From time to time, the U.S. Treasury buys back Treasury marketable securities that have not yet matured.
Current buyback rules:
History of those rules: 1999 proposed rules and comments on the proposed
Why does Treasury buy back Treasury marketable securities?
Buying back securities has several advantages for the U.S. government.
- Buybacks are a good cash management tool. They give us flexibility to manage the public debt.
- By buying higher-yield debt and replacing it with lower-yield debt, we may be able to reduce what the government pays for interest.
- We can absorb extra cash when revenues are more than the government needs for immediate spending.
- We can offer new securities in appropriate size and maturity, giving us more control over the maturity structure of the public debt.
Who may participate in a buyback?
Institutions that are approved by the Federal Reserve Bank of New York (FRBNY) to conduct open market transactions may participate in a buyback. Other institutions and individuals may participate in a buyback through an approved institution.
How does a buyback work?
A buyback has several phases:
- Treasury announces the buyback.
- Interested participants submit offers.
- FRBNY evaluates the offers.
- Participants learn what was accepted.
- Treasury publishes the results.
- Treasury pays for the securities it has agreed to buy.
Treasury announces the buyback
Treasury calls a buyback an "operation."
Each announcement includes this information:
- List of eligible securities
- Par amount to be bought
- Operation date
- Operation start time
- Operation close time
- Settlement date
- Offering amount limits
- Offering formats
- Other relevant information
Interested participants submit offers
FRBNY uses its FedTrade system to do buyback operations.
Interested participants submit offers.
FRBNY evaluates the offers
FRBNY accepts offers with the best value relative to prevailing market prices.
Participants learn what was accepted
FedTrade tells participants about their accepted offers.
Treasury publishes the results
Shortly after the operation, Treasury publishes summary results.
Summary results include
- Total par amount offered
- Total par amount accepted
- Number of eligible issues
- Number of accepted issues
- Amounts for each eligible security
Treasury publishes detailed information for each eligible security later on operation day.
Treasury pays for the securities it has agreed to buy
Treasury usually settles one business day after the operation and pays for securities at their accepted prices.
We did buybacks from 2000 through 2002. We did none between 2003 and 2013. Since 2014, we have been doing small-value buybacks.
See the buyback results for all years. Also see a summary of the historical information from 2000 through 2002.
Where can I see buybacks in Treasury reports?
We report securities we’ve bought back as redemptions on various statements, such as:
- Daily Treasury Statement, Table III-A, "Public Debt Transactions"
- Monthly Statement of the Public Debt, Table III, "Detail of Treasury Securities Outstanding"
What is a small-value Treasury buyback?
What is a small-value Treasury buyback?
A small-value buyback is an operation to buy a relatively small amount of securities to test operational readiness rather than to meet a specific debt-management need. We believe it is good to periodically conduct small-value buyback operations to ensure operational readiness of our buyback infrastructure. These small-value buyback operations are not a precursor or signal of any pending policy changes regarding the U.S. Treasury's use of buybacks more broadly.
Who will conduct the small-value buyback operation?
Buybacks of Treasury securities are conducted at the direction and full discretion of the U.S. Treasury. The U.S. Treasury has directed the Federal Reserve Bank of New York (FRBNY), as fiscal agent of the United States, to conduct small-value buyback operations.
Who can submit offers in the small-value buyback operation?
Only primary dealers, as designated by FRBNY, may submit offers in a small-value operation.
Which securities will be considered for the small-value buyback operation?
Before each small-value operation, the U.S. Treasury will announce the securities to be bought back. The announcement will be available on the TreasuryDirect website at https://www.treasurydirect.gov/auctions/announcements-data-results/buy-backs/announcements/.
How will the small-value buyback operation be conducted?
The small-value buyback operation will be conducted through a multiple-price competitive auction using FRBNY’s FedTrade system. Primary dealers will submit a fixed number of offers, which FRBNY will evaluate for their relative value to prevailing market prices.
How will the U.S. Treasury communicate the small-value buyback operation results?
Treasury will publish summary results shortly after an operation closes. Participating primary dealers will be notified of their accepted offers via FedTrade.
Treasury will publish detailed results later on operation day.
Summary and detailed results will be available on the TreasuryDirect website at https://www.treasurydirect.gov/auctions/announcements-data-results/buy-backs/results/
When and how does security settlement take place?
Security settlement for the small-value buyback operation will typically occur one business day after the day of the operation.