US to lower minimum purchase of govt debt in April

WASHINGTON, March 21 (Reuters) - Individual investors will be able to purchase U.S. Treasury debt securities in increments as small as $100 starting with the April 7 auction of 3- and 6-month bills, the Treasury said on Friday.

The reduction of the minimum trading increment comes as U.S. government borrowing needs are rising. Previously, Treasury debt could be traded only in increments of $1,000, shutting out many small investors.

The new $100 increment applies to all Treasury marketable bills, notes, bonds and the inflation-indexed notes known as TIPS on April 7.

Describing Treasury securities as "the world's safest, most liquid investments," Treasury Assistant Secretary for Financial Markets Anthony Ryan said they should be accessible to the broadest universe of investors.

"The new lower minimum Treasury amount will put marketable securities within reach of more savers and investors in the United States and around the world," Ryan said in a statement, adding the move will increase flexibility for all market participants.

Treasury securities can be bought on a non-competitive bid basis directly from the Treasury at www.treasurydirect.gov.

However, financial market turmoil has unleashed a flood of cash into safe-haven Treasuries, causing yields to plummet in many cases below the returns offered on bank savings accounts.

The 3-month bill secondary market yield of 0.53 percent US3MT=RR this week was the lowest in more than 50 years. In the most recent auction on March 17, 3-month bills were sold at a high yield of only 1.1 percent.

By contrast, HSBC Direct (HSBA.L) is offering a 3.05 percent annual percentage yield on its insured U.S. online savings account.

Treasury said the minimum and multiple par amount of Treasury securities that may be stripped of their interest coupon in the Separate Trading of Registered Interest and principal of Securities (STRIPS) program will also be reduced to $100 beginning April 7. (Reporting by David Lawder; Editing by Neil Stempleman)