The new 30-year bond will debut on Feb. 9, helping the U.S. Treasury to raise an estimated record $171 billion during the January-March quarter, the government announced Wednesday.
The Treasury Department said the first 30-year bonds will be auctioned on Feb. 9 and the total amount of bonds that will be sold will be announced on Feb. 1. The government had announced in August that it was bringing back the 30-year bond but it had not specified the date for the first auction.
Officials said in August that they expected to raise between $20 billion and $30 billion each year with the bonds auctioned in February and August.
The government began selling a 30-year bond in 1977, but it was discontinued in 2001, which turned out to be the last year that the government produced a budget surplus.
Since that time, the government has faced record budget deficits, although the red ink for the budget year that ended Sept. 31 narrowed to $319 billion. While that was down from a record $413 billion set in 2004, it was still the third-largest deficit in history in dollar terms.
Government officials said on Monday that they anticipate needing to borrow $171 billion in the first three months of next year, which would be a record quarterly amount, surpassing the old record of $146 billion set in the January-March quarter of 2004.
The money Treasury borrows goes to cover the shortfall between tax revenues and spending. It also refinances the part of the national debt that comes due every quarter.
Randal Quarles, Treasury undersecretary for domestic finance, told reporters that Treasury still expects the government will hit the current debt ceiling in the first three months of next year. The current national debt stands at $7.96 trillion with the statutory debt limit set at $8.18 trillion.
Congress must raise that ceiling to allow the government to keep borrowing to finance government operations once the current cap is hit.
Democrats are certain to use the debate over raising the debt limit to highlight their view that the nation’s debt is exploding because of President Bush’s tax cuts. Republicans contend those tax cuts were necessary to help get the country out of the 2001 recession. They blame a failure to restrain government spending for driving the country deeper into debt.
In its announcement Wednesday, the government said it would auction $18 billion in three-year notes next Tuesday and sell $13 billion in five-year notes on Wednesday and $13 billion in 10-year notes on Thursday of next week.
The government also said that to make room for the 30-year bond, it would move the five-year note auction in February to later in the month.