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February 10, 1997

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Others Rush To Issue Inflation-Indexed Bonds

If you missed out on the U.S. Treasury Department's big auction on January 29, you now have more than one place to choose from when shopping for inflation-indexed bonds. The Treasury already has competition with similar inflation-proof bonds.

On February 4, the Federal Home Loan Bank (FHLB) unveiled a $200 million offering of five-year, inflation-indexed notes. Their yield is set at 3.15 percentage points above the inflation rate as measured by the consumer price index (CPI), according to the Wall Street Journal (February 5).

J.P. Morgan Securities is the investment bank underwriting the bond deal.

The Tennessee Valley Authority (TVA) is expected to offer $300 million in 10-year, inflation-indexed securities on February 5.

The Federal Home Loan Banks is a government-sponsored system that supports the residential-mortgage market, while TVA, the largest provider of electricity in the U.S., is a quasi-governmental institution.

For background analysis and information on bond yields and the Treasuries’ inflation-indexed bonds, click here.

Key Words: CPI, inflation-indexed bonds, U.S. Treasury, FHLB, TVA

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