Weak demand at $12 bln, 30-year U.S. Treasury sale

NEW YORK Oct 8 (Reuters) - The U.S. government sold $12 billion worth of 30-year debt on Thursday, the Treasury said, in an auction that attracted soft demand and ended a $78 billion week of coupon securities offerings on a weak note.

The auction was a reopening of securities originally issued on August 17. Overall demand was weak based on the bid-to-cover ratio of 2.37 times the amount on offer, below the average of 2.49 at the five reopenings that took place within the past year.

Foreign and institutional investors showed tepid demand as well, based on the indirect bidder category that took 34 percent of the auction.

That was above the average of 32 percent over the last five reopenings but below the average of about 48 percent in auctions that took place since June, when changes in calculating the indirect bidding category boosted figures.

Yields at the auction were above expectations, based on trade in the when-issued market just before the sale, indicating investors were aggressive in trying to bid down prices after long bonds had rallied throughout the day.

This week's auctions also included 10-year inflation-indexed bonds as well as conventional three- and 10-year debt and Treasuries generally held up well until the 30-year sale.

Investors have kept a close eye on U.S. debt auctions this year in light of the government's burgeoning budget deficit. During a brief period in May some questioned the longevity of the United States' prized AAA rating. (Reporting by Burton Frierson; Editing by Andrea Ricci)