The U.S. hasn’t issued 20-year bonds on a regular basis since 1986.
the reintroduction of the bond in January, before the coronavirus crisis began in earnest in the United States. The extended timeframe gives the government a longer window to come up with the cash to repay bondholders, and provides Treasury with more leeway to spend in the short term.
With interest rates near historic lows , it’s relatively cheap for the government to issue bonds like these. Yields on existing bond issuances saw a boost after the Treasury’s announcement on Wednesday morning, with the 10-year yield climbing 0.06%. “Treasury’s borrowing needs have increased substantially as a result of the federal government’s response to the COVID-19 outbreak,” deputy assistant secretary for federal finance Brian Smith
. “In light of the substantial increase in borrowing needs, Treasury plans to increase its long-term issuance as a prudent means of managing its maturity profile and limiting potential future issuance volatility.”during the current quarter to cover the massive cost of the federal government’s response to the coronavirus crisis; the 20-year bond issuance is part of this borrowing plan.
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