The U.S. Treasury announced on
Tuesday it would buy back up to $1 billion in U.S. government
debt in its first move to exploit rising surpluses to cut its
trillion dollar debt pile.
The buy back is the U.S. government's first in 70 years, and
targets 30-year bonds maturing between February 2015 and
Treasury said it would purchase the debt through open market
operations performed by the New York Federal Reserve. The
operation date for the transaction will be March 9. The
settlement date will be March 13.
Treasury announced plans in January to buy back up to $30
billion this year in an attempt to cut interest payments on the
$3.3 trillion it has in publicly traded U.S. Treasury bonds. A
second buyback by Treasury is expected later this month.
The government posted back-to-back surpluses of $69 billion
and $123 billion respectively in fiscal 1998 and fiscal 1999.
Surpluses are forecast to continue until about 2010, making
debt buybacks possible for the first time since 1930.
Previously, the U.S. government has used other methods to retire
debt, including debt exchanges in the 1960s.
President Clinton wants the buyback program to make more
investment capital available and set the United States on the
path to debt-free status in 15 years.