August 27, 2014 / 5:36 PM / in 3 years

Indirect bidders buy over half of U.S. 5-year note supply

NEW YORK, Aug 27 (Reuters) - Foreign central banks and indirect bidders bought 52.71 percent of a $35 billion five-year note issue the U.S. Treasury Department auctioned on Wednesday, which was their biggest percentage purchase in 13 months, Treasury data showed.

The heavy bidding from this group of investors resulted in the latest five-year Treasuries due in August 2019 to clear at a yield of 1.646 percent, which was the lowest level in three months.

Wednesday’s five-year debt sale was the third of four longer-dated Treasuries auctions scheduled this week.

The Treasury earlier sold $13 billion in two-year floating-rate notes at high margin rate of 5.5 basis points.

It will complete this week’s sale with a $29 billion offering of seven-year securities at 1 p.m. (1700 GMT) on Thursday.

At the latest five-year note auction, large investment managers, smaller bond dealers and other direct bidders bought 10.84 percent of the supply, the lowest percentage since June.

The Treasury awarded primary dealers or the top 22 Wall Street firms that do business directly with Federal Reserve 36.45 percent of the latest five-year note supply. This was higher than the 25.90 percent at the July auction.

Overall bidding was above-average. The amount of bids submitted to the size of the five-year note offering or the bid-to-cover ratio was 2.81, matching July’s level which was the strongest since March. (Reporting by Richard Leong; Editing by Chris Reese)

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