U.S.

Treasury Borrowing

Borrowing modestly larger than expected
October - December 2002
(Projected)
Net Marketable Issuance* Bills Nominal Notes IIS 76

January - March 2003
(Projected)
110

(Actuals)
83 21 55 7

Financing Deficit Funding ** Net Non-Marketable Financing Change in Cash Balance

76 109 17 16

83 118 8 28

110 116 -3 8

Notes: Starting Cash Balance Ending Cash Balance 61 45 61 33 33 25

Treasury Financing Requirements
$ Billions
* If unchanged, current coupon issuance pattern would raise $208 billion in FY03. ** Includes budget results, direct loan activity, changes in accrued interest and checks outstanding and minor miscellaneous transactions. Note: Dollars in billions; totals may not add due to rounding

Department of the Treasury Office of Market Finance

February 3, 2003-1

Cash balance volatility declines
$Bil. FY 2002 FY 2003 60 60 $Bil.

70

70

50

50

40

40

30

30

20

20

10

10

0 Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep

0

Treasury Daily Operating Cash Balance
Source: Daily Treasury Statement, data through January 29.
Department of the Treasury Office of Market Finance February 3, 2003-2

Percent 2 0 -2 -4 -6 -8 Percent 80 60 40 20 0 1950

Financing needs low by historical standards
Surplus/Deficit % of GDP

Percent 2 0 -2 -4 -6 -8 Percent

Debt Held by the Public to GDP (%)

80 60 40 20 0 '03

1955

1960

1965

1970

1975 1980 Annual

1985

1990

1995

2000

Surplus/Deficit and Debt to GDP
Department of the Treasury Office of Market Finance

Source: U.S. Government Budget for FY 2004 Budget Historical Tables 1.2 & 7.1.
February 3, 2003-3

$Bil. 20,000

Credit market share low and stable
$Bil. 20,000 Nonfinancial Credit Market Treasuries 15,000 10,000 5,000 0 Percent Treasuries Muni's Corporates Home Mortgages Consumer Credit Other 30

15,000 10,000 5,000 0 Percent

30

20

20

10

10

0 1960

1965

1970

1975

1980 1985 Quarterly

1990

1995

2000

0

Domestic Nonfinancial Credit Market and Treasury Debt
Department of the Treasury Office of Market Finance

Source: U.S. Federal Reserve Board of Governors Flow of Funds.

February 3, 2003-4

Treasury's share of money markets near historic lows
Percent 70 65 60 55 50 45 40 35 30 25 1969 Percent 70 65 60 55 50 45 40 35 30 25

1973

1977

1981

1985 Quarterly

1989

1993

1997
1

2001

Treasury Bills as a Percentage of the Money Market
1
Department of the Treasury Office of Market Finance

Money market = Treasury bills, nonfinancial commercial paper and bankers acceptances. Source: U.S. Federal Reserve Board of Governors Flow of Funds statistical release Z.1.
February 3, 2003-5

Treasuries playing an important financial intermediation role
$Bil. Bills Notes/Bonds 300 Agencies MBS 250 Corp
1

$Bil.

350

350

300

250

200

200

150

150

100

100

50

50

0 1995 1996 1997 1998 1999 2000 2001 2002 2003

0

Primary Dealer Trading Volume Outright Transactions, 3-Month Moving Average
1
Department of the Treasury Office of Market Finance

Data available beginning September 26, 2001. Source: Federal Reserve Bank of New York.
February 3, 2003-6

Maturity of issuance has been highly volatile
Months Months

80

80

60

60

40

40

20

Average Maturity of Outstanding Privately Held Constant-Issuance Maturity (6-month average)
1

20

0 1980 1982 1984 1986 1988 1990 1992 Quarterly 1994 1996 1998 2000 2002

0

Maturity of Marketable Debt
Department of the Treasury Office of Market Finance

1

Assumes the distribution of issuance in any given quarter is held constant going forward.
February 3, 2003-7

Current coupon issuance tilted toward 2-year notes
$Bil. 550 500 450 400 350 300 250 200 150 100 50 0 2003 2004 2005 2006 2007 2008 2009 Calendar Year 2010 2011
1

$Bil. 550 4th Quarter 3rd Quarter 2nd Quarter 1st Quarter 500 450 400 350 300 250 200 150 100 50 2012 2013 0

Outstanding Treasury Marketable Coupon Securities
Department of the Treasury Office of Market Finance

