The Treasury Department has suddenly made it easier for small investors to buy government securities, just when many people are looking for a safe place to hide their money from further stock market loses.
The Treasury said Wednesday it will now sell its bills, notes and bonds in lots of as little as $1,000. Previously, all securities with maturities under one year were only sold in minimum amounts of $10,000, while two-year notes required a $5,000 minimum purchase. Ten-year notes and 30-year bonds were already available in $1,000 increments.
And to make it even easier for the little guy, the Treasury said it would sell securities over a secure Internet link to individual investors. The Internet service will begin Sept. 16 and by late October, investors will also be able to buy securities direct from Treasury over the telephone.
Investors who want to use the new direct purchase channels must be Treasury Direct customers. Treasury Direct allows investors to buy, sell or reinvest Treasury securities directly without going through a broker. Treasury maintains the accounts.
"These steps, once again, demonstrate the administration's commitment to seek innovative ways to encourage all Americans to save and invest," said Treasury Secretary Robert Rubin.
The Treasury also announced its schedule for its quarterly refunding. The government will pay down about $45 billion during the quarter. To pay off maturing debt, the Treasury will auction $37 billion in notes and bonds next week. The department will auction $16 billion in 5-year notes on Tuesday, $11 billion of re-opened 10-year notes on Wednesday and $10 billion of 30-year bonds on Thursday.
The Treasury has had to juggle its auction schedule to accommodate the growing federal budget surplus without causing too much chaos in the capital markets. Treasury has eliminated the 3-year note auctions, reduced the frequency of the 5-year not auctions and may reduce the frequency of the 2-year auctions. The government has no current plans to buy back debt, said Assistant Treasury Secretary Gary Gensler.
Written By Rex Nutting