The US Treasury said Thursday it will introduce a new 20-year bond meant to finance the country's growing deficit, which exceeded $1 trillion last year.

Treasury intends to issue the first 20-year bonds during the first half of the year, the department said in a statement, with more details to be released on February 5.

"We seek to finance the government at the least possible cost to taxpayers over time, and we will continue to evaluate other potential new products to meet that goal," said Treasury Secretary Steven Mnuchin.

The new 20-year bond would serve as an intermediate option between the two most popular maturities: the 10- and 30-year bond.

The US Treasury Department intends to issue its first 20-year bonds during the first half of 2020
The US Treasury Department intends to issue its first 20-year bonds during the first half of 2020 AFP / Alastair Pike

The department said an advisory committee had informed its decision and that it had also consulted the opinion of a variety of market participants, including companies that resell US debt securities, which are known as primary dealers.

As a result, "Treasury believes that there will be strong demand from investors for a 20-year bond, which will increase Treasury's financing capacity over the long term," the statement said.

Mnuchin reiterated at the end of August that he was considering new ultra-long bonds of up to 50 or 100 years to finance the debt, a proposition first studied by Treasury shortly after Mnuchin's arrival in 2017.

President Donald Trump has spent heavily during the past three years. According to projections by the non-partisan Congressional Budget Office, the federal budget deficit will exceed $1 trillion per year from 2020-2029, totaling more than $12.2 trillion.

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