The Treasury will hold the first auction for the 30-year bond often called the “long” or “long bond” in the first quarter of 2006. There will be two auctions per year.
Investors favor the long bond because they can lock in a safe, long-term interest rate for their portfolio.
Currently, the only way investors can buy a 30-year bond is from another investor on the secondary market.
Issuing the new long bonds has benefits for the government. It can refinance short-term debt with the long-term, fixed bonds. While short-term rates have been low, they are on the rise and when it comes time to re-finance, it will undoubtedly be at ever-increasing rates.
For many of the same reasons, pension funds, insurance companies, and individual investors favor the security of locking in rates in a secure investment.
