US Treasury 20-year bond sale meets solid demand

NEW YORK, July 23 (Reuters) - A U.S. government debt sale of 20-year bonds on Wednesday was well received, likely assuaging, at least for the time being, lingering concerns in the market over U.S. fiscal health and widening U.S. government debt levels.

The 20-year bonds, worth $13 billion, were sold with a high yield of 4.935%, nearly two basis points below the market at the bidding deadline, a sign investors were willing to pay up to absorb the issuance. After the auction, 20-year Treasury yields US20YT=RR declined and were last at about 4.94%.

Investors have been scrutinizing Treasury auctions over the past few months to assess demand for government debt after the U.S. bond market wobbled in April on the back of sweeping U.S. tariffs that dented investor confidence in the safe-haven quality of Treasuries.

Those concerns were then exacerbated by a downgrade of U.S. sovereign debt by rating agency Moody's in May, as well as this month's passage of a tax-cut and spending bill that is largely expected to add trillions to the government's debt.

However, signs of a buyer's strike for Treasury securities have not materialized. The Treasury Department saw solid demand for a $22 billion sale of 30-year bonds earlier this month, as well as a 10-year note auction worth $39 billion.

The bid to cover ratio for Wednesday's 20-year debt sale, a key metric of demand that compares the amount of bids received to the amount of securities offered, was 2.79, the highest since April 2024.

"Primary Dealers ended up with 10.7% of the sale, that is one of the lowest percentages in the last year for this maturity, indicative of solid demand from other participants," Lou Brien, a strategist at DRW Trading, said in a note.