First Time since the GREAT DEPRESSION

Treasury Sells $30 Billion of Four-Week Bills at Zero Percent

By Cordell Eddings and Daniel Kruger

Dec. 9 (Bloomberg) -- The Treasury sold $30 billion of four-week bills at zero percent for the first time since it began selling the securities in 2001 amid persistent demand for the safety of U.S. debt during the worst financial crisis since the Great Depression.

The bills were sold at a high discount rate of zero percent, the Treasury Department said today in Washington. The government received bids for the bills totaling more than four times the amount sold.

“It’s the year-end factor with those four-week bills,” said Chris Ahrens, an interest-rate strategist in Greenwich, Connecticut, at UBS Securities LLC, one of the 17 primary dealers that trade directly with the Federal Reserve. “Everyone wants to be in bills going into year-end. Buy now while the opportunity is still there.”

Indirect bidders, a group that includes foreign central banks, bought 47.2 percent of the amount sold, compared with 31.7 percent in the prior auction. Primary dealers bought 52.1 percent, while direct bidders such as individual investors purchased 0.7 percent.

Yields on government securities have plummeted this year to record lows as investors have gravitated toward their safety as stocks and emerging-market assets plunged. Rates on three-month bills, viewed as a haven in times of turmoil, traded at a negative rate of 0.01 percent today. The Treasury sold $27 billion in three-month bills yesterday at a rate of 0.005 percent, the lowest rate since it starting auctioning the securities in 1929.

The rate on four-week bills peaked at 5.175 percent on Jan. 29, 2007. The government began issuing the four-week bills in July 2001, according to Stephen Meyerhardt, a spokesman for the Bureau of Public Debt in Washington. The bills are intended to reduce the government’s reliance on irregularly issued cash management bills.