Agenda 

August 2003 Refunding 

Treasury Dealer Meetings – July 25, 2003 

Dealer ___________________

To allow more time for discussion on Friday, please e-mail your responses prior to 12:00 noon on 

Wednesday to Jeff Huther, Dept. of Treasury, at Jeff.Huther@do.treas.gov and Richard Dzina, Federal 

Reserve Bank of New York, at richard.dzina@ny.frb.org. If you are not scheduled to meet with 

Treasury officials this quarter, your responses would still be very helpful to us, particularly answers to 

the discussion questions. Thank you. 

I. Borrowing Estimates Central 

Estimate 

Range that would not 

surprise you 

July – September 

 Ending Cash Balance 

October – December 

 Ending Cash Balance 

II. Budget Deficit Estimates 

FY2003 

FY2004 

III. Quarterly Note Issuance 

3-year 

5-year 

10-year 

10-year reopening (Sept) 

10-year TIIS reopening (Oct) 

IV. Discussion Topics 

• The Administration has recently estimated deficits of $455 billion in FY2003 and $475 billion in 

FY2004. Do you think that the recent adjustments to the financing schedule provide Treasury with 

sufficient debt management tools to handle the consequent increases in debt issuance and facilitate 

our primary objective of meeting the government’s financing needs at the lowest cost over time? 

• From time to time, FOMC announcements occur on Treasury note auction dates. Given the 

uncertainty this injects into the auction process, do you think Treasury should consider adjusting its 

note auction schedule to avoid coinciding with FOMC announcement dates? If so, what 

adjustments to the note auction calendar would you recommend? 

• As part of our ongoing efforts to develop and refine our contingency plans, we have developed a 

list of possible circumstances that might lead to the disruption of a planned auction and possible 

Treasury responses. In all of the situations presented below, Treasury would reject all competitive 

bids already tendered and participants would need to resubmit competitive bids when the auction 

resumed. 

 

Contingency Treasury Response
Treasury/Fed operational/technical problems Delay auction.* 

Notify market of specific length of delay (e.g. 1 

hour). 

Treasury/Fed systems failure Reschedule auction. 

Notify market of rescheduling with specific date 

and time if possible. If not immediately possible, 

provide follow-up with specific date and time as 

soon as feasible. 

Bidder connectivity disrupted (some 

participants affected, auction still covered) 

Response will depend on strength of auction 

coverage. If delay is necessary, then notify 

market of specific length of delay (e.g. 1 hour). 

Bidder connectivity disrupted (many 

participants affected, auction not covered) 

Delay auction.* 

Notify market of specific length of delay (e.g. 1 

hour). 

Independent of connectivity, auction not 

covered 

Delay auction.* 

Notify market of specific length of delay (e.g. 1 

hour). 

∗ If an auction is delayed for any reason, Treasury will notify the market of the delay and the new 

closing time. In all cases, a delay will cause Treasury to reject all competitive bids already tendered 

and participants will need to resubmit competitive bids when the auction resumes. 

The list aims to cover a broad enough range of possible situations to provide participants with a 

general sense of how Treasury would respond to a given contingency should one occur. Are there 

other situations that should be included? Do you think the responses are adequate and appropriate? 

 If not, how do you think Treasury should respond? How do you think the market would respond 

in each of the above situations, and how do you think auction outcomes would be affected? Do 

you anticipate that there would be repercussions for future auctions?