WASHINGTON -- The Treasury Borrowing Advisory Committee of the Public Securities Association says an "acute and protracted shortage" of 30-year Treasury bonds could develop resulting from the department's decision to cut the bond's annual issue nearly in half.

"Although the committee does not believe that the foregoing criteria for an ~acute and protracted shortage' are fully met at present, a situation could possibly develop wherein Treasury's credibility in dealing with such situations might be challenged given the financing strategy announced last May," said minutes of the group's November 3rd meeting.

The department released minutes of the meeting yesterday.

An acute and protracted shortage is known as a "squeeze." In May, the department decided to issue 30-year bonds every six months instead of every quarter and to cut the total annual issuance of 30-year bonds almost in half This was done to take advantage of the lower rates of shorter maturities.

In addition, the minutes said the advisory panel felt that a squeeze did exist with the 10-year Treasury note issued last quarter and the Treasury should reopen that issue this quarter to relieve the squeeze.

Last week, the department did in fact announce that it was reopening the 10-year note originally issued last quarter.

"Evidencing persistent shortages in the collateral markets, the current 10-year issue has been on ~special' since its original sale, significantly differing from the pattern that characterized previous 10-year notes," the panel said in the minutes.

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