Strong Treasuries demand seen as institutions bid for 83% of bond sales

September 23
12:22 AM 2013

This year, the total bids submitted from investors including foreign central banks, pension managers, insurance companies and mutual funds had reached 83% of auctioned Treasury debt. This was higher compared with 84% last year and 37% in 2008 at the peak of the worst global financial crisis since the Great Depression. This was according to a data compiled by Bloomberg.

Consistent investors demand had helped balance declining purchases from bond dealers and individuals in the worst year for the government debt from 2009. Institutional investors control as much as 81% of the USD11.6 trillion in Treasuries. Yields had been rising following the improvement in the economy. By next year, the US had prepared refinancing a record of USD1.38 trillion. The budget deficit of US had also lowered to the least since 2008 and the US Federal Reserve had planned a new stimulus reduction policy while its Congress battle with President Barack Obama to raise the country's borrowing limit.

Senior managing partner at Payden & Rygel James Sarni said, "Sovereign wealth funds and central banks are going to continue to have demand for Treasuries. Despite the fact there's widespread concerns that rates are going up, there's still demand coming from individuals looking for income."

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