A larger projected budget deficit will push net Treasury bill, note, and bond issuance higher in the second quarter of 2008 than in 2007, but will result in a paydown of debt, according to a Securities Industry and Financial Markets Association quarterly survey released yesterday.

The median response forecast a $500 million paydown of debt in the quarter, compared to net issuance of $82.0 billion in the first quarter of 2008, and a second quarter 2007 paydown of $232.7 billion. The survey forecasts a federal budget deficit of $413 billion for fiscal 2008, compared to the $168 billion 2007 deficit, which was the smallest shortfall in five years.

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