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US Treasury Sells $25B in 30-Year Bonds at 5.046% Yield Amid Strong Foreign Demand

The US Treasury sold $25 billion worth of 30-year government bonds at a yield of 5.046%. The auction attracted strong foreign demand, with indirect bidders purchasing $16.6 billion of the securities. The bid-to-cover ratio stood at 2.30, indicating robust investor interest. Treasury auctions are closely watched globally as US securities serve as benchmarks for borrowing costs.

Key Points: US Treasury Sells $25B 30-Year Bonds at 5.046% Yield

  • $25 billion 30-year bonds sold at 5.046% yield
  • Strong foreign demand with $16.6B from indirect bidders
  • Bid-to-cover ratio of 2.30 indicates robust demand
  • Bonds mature on May 15, 2056 with 5% coupon rate
2 min read

US Treasury sells USD 25 bn worth of 30-year bonds at 5.046% yield amid strong foreign demand

The US Treasury sold $25 billion in 30-year bonds at a 5.046% yield, with strong foreign demand driving a bid-to-cover ratio of 2.30.

"The auction attracted strong interest from indirect bidders, who are widely considered a proxy for foreign demand - US Treasury Department"

Washington DC, May 15

The US Treasury Department has sold USD 25 billion worth of 30-year government bonds at a high yield of 5.046 per cent, according to official Treasury auction results.

According to the auction results, the coupon rate, which refers to the fixed annual interest rate paid on the bond, was set at 5 per cent. However, the auction stopped at a slightly higher yield of 5.046 per cent, indicating that investors demanded slightly higher returns while purchasing the bonds.

The bonds have been issued for 30 years and will mature on May 15, 2056.

The total amount tendered in the auction stood at over USD 63.50 billion, while the total accepted amount was around USD 30.93 billion, including purchases by the Federal Reserve's System Open Market Account (SOMA).

The data shared by the department also highlighted that the auction attracted strong interest from indirect bidders, who are widely considered a proxy for foreign demand, including foreign central banks, sovereign wealth funds and overseas institutional investors.

Indirect bidders purchased around USD 16.6 billion worth of the accepted securities.

Meanwhile, direct bidders purchased around USD 5.42 billion, while primary dealers were allotted around USD 2.9 billion worth of securities.

The Treasury auction also recorded a bid-to-cover ratio of 2.30, meaning investor demand was 2.3 times the amount of bonds offered for sale.

The auction was conducted as part of the US government's regular borrowing programme through which it raises money to fund public spending and manage fiscal requirements.

Treasury auctions are conducted by the US government to borrow money from investors. In return, investors receive Treasury securities and earn interest over a fixed period. In this case, the government sold 30-year bonds, meaning investors lending money to the US government will receive interest payments for 30 years before the principal amount is repaid at maturity.

In bond markets, higher yields generally indicate that investors are demanding better returns for lending money, often due to inflation concerns, higher interest rate expectations or uncertainty in financial markets.

The results of Treasury auctions are closely watched globally because US Treasury securities are considered among the safest financial assets in the world and serve as benchmarks for borrowing costs across global markets.

- ANI

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Reader Comments

A
Arun Y
The bid-to-cover ratio of 2.3 is decent but not insane. Shows foreign central banks are parking dollars but hedging bets. India should learn from this - our bond markets need more depth and foreign participation instead of being dominated by LIC and banks.
P
Priya S
5% for 30 years is actually decent given current inflation. But think about it - US$25B raised at this rate means they'll pay billions in interest over three decades. Meanwhile our country debates fiscal deficit every budget. Different priorities I guess. 🤔
S
Siddharth J
The indirect bidder data (USD 16.6B) clearly shows China, Japan, and other central banks still loading up on US debt despite all the talk of de-dollarization. Actions speak louder than headlines. Our RBI also holds significant US treasuries.
N
Nikhil C
Good for US fiscal position but concerning for emerging markets. High US yields mean capital flows out of India and other EMs as investors chase safer returns. Expect RBI to manage rupee volatility carefully. Let's see how Fed reacts.
V
Varun X
Interesting that yield stopped above coupon. Market is basically saying "we want 5.046% not 5%". For us retail investors here, FD rates in India (6-7%) still beat this after accounting for currency risk. But for institutions, US Treasuries offer unmatched liquidity.

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