Stretching the Debt

When Robert B. Anderson Jr. took over as Secretary of the Treasury about a year ago, the nation's finances were--as even retiring Secretary George M. Humphrey agreed--"in a mess." The Treasury had to refinance some $75 billion (28%) of the U.S. debt within a year, and the attrition --demands for cash--in refinancing operations had been running as high as an alarming 30%. Secretary Anderson set out to lengthen the average maturity of the federal debt, which had shrunk to 57 months, thus keep the Treasury from going to the market so often. He hoped to lessen competition with municipal and corporate issues, give the Federal Reserve a freer hand in controlling the money supply. In spite of complaints from money men that long-term issues would hinder the easing of money rates, Anderson tried several such issues. He judged the market shrewdly. Fortnight ago his longest-term issue (27 years), for $1 billion, was heavily oversubscribed.

Last week the Treasury announced that it had completed a $9.6 billion refinancing which stretched the average maturity of the federal debt from 58 months to 63 months. Holders of maturing securities gave the Treasury a pleasant surprise, swapped all but 3.7% of their holdings for two new Treasury issues. The Treasury had to pay out only $356 million in cash. It hopes now to stay out of the market until July, when it will refinance $11.5 billion that comes due Aug. i.

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