Floating-rate notes are proving to be a success, with the U.S. Treasury's first new debt offering in 17 years being scooped up at auction by investors seeking an alternative money-market security.

The U.S. sold $13 billion of floaters yesterday at a bid-to-cover ratio, which gauges demand by comparing the amount of bids with the amount of securities offered, of 4.67, higher than the 2.9 average of fixed-rate debt sold this year by the government. It was the third sale since the inaugural floating-rate auction on Jan. 29.

The Treasury is seeking to extend the average maturity of its debt and cut the amount of outstanding short-term bills, which ballooned to $2.1 trillion during the the global financial crisis. The notes also offer protection against rising interest rates, with investors anticipating that the Federal Reserve is preparing to lift its benchmark rate from close to zero for the first time since 2008.

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