Treasury To Issue $331 Billion In Debt In Fiscal Q4, $660 Billion Gross, Expects Debt Ceiling To Be Raised

Tyler Durden's picture

Tim Geithner has released his projection of expected borrowing needs for the final fiscal quarter of 2011 (ending on September 30). But before that, we learn that while back on May 1 the Treasury had expected to raise $142 billion in marketable debt in Q3, instead if raised $190 billion, with the difference going primarily to build up the EOQ cash balance which instead of being $95 billion, was $137 billion, obviously due to the threat of the debt ceiling breach. That threat however has not prevented the Treasury from assuming that the debt ceiling will be raised without a hitch, and it now predicts issuing $331 billion in net marketable debt issued in Q4, $74 billion less than the projection from May 1 (and further sees another $285 billion in borrowing needs in Q1 2012). In other words, if there is no debt ceiling deal, the Treasury will be $616 billion short in revenues over the next 6 months. Of course, the numbers net out the massive issuance that has to hit the market to fund the "disinvested" government retirement funds and various other mechanism that were used to prevent the Treasury from running out of cash, which amount to about $300 billion primarily in the form of short-term bills that matured and were not rolled over to make space for marketable debt issuance. In other words, gross issuance in the next quarter will be about over $660 billion. This is just a little under the total debt issued in the last 3 quarters (due to the May 16th debt ceiling breach)! And people think the Treasury can raise this money without the Fed monetizing at will? Fascinating.

The full sources and uses table:

And the full release:

WASHINGTON - The U.S. Department of the Treasury today announced its current estimates of net marketable borrowing for the July – September 2011 and the October – December 2011 quarters:

  • During the July – September 2011 quarter, Treasury expects to issue $331 billion in net marketable debt, assuming an end-of-September cash balance of $110 billion.  This borrowing estimate is $74 billion lower than announced in May 2011.  The decrease in borrowing largely relates to lower outlays and cash balance adjustments.
  • During the October – December 2011 quarter, Treasury expects to issue $285 billion in net marketable debt, assuming an end-of-December cash balance of $100 billion.

During the April - June 2011 quarter, Treasury issued $190 billion in net marketable debt, and ended the quarter with a cash balance of $137 billion, of which $5 billion was attributable to the Supplementary Financing Program (SFP).  In May 2011, Treasury estimated $142 billion in net marketable borrowing and assumed an end-of-June cash balance of $95 billion, which included an SFP balance of $5 billion. 

Additional financing details relating to Treasury’s Quarterly Refunding will be released at 9:00 a.m. on Wednesday, August 3, 2011.