NEW YORK Jan 29 The U.S. government, seeking a
new vehicle to raise cash, sold its first-ever floating-rate
debt on Wednesday to strong demand.
The amount of bids on this variable-rate Treasuries issue
from investors and Wall Street dealers was more than five times
than the $15 billion offered.
"The first (floating-rate note) auction looks to have been a
success," Jefferies & Co. money market strategist Thomas Simons
wrote in a note on the auction results.
Investors who are worried about rising interest rates due to
an improving global economy and decreasing accommodation from
the Federal Reserve have been drawn to bonds whose interest
rates reset higher if benchmark borrowing costs rise.
The Fed is widely expected to pare its bond-purchase
stimulus later Wednesday by $10 billion to $65 billion in
February after a $10 billion reduction in January.
The Treasury Department auctioned $15 billion of
floating-rate notes that mature in January 2016 at a yield
premium of 0.045 percent above an index on interest rates on
three-month Treasury bills, which stood at 0.055
] These two-year floaters were yielding below two-year
fixed-rate notes. On Tuesday, the Treasury sold $32
billon in two-year fixed-rate debt at a yield of 0.38 percent,
the highest since August.