A Dealer Take on the Less Than Festive Bond Results
October 8th, 2009 1:10 pm | by John Jansen |The results of the 30-year bond reopening were sloppy.
The auction stopped at 4.009% vs a 100PM of 3.98%, so bidding was not
aggressive.
The bid/cover ratio was 2.37. The YTD bid/cover has averaged 2.37, but has
averaged 2.63 since the June 1 change in auction bidding rules coming into
today’s auction. Noncomps were $18.9 mln.
The Indirect takedown was 34.5% of the auction. YTD, the Indirect takedown has
averaged 40.2 %, but 48.4% since the June 1 change in the auction bidding rules
coming into today’s auction.
Directs took down 8.5% of the auction, which compares with a YTD average of
7.1% and 4.8 % since the June 1 change in the auction bidding rules coming into
today’s auction.
http://www.treasurydirect.gov/instit/annceresult/press/preanre/2009/R_20091008_2.pdf
14 Responses to “A Dealer Take on the Less Than Festive Bond Results”
By sbenard on Oct 8, 2009 | Reply
NEW YORK, Oct 8 (Reuters) – Longer-dated U.S. Treasury debt prices shed gains to turn negative on Thursday after an auction of $12 billion of reopened 30-year bonds.
Immediately after the sale, the 30-year bond was trading 7/32 lower in price to yield 4.02 percent, up from 4.01 percent late on Wednesday.
The benchmark 10-year Treasury notes were trading with a yield of 3.21 percent, on par with a high yield of 3.21 percent in an auction of $20 billion of reopened 10-year notes on Wednesday.
Can someone explain to me what a “reopened” bond is? A bond that went unsold at a previous auction?
By Steve Milos on Oct 8, 2009 | Reply
A reopened bond is when the Treasury sells more of a preexisting issue, rather than issuing a new one. So, rather than a new 30 year bond, today’s newly auctioned bonds are 29 year, 10 month bonds (reopening the issue originally auctioned in August).
Hope that’s clear.
By franko on Oct 8, 2009 | Reply
re-opened is a bond that was pre-existing vs what i have heard referred to as a “fresh print” (not to be confused with Will Smith aka The Fresh Prince of Bel Air) in which the bond is the offered for the first time *ever* – so today’s auction was for the (unless i am mistaken) 4.50% of aug15/2039, and it EVEN has the same CUSIP (912810QC5, known colloquially as “QC5’s”), despite the different issue date. This bond was originally issued on aug17/2009.
By sbenard on Oct 8, 2009 | Reply
Thanks franko!
By sbenard on Oct 8, 2009 | Reply
…and thanks, Steve!
Wow! Today, it’s treasury trauma!
By Bman on Oct 8, 2009 | Reply
sbenard – it also gets assigned the original coupon of 4.50% – hence the premium price. (just a little value-added to complete your day in class).
By Tyler K on Oct 8, 2009 | Reply
another tidbit: its a re-opening of the on the run issue.
By Bman on Oct 8, 2009 | Reply
oh, I forgot the most important part – the Treasury has no money to pay your semi-annual interest, so they will issue more bonds and notes to raise money for that one – and so on, and so on…
By Tyler K on Oct 8, 2009 | Reply
ssssshhhhhh! Quiet you! — you’ll give away the dirty little secret
By Alan Greenspend on Oct 8, 2009 | Reply
~Bman, that’s a hoot!
Not sure if it’s been noted, just dropping by John’s wonderful blog when I can. But wondering about the repercussions of Latvia’s failed Bond sale and Lithuania’s functional bond sale (they are rated by Fitch at BBB).
Ultimately, the tea leaves are once again getting cloudy and hard to read. Perhaps using a toaster in a bathtub to make tea is not the best method…
By Al on Oct 8, 2009 | Reply
in other words, if you bought this bond good luck to you, you’re gonna need it
By Farah Fawcett on Oct 8, 2009 | Reply
Bought to close 20 Oct. TBT 46 puts @1.90
Profit: (2.00-1.90)2,000 = $200
Across The Curve Donation 1% = $2
I still hold short puts positions:
10 Oct. TBT 44 puts sold @1.20
20 Nov. TBT 43 puts sold @1.00
Can’t wait to sell more TBT puts…
By John Jansen on Oct 8, 2009 | Reply
Farrah,
Thank you.
JJJ