Treasury Auction Raises $17 Billion

The federal government’s quarterly auction of notes and bonds got off to a strong start Tuesday as buyers snapped up $17 billion worth of three-year notes from the Treasury.

The Treasury Department is selling $40 billion worth of notes and bonds this week to raise $9.5 billion in new cash and to return $30.5 billion to lenders as it pays off maturing securities.

Market analysts said the three-year auction came in at about the expected yield, which settled at 7.34%. Bidding was healthy, especially from private investors, indicating pent-up demand for government debt. “It got a good reception,” said Kevin Flanagan of Dean Witter Reynolds, who described the bidding as tight.

Traders said they were unable to confirm rumors of Japanese buying at the auction. But Flanagan said the level of non-competitive bids, $1.57 billion, was the highest since May, 1990, indicating strong interest from private investors.

In addition to the designated group of securities firms that buy bonds directly from the Treasury, private investors can also bid.

The next two legs of the refinancing are on Wednesday and Thursday.