Bond issuance on the rise, survey says

U.S. government bond issuance will rise in the second quarter due to a larger projected federal budget deficit, according to a report from the Securities Industry and Financial Markets Association’s Government Securities Research Analysis and Strategy Committee. Net new issuance of Treasury coupon securities is expected to hit $47 billion in the second quarter, compared with $36.5 billion in the first quarter and $25.4 billion in the second quarter of 2007. The report projected an increase in the federal budget deficit this fiscal year to $413 billion, from $168 billion in 2007. "The year-over-year projected issuance increase is the result of the higher budget deficit forecast for fiscal year 2008, reflecting a slower economic-growth outlook due to the continued impact of weakness in the housing sector and current conditions in the credit markets," Steve Davidson, managing director of Washington- and New York-based SIFMA, said in a statement. "Taking into account the market environment, the committee continues to favor a short-duration portfolio. The survey results also suggest a view that market conditions may ease later in the year," he added.