WASHINGTON — The U.S. Treasury Department sold $14 billion in 30-year bonds Feb. 9 in its first auction of the bonds since 2001. The deal was reportedly oversubscribed by about two to one, and the stop yield — the yield of the bond at the end of the auction — was 4.53%, about four basis points lower than during the day. According to money managers, the most surprising aspect of the auction was that 65% of the bidders did not go through a dealer, electing to buy directly.
"Usually, on average, that number is about 40%," said Dan Vandivort, CIO and co-head of fixed income at Weiss, Peck & Greer, New York. "That and the fact that the stop yield was lower than where it was trading indicate that people were not really concerned about what they were paying on the dollar. They were just saying, ‘I don't care, I just want to own it.'"
Demand was extremely high for the issue, noted Jim Midanek, chairman of institutional fixed-income firm Midanek/Pak Advisors. "There's a need for about $165 billion in 10-plus-year debt in the U.S., by pension funds and other institutional investors, so $14 billion doesn't seem so big."