Must investors participate in buybacks?

No. Investors may hold their stocks until maturity. Participation in buybacks is strictly voluntary. For all the rules on buybacks, see 31 CFR Part 375.

When do these buybacks occur?

Buybacks don't occur on a regular pattern. At this time, none are scheduled.

Click here for specifics on past buybacks.

Why does the government conduct buybacks?

Buybacks give us more flexibility in managing the public debt. . . .

• Buybacks let us continue offering regular new securities in different maturities -- and in more volume -- than we otherwise could. The end result? The improved liquidity for new securities could lower the government's interest expense and promote more efficient capital markets.
  
• With buybacks, we have more control over the maturity structure of the outstanding debt. Without a buyback program, we might need to further reduce the size and frequency of new Treasury issues.
  
• Buybacks are a good cash management tool. With them, we can absorb extra cash whenever revenues are greater than the immediate spending need.
  
• With buybacks, we may be able to reduce the government's interest expense by buying higher-yield debt and replacing it with lower-yield debt.

Can investors who hold marketable Treasury securities in TreasuryDirect participate in the buyback program?

Yes, but it will take some coordination and effort. First, though, let us point out that the easiest and most convenient way for TreasuryDirect customers to sell their marketable securities isn't through a buyback, but rather our Sell Direct® program! But, if you want to sell your securities back to us, here's how . . .

How does a TreasuryDirect customer participate in a buyback?

• Establish an account with a primary securities dealer listed with the Federal Reserve Bank of New York. Only primary dealers can submit buyback offers. For a list of the eligible primary dealers, follow these steps:
  
  1. Start at the Federal Reserve Bank of New York home page.
  2. Click "News & Events."
  3. Click "Primary Dealer List."
  4. Find the most recent list of primary dealers.
  

• Before a primary dealer will submit an offer for you, you'll first probably have to transfer the securities for buyback consideration into an established account with the dealer you selected. Here's the tricky part: Before the official announcement, you have no way to know which securities Treasury will offer to buy back. So, the securities you transfer may not be among the eligible securities in the buyback offering.

  Nevertheless, if you want to try to take part in the buyback, here's what to do:

  • Fill out a Security Transfer Request (PD F 5179). Make sure the information is complete -- you'll need to get some information from the broker or dealer you've chosen. (Download or order a Security Transfer Request.)
    

  • Sign the Security Transfer Request in front of an authorized certifying officer. What's that? Authorized employees of insured depository institutions (banks) and corporate central credit unions can certify your signature. A notary public CAN'T certify your signature. Then you send the request to your customer contact center and the transfer is under way.

We'll be honest: Participating in a buyback may be difficult, mainly because of timing issues. You may have only a few hours between the announcement and the actual buyback itself, so it's possible you won't be aware of the buyback in time to tell a dealer to make an offer on your behalf.

Since we accept only competitive offers, there's no guarantee we'll accept your offer even if you do arrange to have a dealer place it on your behalf. (By the way, that's not unique to this situation: all competitive bids run the risk of not being accepted. That's the reason most individuals bid noncompetitively when purchasing their securities.)

Why use Sell Direct® instead of a buyback?

If you're interested in selling your security at a market-based price, we think you'd be better off using Sell Direct, the easiest and most convenient way for TreasuryDirect customers to sell their marketable securities. Why? Because with Sell Direct:

• You sell whenever you want to sell, unlike the limited timeframe of a buyback.
  
• You're guaranteed a market-based price, instead of taking the chance your competitive offer through the buyback program isn't accepted.
  
• You don't need to have a brokerage account in the commercial market.

If you're not familiar with Sell Direct, here are the basics: You need only to fill out a Sell Direct form, have your signature certified, and send the form to the Federal Reserve Bank of Chicago. In turn, FRB Chicago will obtain quotes and sell the security to the highest bidder. Next, we subtract a very competitive transaction fee ($34) from the proceeds and deposit the rest into your personal account. Sounds easier, doesn't it? Click here for more information.