US $13 bln of 30-yr bonds draw robust demand

NEW YORK, March 11 (BestGrowthStock) – The U.S. government
attracted robust demand at its offering of $13 billion worth of
30-year bonds on Thursday, ending a series of well-bid auctions
on a resoundingly strong note.

The long-bond sale, a reopening of previously issued debt,
was the last of this week’s three bond offerings totaling $74
billion and should tamp down for now any worries over the
government’s ability to attract investors in numbers.

The auction drew bids worth 2.89 times the amount on offer,
outperforming the average of 2.58 at the last six reopenings of
30-year bonds.

Long bonds are a tricky maturity to sell and reopenings
often suffer lackluster interest, but a recent sell-off in
Treasuries brought prices down to attractive levels, as was the
case in the week’s two previous offerings.

“Another day and another incredibly strong auction,” said
Aaron Kohli, interest rate strategist at RBS Securities in
Stamford, Connecticut.

Illustrating this point, yields at the auction came in
below expectations, based on trade in the when-issued market at
the deadline for bids, indicating investors were willing to pay
a premium over market prices.

In one apparent weak note, foreign central bank and large
institutional investor demand, gauged by the indirect bidder
category, appeared weak, accounting for about 24 percent of the

This was well below the average of about 43 percent in the
reopenings since June, which has become a benchmark for
comparisons due to changes in calculations that had boosted
this category.

Much of that demand, though, was replaced by or migrated to
the direct bid category, which accounted for a record 30
percent of the sale. That was also well above the roughly
five-percent average for reopenings since June.

“Directs were at record allocation and was the first time
in the history of the 30-year that direct awards exceeded
indirect awards,” said Kohli.

Financial markets are watching bond auctions closely, given
a burgeoning U.S. budget deficit brought on by a costly
financial sector bailout and efforts to stimulate the economy.

While investors in May 2009 briefly appeared to question
the longevity of the United States’ prized AAA credit rating,
those worries seem to have subsided. Some analysts say the jump
in debt could yet come back to haunt the government.

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(Reporting by Burton Frierson; Editing by Kenneth Barry)

US $13 bln of 30-yr bonds draw robust demand