The first U.S. floating-rate notes were sold with a high discount margin of 0.045 percent. The spread over three-month Treasury bills, the security's benchmark, was the same at 0.045 percent. The bid-to-cover ratio, which gauges demand by comparing the number of bids with the amount of securities sold, was 5.67.
"The sale came extraordinarily well," said Jim Vogel, head of agency-debt research at FTN Financial in Memphis, Tennessee. "The floaters are money-market yields without the headaches. From the beginning, the floaters have had 'winner' stamped all over it. And the securities came at the perfect time."
The debt offers investors a short-term security that's a hedge against a potential rise in interest rates. The securities are considered short-term because they are benchmarked to a short-term index—the high rate from a 13-week bill. The rate at which interest will accrue on the notes will be re-set daily.
Complete your profile to continue reading and get FREE access to Treasury & Risk, part of your ALM digital membership.
Your access to unlimited Treasury & Risk content isn’t changing.
Once you are an ALM digital member, you’ll receive:
- Thought leadership on regulatory changes, economic trends, corporate success stories, and tactical solutions for treasurers, CFOs, risk managers, controllers, and other finance professionals
- Informative weekly newsletter featuring news, analysis, real-world case studies, and other critical content
- Educational webcasts, white papers, and ebooks from industry thought leaders
- Critical coverage of the employee benefits and financial advisory markets on our other ALM sites, PropertyCasualty360 and ThinkAdvisor
Already have an account? Sign In Now
*May exclude premium content© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.