U.S. gross debt issuance will reach $7 trillion when the current fiscal year ends this month, Treasury Acting Assistant Secretary for Financial Markets Karthik Ramanathan, said on Wednesday.

In fiscal year 2009, which ends next week, Treasury will have issued $7 trillion in gross issuance -- that's in a 12-month period, Ramanathan said in a speech at a financial markets conference in New York.

This issuance was necessary to meet nearly $1.7 trillion in net marketable borrowing needs, nearly $1 trillion more than what we raised last year.

He said that demand for Treasuries this year had been tremendous but expected some flight-to-quality flows into government debt to begin going to other sectors as the financial markets recovery continues.

There is still a long way to go toward market and economic stabilization but good progress is taking place, Ramanathan said, adding that officials were no longer focused on LIBOR/OIS spreads on a daily or hourly basis.

The LIBOR/OIS spread is a market measure that reflects the difference between the cost of so-called risk-free borrowing, such as that done by the U.S. Treasury, and lending to the private sector, which is normally considered less safe.

When asked whether the Treasury would consider offering a longer maturity bond in the future, Ramanathan said, We are content with our current suite of securities.

The Treasury's longest maturity is the 30-year bond.

(Reporting by Burton Frierson; Editing by Theodore d'Afflisio)