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US Treasury to sell $51 bln next wk; warns on limit Wed Nov 3, 2004 WASHINGTON, Nov 3 (Reuters) - The U.S. Treasury Department on Wednesday said it would sell $51 billion in notes at its quarterly "refunding" auctions next week, and warned it was running out of room to maneuver around the federal debt limit. "We need to have something before the 18th (of November)," a Treasury official said in response to reporters' questions on the "drop-dead date" for government financing. Treasury will sell $22 billion in three-year notes on Nov. 8; $15 billion of five-year notes on Nov. 9; and $14 billion of 10-year notes on Nov. 10. The size and composition of the refunding package were in line with Wall Street analysts' expectations. Since early October, the Treasury has been bumping up against the $7.384 trillion limit on federal borrowing imposed by Congress. As of Monday, debt subject to that limit was just $25 million under that limit. Congress avoided dealing with the politically sensitive subject of the debt ceiling prior to the general election, but is to return in a "lame duck" session around Nov. 16 and will likely deal with the issue then. Treasury said it was already feeling the effects of the debt impasse, noting it had no room left to settle an expected four-week bill auction that would have settled on Nov. 18. "Treasury market participants should be prepared for a delay in the formal auction announcement for the four-week bill and in the auction itself if Congress does not enact legislation to raise the debt limit," said Tim Bitsberger, Treasury's acting assistant secretary for financial markets. Treasury said all debt sales settling before Nov. 18, which would include the refunding auctions, would settle as expected. Bitsberger, in a press conference, played down expectations that its review of data released after auctions will include further details on bidding by foreign central banks, information Wall Street would like to see. "Certainly foreign central bank participation is a hot topic but we are kind of bound by certain confidentiality rules about how we release that data, so I don't think we'll be any more specific in how we release foreign central bank bidding data," he said. Treasury also said it was dropping an idea it had floated in its meetings with primary dealers in government debt: allowing for further stripping of inflation-indexed securities. "We accept the view expressed by some market participants that further stripping of (Treasury Inflation-Protected Securities), while helpful to the development of inflation derivative markets, may reduce liquidity in the TIPS market," Bitsberger said. Treasury also said it expects to issue cash management bills in early December and January.
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