US, WASHINGTON (ORDO NEWS) — The US Treasury Department will issue new 20-year bonds to finance the record level of government borrowing needed to support the economy amid the coronavirus pandemic, Fox Business writes.
The agency announced plans to hold an auction to sell the first 20-year bonds on May 20 with an initial offer of $ 20 billion.
“The Treasury’s borrowing needs have increased significantly as a result of the federal government’s reaction to the outbreak of COVID-19,” the Treasury statement said.
As a result of the outbreak, the Treasury Department borrowed $ 2.99 trillion in one quarter, much more than ever before. This amount is five times the previous record high of $ 569 billion in government loans at the height of the Great Recession.
The ministry said the record amount was needed to pay almost $ 3 trillion for incentive measures approved by the federal government to protect the US economy from the crisis and support tens of millions of unemployed with direct payments.
The Treasury expects a shift in most treasury bills to longer-term securities in the future.
“Although the initial increase in funding related to the response to the COVID-19 outbreak was focused on Treasury bills, the Treasury expects to start transferring financing from bills on long-term maturities in the coming quarters,” said Brian Smith, Assistant Treasury Secretary for Federal Finance.
“In light of a significant increase in borrowing requirements, the Treasury plans to increase its long-term emissions as a reasonable means of managing maturities and limiting potential volatility of emissions in the future,” he added.
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