* Treasury, dealers consider longer-dated bonds
* Wall St mulls ways to increase demand for US Treasuries
* Treasury official sees little benefit in 100-year bonds
(Recasts with comments from Treasury, adds details, quotes)
By Rachelle Younglai
WASHINGTON, Feb 2 Top Wall Street firms are
urging the U.S. Treasury to create new products for American
investors and have suggested an ultra-long bond with a maturity
of 100 years, according to minutes from an advisory committee
meeting released on Wednesday.
The Treasury's debt advisory panel, which includes
executives from JPMorgan Chase (JPM.N) and Goldman Sachs
(GS.N), recommended at a meeting on Tuesday that the government
develop products for three different investor classes: banks,
pension funds and insurers, and retail investors.
The new offerings would be a way to pump up domestic demand
for the government's securities. Although around half of U.S.
debt is held by domestic investors, heavy reliance on foreign
creditors such as China, with just under $900 billion in U.S.
Treasuries, is causing some concern in Washington.
The minutes said one member of Treasury's Borrowing
Advisory Committee panel, who was not identified, said that
expanding the share of domestic investors was desirable and
would reduce overall funding risk, noting that Italy's, Japan's
and Britain's debts are largely funded domestically.
The panel member said "significant demand exists for
high-quality, long-duration bonds" from financial players like
insurers and pension funds that have longer-dated liabilities,
according to the minutes.
But a top Treasury official dismissed a bond with a
maturity as long as 100 years. "I don't think there is much
benefit of going out that long," Mary Miller, Treasury's
assistant secretary, told reporters on Wednesday.
Another panel member, who also was not identified, urged
the Treasury to develop products that target the needs of
banks, retail investors, and pension funds and insurers. The
member estimated that demand from these investor classes could
total $2.4 trillion over five years if the right products were
Miller said the Treasury had no plans to change anything at
the moment. "We have nothing on the table right now," she
Executives from top Wall Street investment firms meet once
a quarter with the Treasury to advise the government on
borrowing conditions. The notes were from a Feb. 1 meeting.
Market players were equally dismissive of an ultra-long
bond. "I just don't see it," said John Canavan, a market
strategist with Stone & McCarthy Research Associates in New
"Given current interest rates, they could try to issue them
to lock them in. But they are clearly meeting their financing
needs at the moment. I don't see them instituting it," he
(Reporting by David Lawder and Rachelle Younglai in Washington
and Richard Leong in New York; Editing by Leslie Adler)