April 2, 2018 / 3:24 PM / 9 months ago

UPDATE 2-U.S. pares bill sales to $145 bln in latest week

* U.S. cuts 3-month, 6-month bill supply by $3 bln each

* U.S. reduces 1-month T-bill issuance by $10 bln

* Annual tax season seen filling U.S. government’s coffer (Recasts with detail on expected revenues; adds details, graphic, quotes)

By Richard Leong

NEW YORK, April 2 (Reuters) - The U.S. Treasury Department reduced the amount of short-term debt for sale this week, as the government is expected to collect more money from individuals and companies ahead of the annual tax filing deadline later in April.

The Treasury is expected to sell a total $145 billion in one-month, three-month and six-month bills this week.

Last week, it auctioned $185 billion in T-bills, including $24 billion in one-year bills. The size of this week’s three-month and six-month bills was each $3 billion less than last week, while one-month bill issuance was $10 billion less than last week.

The government had ramped up its sales of short-dated government debt to help fill an expected shortfall in revenues stemming from a two-year federal budget deal in February and the massive tax overhaul in December.

“We should see a reprieve of this with higher collection of tax receipts,” said Jason Granet, deputy head of liquidity solutions at Goldman Sachs Asset Management, in New York. “As we go through the tax season, the government should be a net collector of money.”

The surge in short-term federal borrowing partly propelled an increase in interest rates in money markets which companies tap to finance their trades, inventories and payrolls, analysts said.

Expectations the Federal Reserve will hike interest rates further in 2018 have also raised public and private borrowing costs

The London interbank offered rate for three-month dollars , a benchmark for $200 billion in U.S. financial products, hit 2.31175 percent on Friday, which was its highest level since November 2008.

Libor’s premium over the three-month overnight index swap rate, a gauge of risk-free borrowing cost for dollars, is hovering above 60 basis points, at its loftiest level since April 2009.

This rate spread blew out to 2.37 percentage points at the height of the global credit crisis nearly a decade ago, Reuters data showed.

The recent widening of the Libor/OIS spread kindled concerns of stress in money markets, but most analysts have blamed the move on a mismatch in supply and demand for dollars rather than an omen of troubles brewing in the banking sector.

“We don’t think there’s stress, but it’s more expensive” to borrow, Granet said.

Earlier Monday, the Treasury sold $48 billion in three-month bills and $42 billion in six-month bills to mediocre demand, according to analysts said.

The Treasury will sell $55 billion in one-month bills at 11:30 a.m. (1530 GMT) on Tuesday.

Reporting by Richard Leong Editing by Leslie Adler

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