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Treasury To Auction $27B in Notes

May 5, 1999

WASHINGTON (AP) _ The Treasury Department announced some details on Wednesday of the government’s April-June refunding plan, which is expected to include paying off a record $116 billion of the $5.5 trillion national debt.

``It is a great accomplishment,″ said Treasury Secretary Robert Rubin in a statement. ``Less government debt outstanding means lower interest rates, higher national savings, more investment and a stronger economy.″

The government plans to sell $27 billion of new securities at its quarterly refunding auctions next week, Treasury officials said.

It will sell $15 billion in five-year notes in minimum amounts of $1,000 on May 11, and $12 billion in 10-year notes in minimum amounts of $1,000 on May 12. Proceeds from the sales will be used to redeem $28.8 million in maturing notes and to pay down $1.8 billion in debt.

Treasury undersecretary for domestic finance, Gary Gensler, estimated that after its record $116 billion quarterly debt pay-down, the government will have a cash balance of $55 billion at the end of June.

He estimated that the government will pay down about another $10 billion in debt from July through September, leaving it with a $45 billion cash balance at the end of its 1999 fiscal year.

The once-rare but now increasingly common reductions in federal debt are the result of the return to annual federal budget surpluses after 28 consecutive years of deficit, from 1969 through 1997.

About $320 billion of in debt so far has been paid down in just over two years.

Gensler said the Clinton administration is considering suggestions that the government buy back some of its outstanding securities if surpluses continue as expected.

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