The decision, done in consultation with Treasury dealers, comes after the U.S. reviewed other options, including ultra-long bonds maturing in 50 or 100 years. The current maximum is 30 years. Many on Wall Street lobbied against those longer durations as the government was weighing what to do.
"The 20-year bond fits more easily into the existing market structure because it's likely to be an attractive trading instrument with the markets because it lines up with existing with other cash market instruments," said Wrightson ICAP LLC chief economist Lou Crandall. "This is a way of taking advantage of long-term interest rates that are low by historical standards without introducing a wild-card such as an ultra-long bond, which would have had more growing pains."
Treasury said it anticipates strong demand from investors. The department will announce further details in its Feb. 5 quarterly refunding statement.
"We seek to finance the government at the least possible cost to taxpayers over time, and we will continue to evaluate other potential new products to meet that goal," Treasury Secretary Steven Mnuchin said in the statement.
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The Treasury building in Washington. (Photo: Shutterstock) 
