Treasury said it will auction $15 billion of the new floating rate notes on Jan. 29. The two-year security will have an interest rate that resets every day and will be tied to the three-month Treasury bill.
“Floating-rate notes bring additional diversity to Treasury’s current portfolio and help support our goal of saving taxpayer dollars by financing the government’s borrowing needs at the lowest cost over time,” said Mary Miller, Underdecretary for Domestic Finance. “Over the past three years, Treasury has worked closely with market participants to design the FRN program and we appreciate their continued feedback.”
Treasury said it expected to offer the floating rate securities each month with auctions at the beginning of each quarter in January, April, July and October and then a re-opening of the security in the subsequent months in each quarter.
The floating rate notes are the first new Treasury debt product since Treasury inflation protected securities were first auctioned in 1997. The notes will be sold in increments of $100 with a minimum purchase of $100. Interest payments will be made on a quarterly basis.