Note: Where applicable, maturities represent first call date. 1 Issued or announced through January 31, 2003.
February 3, 2003-8

Refinancing dominates new financing
$Bil. 1,000 Maturing Debt Maturing Debt Without 4-week Bills Fiscal Balance
(Deficit/Surplus)

$Bil. 1,000

800

800

600

600

400

400

200

200

0

0

-200

-200

Department of the Treasury Office of Market Finance

Dec-61 Dec-62 Dec-63 Dec-64 Dec-65 Dec-66 Dec-67 Dec-68 Dec-69 Dec-70 Dec-71 Dec-72 Dec-73 Dec-74 Dec-75 Dec-76 Dec-77 Dec-78 Dec-79 Dec-80 Dec-81 Dec-82 Dec-83 Dec-84 Dec-85 Dec-86 Dec-87 Dec-88 Dec-89 Dec-90 Dec-91 Dec-92 Dec-93 Dec-94 Dec-95 Dec-96 Dec-97 Dec-98 Dec-99 Dec-00 Dec-99 Dec-00

-400 1961

'64

'67

'70

'73

'76

'79

'82

'85

'88

'91

'94

'97

'00

-400 '03

Quarterly Financial Obligations

February 3, 2003-9

Decreasing variance of auction release times
Min. Min.

10

Data Through January 31

10

Target Release Range 8 1 8

6

6

4

4

2

Current Quarter
(October 28 - January 31)

2

0 Feb-02 Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan-03

0

Auction Release Times
Minutes from Closing to Release
Note: Current Quarter Exceptions: 1. 10/28/02, 13- and 26-week bills, release time:1:07:49, the press release was delayed due to an operator error. A submitter sent a timely competitive bid
for the 13-week bill auction that was inadvertently rejected. Failure to notice this error resulted in not being able to close and calculate the auction timely.
Department of the Treasury BPD - Office of Financing February 3, 2003-10

Bidders 45

No trend in indirect bidding
Indirect Direct
2 1

Bidders 45 40 35 30 25 20 15 10 5 0

40 35 30 25 20 15 10 5 0

Jan

Feb

Mar

Apr

May

Jun 2002

Jul

Aug

Sep

Oct

Nov

Dec

Jan 2003

Competitive Bidder Participation in Treasury Bill Auctions
Monthly Averages
1
Department of the Treasury BPD - Office of Financing

2

Indirect bidders submit competitive bids through a direct bidder. Direct bidders submit competitive bids for their own account.
February 3, 2003-11

Treasury Inflation Indexed Securities attract more bidders
Bidders 80 70 60 50 40 30 20 10 0 Nominal Indirect 1 Direct
2

Bidders TIIS Indirect 1 Direct
2

80 70 60 50 40 30 20 10 0

Jan

Feb

Mar

Apr

May

Jun

Jul 2002

Aug

Sep

Oct

Nov

Dec

Jan 2003

Competitive Bidder Participation in Treasury Note Auctions
Monthly Averages
1
Department of the Treasury BPD - Office of Financing

2

Indirect bidders submit competitive bids through a direct bidder. Direct bidders submit competitive bids for their own account.
February 3, 2003-12

$Bil.

120 80 40 0 -40

Coupons Buybacks Over 10 yrs 5 - 10 yrs 2 - under 5 yrs Bills 24.0 5.8 10.3

$Bil. 52.1 74.4 47.0 17.8 52.5 15.1 40 0 -15.9 -40 -47.7 -26.1 -80 -120 84.2 82.6 80 120

-20.1

-38.8 -80 -120 -160 -97.9 -113.8

-160 -163.4 -200 IV I II III 2001 IV I II III 2002 IV

-200 I II III 1998 IV I II III 1999 IV I

-192.1 II III 2000

Treasury Quarterly Net Market Borrowing
Department of the Treasury Office of Market Finance February 3, 2003-A.1

$Bil. State and Local Series 12.6 13.0 15 Foreign Series Savings Bonds 10 6.2

$Bil.

