U.S. Treasury Three-Year Note Yields Rise to 1.419% at Auction
By Andy Burt
Feb. 10 (Bloomberg) -- The U.S. Treasury sold $32 billion of three-year notes at a yield of 1.419 percent, the highest since Nov. 10 last year.
Demand was stronger than at the last auction, judging by the bid/cover ratio, which compares the number of bids with the amount of securities sold. The bid/cover ratio was 2.67, showing there was more demand than at the Treasury’s last sale of three-year notes on Jan. 7 when the ratio was 2.21.
At the past six auctions of three-year notes, bids were received for 2.58 times the amount of notes being sold, on average.
The yield was lower than the 1.4760 percent yield traders anticipated in a Bloomberg News survey. In when-issued trading before the sale, the notes yielded 1.41 percent to 1.42 percent.
The yield on the three-year notes sold today was the highest since 1.8 percent at the Nov. 10, 2008, auction. At the January auction, the notes yielded 1.2 percent.
In financial market trading after the auction, the benchmark 10-year note yielded 2.88 percent. In market trading, the two-year note yielded 0.98 percent.
At today’s auction, 61.41 percent of the bids were allotted at the high yield of 1.419 percent. The low yield submitted was 1.3 percent, the median yield was 1.373 percent, and the coupon rate was 1.375 percent.
The price was 99.871395.
Tenders totaled $85,555,578,500 and the Treasury accepted $32,000,007,000 of the bids. Competitive bids awarded totaled $31,902,414,500. Non-competitive bids awarded -- including those sold directly to individual investors -- totaled $97,592,500.
Indirect bidders, a group that includes foreign central banks, bought 44.8 percent of the amount sold, compared with 28 percent in the prior auction. Primary dealers bought 54.1 percent, compared with 70.9 in the previous sale. Direct bidders purchased 1.1 percent.
The three-year notes will be issued Feb. 17, settle Feb. 15, and mature Feb. 15, 2012. The CUSIP number on the bills is 912828LC3.
The minimum amount for Strips was $100.
Strips is an abbreviation for Separate Trading of Registered Interest and Principal of Securities. Coupons are separated from a note or bond and become a security. The remaining face value bond becomes another security that is known as a zero-coupon bond.
To contact the reporter on this story: Andy Burt
in Washington at email@example.com
Last Updated: February 10, 2009 13:14 EST