Time Clock: The Treasury's Test

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The U.S. Treasury last week took a bold step to raise cash. For the first time in more than a year it offered a new long-term bond, a 25-year issue with 4^% interest, the legal maximum imposed by

Congress. The long maturity date took Wall Street by surprise, since experts had expected an eight-to ten-year issue.

The Treasury will sell up to $1.5 billion, if possible, of the 25-year bonds, but privately will consider the issue a success if it sells only $500 million worth. With the new bonds, the Treasury will also issue $2 billion in 4% notes, thus take care of its major cash needs until mid-May. The Treasury thinks that the long-term bonds should sell well, since the yield on Government bonds last week was under 4¼%. But if the bonds do sell well, it will just about end the Treasury's hopes of getting Congress to eliminate the 4¼% ceiling this session.