As borrowing costs stay surprisingly low, the Treasury Department is looking smarter than the initial critics of its floating-rate notes program.

Demand for the securities has exceeded that for fixed-rate debt at U.S. government auctions since the Treasury first sold the notes in January 2014, even as interest rates remained low. A class of investors that includes foreign central banks and domestic asset managers bought a record 75.5 percent of the $13 billion two-year offering sold March 25.

Investors are flocking to the securities—which have interest payments reset higher as borrowing costs rise—as the Federal Reserve gets closer to raising rates for the first time since 2006. Critics have said the Treasury should be seeking to lock in historically low borrowing costs since the securities were introduced.

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