Survey: Bond issuance to spike in 1Q

Securities dealers are forecasting an increased issuance of treasuries early in the year due to a spike in the federal deficit, according to a survey released by the Securities Industry and Financial Markets Association. Treasury bill, note and bond issuance is expected to climb to $125 billion during the first quarter of this year, a jump from the $34 billion issued in the recent fourth quarter and $80 million during the first quarter of 2007, the securities dealers surveyed by the New York-based organization said. SIFMA officials also expect the 2008 federal deficit to escalate to $228 billion from the $162.8 billion in 2007. "A slowing economy hurts the government's fiscal position by lowering tax receipts and puts pressure on spending programs, causing a rise in borrowing,” said Michael Decker, SIFMA’s senior managing director and head of research and public policy of the reasons behind the survey’s results. The survey was conducted prior to Federal Reserve Chairman Ben Bernanke’s January 22 decision to slash interest rates 0.75% for the first three-quarter percentage point cut in recent memory (InvestmentNews, Jan. 22).