U.S. eyes auction changes if debt limit not raised
WASHINGTON |
(Reuters) - The Treasury made no changes to its borrowing plans on Wednesday but said if Congress is unable to raise the country's borrowing cap before August it will be forced to delay or reduce future offerings.
As planned, the Treasury will sell $72 billion in bonds and notes next week that will bring the United States to the edge of its $14.294 trillion borrowing cap on May 16.
The Treasury will start to employ a series of emergency measures this month to allow the government to meet its obligations, such as paying interest on U.S. debt.
The measures and higher-than-expected tax receipts gives Congress until around August 2 to broker a deal to raise the debt ceiling, the Treasury has said.
Although the payments from American taxpayers gives the Treasury more room to fund government operations, the Treasury did not want to spook markets by changing the April-June quarter's auction sizes. Treasury officials said this would have been highly disruptive.
Congress is divided over how to raise the debt ceiling, with Republicans and some Democrats refusing to do so without slashing the country's $1.4 trillion budget deficit and changes to government spending.
Treasury officials from the secretary to the department's debt managers believe Congress will reach a deal. In a sign of that confidence, Treasury's top debt manager, Mary Miller, said she expects coupon auction sizes to "remain steady in the upcoming quarter."
Treasury's debt advisory panel, which includes executives from JPMorgan Chase, Goldman Sachs and Soros Fund Management, also voiced confidence that Congress would raise the limit in a timely fashion, Treasury officials said.
Nevertheless, the government is taking precautionary measures.
"In the unlikely event that the debt limit is not increased by August 2, some alterations to the auction schedule should be expected," Miller, Treasury's assistant secretary for financial markets, said in a statement.
(Reporting by David Lawder and Rachelle Younglai; Editing by Neil Stempleman)
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