He also noted disappointment that the Treasury's borrowing needs would be larger this year than last.

Lenders set a maximum amount they are willing to lend (credit ceiling), which might be smaller or larger than the borrowing needs of the country.

That may be in part because the government's borrowing needs are relatively modest as a share of the overall economy.

In May the estimated borrowing need was $30 billion to $35 billion.

That will make the overall budget deficit appear larger, and increase the government's outside borrowing needs, hence its interest costs.

From that point on, Macy said, its borrowing needs were expected to decline.

The auction comes at a time when the Government's borrowing needs are shrinking as the budget deficit declines.

Mexico is a major producer of oil, and the bankers say the higher price will reduce the country's borrowing needs.

But currency traders were disappointed by the higher than expected borrowing needs, saying that there had not been enough spending cuts.

The refunding will not include the 30-year bond issue for the first time since 1995 because budget surpluses have reduced the government's borrowing needs.