U.S. debt ceiling deadline could extend to January


The U.S. Treasury could be able to fund government operations into the first half of January without a debt ceiling increase, according to a new estimate by money market research firm Wrightson ICAP on Monday.

Wrightson said in a note to clients that based on the Treasury’s debt issuance plans, the department should be able to go well past a new Dec. 15 deadline set last week by Treasury Secretary Janet Yellen. She said that “under certain scenarios” the Treasury would lack sufficient resources and risk default after Dec. 15 after making a $118 billion transfer to the Highway Trust Fund.

Yellen again urged Congress to increase or suspend the debt limit as soon as possible, but a longer deadline would provide Democrats more room for maneuvering as they struggle to pass a sweeping, $1.75 trillion social and climate spending bill without Republican votes.

“Our own updated base case is that the Treasury will have enough resources to meet its obligations until the first half of January,” Wrightson wrote. “There is some risk that it might run into trouble in the final couple of days of December, but there is also some chance that the drop-dead date might not arrive until after the mid-January non-withheld individual income tax deadline.”

Wrightson said the Treasury was hoping the debt ceiling issue would be resolved well before mid-January, but it had begun to fine-tune its bill issuance in case it was “still on a short leash” in the second half of December.

It said a 35-day cash management bill due to be sold on Tuesday would come due on Dec. 31, which would help the Treasury accommodate the settlement of end-December note and bond auctions.

The firm said it expected a string of “off-cycle” cash management bill issuances in coming weeks.

A U.S. Treasury spokesperson declined comment on the Wrightson report.

(Reporting by David LawderEditing by Mark Potter, Kirsten Donovan)

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