vote is: $18 billion of 3-year notes, $13 billion of 10-year 

notes, and $11.5 billion of 30-year bonds. The other proposal 

was $17.5 billion of 3-year notes, $12.5 billion of 10-year 

notes, and $11 billion of 30-year bonds. 

The Committee voted by 8 to 6 for a new 10-year note, rather 

than a reopening of the 6-112% note of May 15, 2005. The 

Committee did not want to add to the $18.8 billion of marketable 

securities that are already mature on May 15, 2005. 

The Committee then considered the maturity date for the 

long-term bond. By a majority of 12 to 2, the Committee voted to 

recommend a 30-year bond to mature on August 15, 2025. They 
indicated that it 1s not necessary at this time to issue a 30-114 

year bond that would add to the supply of long-term bonds with 

interest payments in May and November. By consensus, the 

Committee agreed to adopt, with revisions, the draft financing 

plan for the rest of the July-September quarter (see attached). 

The Committee then discussed possible strategies to 

recommend for cash-raising beginning in early 1996. There was 

general discussion of the Treasury's several options, including 

increasing the sizes of current offerings, increasing the 

frequency of 3- and 10-year notes and 30-year bonds, adding new 

types of securities, such as floating rate notes, and 

combinations of these options. Several borrowing scenarios were : 

reviewed (also attached) to increase the amounts of existing 

cycles of Treasury new issues. 

The Committee agreed by consensus to recommend that, as a 

guiding principle, the Treasury not allow the 2-year and under 

remaining maturity of the privately held marketable debt to rise 

above about 50 percent of the total in order to distribute 

Treasury maturities over time and lessen interest rate and rollover risks. 

By consensus, the Committee agreed to recommend that, over 

the course of 1996, the Treasury increase the sizes of all of the 

current issues and increase the frequency of 10- and 30-year 

securities. Increasing the frequency the 10- and 30-year 

security issues would be accompanied by reductions in the sizes 

of each security, but an overall increase in the total 10- and 

30-year securities issued each year. New types of securities 

were not recommended. 

Regarding the debt limit-related portion of the Charge, the 

Committee agreed by consensus that Mr. Kellyts..testimony of July 

28, 1995, on behalf of the Public Securities Association 

expressed its views. Thus, the Committee agreed to submit the 

testimony as part of its report. 

Also by consensus, the Committee agreed to recommend the 

financing schedule that is attached for the October-December 

quarter. 

The meeting adjourned at 4:55 p.m. 
Auaust 2 

The Committee reconvened at 8:30 a.m. at the Treasury in 

closed session. All members were present, except Messrs. 

Bennett, Corzine, Kessenich, Lakefield, McKnew, 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 

financing strategy that it recommended in its report, 

particularly the importance that the Committee attaches to 

increasing the Treasury presence in the 10- and 30-year sectors 

of the market. 

The meeting adjourned at 9:00 a.m. 

8 11 k. Ouseley, ~uector 

ffice of Market Finance 

Domestic Finance 

August 2, 1995 

Attachments 

Certified by: cb 

Stephen C. Francis, Chairman 

Treasury Borrowing Advisory Committee 

of the Public Securities Association 

August 2, 1995 

*Mr. Napoli was also absent.