In the midst of hard times for many borrowers, the biggest credit junkie of all comes to Wall Street this week to ask for a record-size loan.
And there is little doubt he will get his money with a minimum of fuss. Lenders, in fact, may be so eager to oblige him that they will offer him a break on the interest rate.The party with the outstretched hand is the U.S. Treasury, which plans to solicit $34.25 billion through the sale, over a three-day span from Tuesday through Thursday, of notes and bonds.
More often than not in recent years, these quarterly "refundings" by the government have been greeted with trepidation by traders in the stock and bond markets.
The nagging fear keeps recurring that one day they will hold a Treasury auction and many of the usual bidders simply won't show up.
This time, however, such talk has been all but stilled. Instead, some observers say, a developing credit crunch in many sectors of the economy may actually have enhanced the market for paper floated by Uncle Sam.
As Jack Lavery, director of global research at Merrill Lynch put it recently: "Increased concern about credit quality has sparked greater domestic demand for Treasury issues, even though foreign demand appears to be drying up."
The Treasury has long ranked as one of the world's best credit risks, supported by a vast store of national resources and assets, and by its powers to tax and to print money. So what if its checkbook has been chronically out of balance for the past 20 years?