The U.S. could be issuing 50-year bonds as soon as next year as the government looks for cheaper and longer-term ways to finance its burgeoning debt load, Treasury Secretary Steven Mnuchin told CNBC on Thursday.
“This is something I have talked about over the last year and it is something we are very seriously considering,” he said on “Squawk Box.” “We’re looking at issuing a 50-year bond, what we could call an ultra-long bond. We think there is some demand for that. It is something we’d very seriously consider for next year.”
Mnunchin’s comments come a day after President Donald Trump tweeted that he thinks the U.S. should look at “refinancing” is debt load, which has recently eclipsed the $22.5 trillion mark.
Though it’s unlikely the government could engage in that process the way a homeowner would refinance a mortgage, Treasury could extend the maturity of the debt by issuing longer-term bonds. The longest duration the government has now is the 30-year bond.
The Treasury secretary said one of the objectives would be to widen the yield spread against the 30-year bond. That might help revert a trend in which some -term government debt is yielding more than longer-duration notes, a phenomenon called an inverted yield curve that has been a reliable recession indicator over the past 50 years.
“We would do this in a way that if there is demand it’s something that we would meet. I personally think it would be a good thing to expand the U.S.’ borrowing capabilities,” Mnuchin said. “I would say it’s obviously quite attractive for us to extend and de-risk the U.S. Treasury borrowing. So we’re also looking at extending the weighted average maturity of the Treasury borrowing to de-risk this for the U.S. people.”
This is a developing news story.