15

7.6 10

5

1.6 0.8

5

0 -0.1 -5 -0.9 -3.6 -6.9 -10 -8.0 -10.1 -15 -10.6 -5.0 -2.2 -1.4 -1.7 -5.5 -0.1 -0.7

0

-5

-10

I

II

III 1998

IV

I

II III 1999

IV

I

II III 2000

IV

I

II III 2001

IV

I

II III 2002

IV

-15

Treasury Quarterly Net Borrowing from Nonmarketable Issues
Department of the Treasury Office of Market Finance February 3, 2003-A.2

Percent 40 35 30 25 20 15 10 Estimated Foreign Holdings 5 0 1993 1994 1995 1996 1997 1998 Quarterly 1999 2000 2001

Percent 40 35 30 25 20 15 10
2

Benchmark revision

1

Foreign and International Institutional Holdings at FRBNY

5 0 2002

Foreign Holdings as a Percent of Total Privately Held Public Debt
1 2

Source: Treasury Foreign Portfolio Investment Survey and monthly data collected under the Treasury International Capital reporting system. Data through November 30, 2002. See http://www.treas.gov/tic/index.html. Source: Federal Reserve Bank of New York statistical release H4.1.
February 3, 2003-A.3

Department of the Treasury Office of Market Finance

November 31, 2002 $ Billions Country As a % of Total Foreign As a % of Total Private

December 31, 2001 $ Billions As a % of Total Foreign As a % of Total Private

December 31, 2000 $ Billions As a % of Total Foreign As a % of Total Private

Japan China United Kingdom Caribbean Banking Centers Hong Kong Oil Exporters Korea Germany Taiwan Mexico Belgium-Luxembourg Switzerland Italy Singapore Thailand France Spain Canada Other Estimated Foreign Total

$361.9 96.8 69.5 66.9 49.6 47.3 42.8 40.0 34.7 27.5 24.3 22.1 18.7 18.1 17.5 16.3 15.7 13.2 172.9 $1,155.8

31.3% 8.4% 6.0% 5.8% 4.3% 4.1% 3.7% 3.5% 3.0% 2.4% 2.1% 1.9% 1.6% 1.6% 1.5% 1.4% 1.4% 1.1% 15.0% 100.0%

12.0% 3.2% 2.3% 2.2% 1.6% 1.6% 1.4% 1.3% 1.1% 0.9% 0.8% 0.7% 0.6% 0.6% 0.6% 0.5% 0.5% 0.4% 5.7% 38.3%

$317.9 78.6 45.0 45.4 47.7 48.9 32.8 47.8 35.3 24.8 22.4 18.7 18.9 20.0 15.7 20.6 15.6 15.4 181.6 $1,053.1

30.2% 7.5% 4.3% 4.3% 4.5% 4.6% 3.1% 4.5% 3.4% 2.4% 2.1% 1.8% 1.8% 1.9% 1.5% 2.0% 1.5% 1.5% 17.2% 100.0%

11.3% 2.8% 1.6% 1.6% 1.7% 1.7% 1.2% 1.7% 1.3% 0.9% 0.8% 0.7% 0.7% 0.7% 0.6% 0.7% 0.6% 0.5% 6.4% 37.4%

$ 317.7 60.3 50.2 43.8 38.6 49.9 29.6 49.0 33.4 27.2 29.6 16.4 20.8 27.9 13.8 25.1 19.0 14.2 167.7 $1,034.2

30.7% 5.8% 4.9% 4.2% 3.7% 4.8% 2.9% 4.7% 3.2% 2.6% 2.9% 1.6% 2.0% 2.7% 1.3% 2.4% 1.8% 1.4% 16.2% 100.0%

11.0% 2.1% 1.7% 1.5% 1.3% 1.7% 1.0% 1.7% 1.2% 0.9% 1.0% 0.6% 0.7% 1.0% 0.5% 0.9% 0.7% 0.5% 5.8% 35.9%

Major Foreign Holders of Treasury Securities
Source: Treasury Foreign Portfolio Investment Survey and monthly data collected under the Treasury International Capital reporting system.
Department of the Treasury Office of Market Finance February 3, 2003-A.4

Percent Coupons Over 10 years 2-10 years 1-2 years 1 year & under Bills

Percent

100 15 80 33 60 17 31 29 19 18

100

80

60

16 40 16 20

14

40 12

18 20 26

20 0 1994 1995 1996 1997 1998 1999

18 2000
1

2001

2002

0

Calendar Year End Data

Privately Held Treasury Marketable Debt
Percent Distribution By Maturity
1
Department of the Treasury Office of Market Finance

Privately held marketable debt excludes holdings of the Federal Reserve and non-interest-bearing matured debt.
February 3, 2003-A.5