Capital Markets

30-Year Bond to Return February 9

The Treasury Department reportedly anticipates borrowing $171 billion during the first three months of 2006, breaking the record of $146 billion se...
Stephen TaubNovember 2, 2005

The 30-year bond will return on February 9, 2006, for the first time since it was discontinued in 2001, according to the Department of the Treasury. Details of the bond auction will be announced on February 1.

The first so-called long bonds sold in 1977. The Treasury Department stopped issuing the bonds several years ago because of a budget surplus and unnecessarily high interest payments.

In August, when officials first announced plans to revive the 30-year bond, they said they expect long-bond sales to generate between $20 billion and $30 billion each year, according to the Associated Press.

The AP also reported that Treasury anticipates borrowing $171 billion during the first three months of 2006, breaking the record of $146 billion set in the first quarter of 2004.

One individual who may mark February 9 with mixed feelings is John Youngdahl, a former Goldman Sachs economist. Youngdahl, who received an insider tip in 2001 that the 30-year bond would be discontinued, used an eight-minute head start to enable Goldman to buy bonds and bond futures contracts that were worth $3.8 million when they were later sold.

Youngdahl paid $240,000 to settle civil charges with the Securities and Exchange Commission, and he pleaded guilty to criminal charges including wire fraud and securities fraud. Come next February, his 33-month prison sentence will still have about two years to run.