The “long bond” is coming back. But is that good news or bad? It depends on your point of view.

The Bush administration said that it would resume sales early next year of the 30-year U.S. Treasury bond, which was discontinued in 2001. That had ended the bond’s 21-year reign as the safe-haven security for investors worldwide.

The bad news is that the government really has little choice.

All bonds represent loans. The buyer pays, say, $1,000 to the issuer – a governmental body or corporation – and the issuer pays the buyer interest for the life of the loan. When that term ends, the bond matures and the issuer pays the $1,000 principal back to the bond’s owner.

Generally, long-term bonds pay more interest than short-term ones, since investors risk tying their money up for so long.

The 30-year bond was sidelined four years ago after the government enjoyed a string of budget surpluses and no longer needed to borrow as much. Why pay the high interest demanded by 30-year bond investors when it could do all the borrowing it needed with bonds maturing in 10 years or less?

Sadly, the government has rung up a string of budget deficits. It wants to lock in its debts at today’s relatively low rates before interest rates rise, as most experts expect they will. It’s like a homeowner refinancing to pay off an adjustable-rate mortgage with one carrying a fixed rate.

The good news is that money managers, such as those who run pension funds, will again have the 30-year bond for a steady, dependable income. And they’ll earn more than on shorter-term bonds.

Ordinary investors may find this appealing, too. But they need to consider the risks.

A bond’s interest payments are fixed for the life of the bond and may start to look pretty stingy if prevailing rates rise and newer bonds pay more.

Although you can sell a bond in the secondary market before it matures, you probably won’t get as much as you had paid if interest rates have gone up. Why would anyone pay you the full $1,000 for an old bond paying 4 percent if a new one paying 6 percent could be had for the same price?

The price drop caused by rising interest rates is more severe for long-term bonds, since investors risk being stuck with sub-par earnings for longer. A 30-year bond can lose 10 percent of its value if prevailing rates rise by just one percentage point.

Generally, then, small investors should buy bonds only if they expect to hold them to maturity, when they are sure of getting back their bonds’ full face value.

Will the new 30-year bonds be a good deal for small investors? We’ll have to wait to see what they’ll pay.

Traditionally, investors are told to keep 30 to 40 percent of their portfolios in bonds, even more if they want to emphasize safety over returns.

But many financial advisers currently recommend a lower percentage because of the risk bond prices will fall if interest rates rise. A recent Bloomberg News survey of 15 investment strategists from major securities firms found the average recommended bonds make up only 23 percent of a typical investor’s portfolio.

Moreover, the bond holdings should be divided among a range of bond issuers with varying maturities – a strategy known as “laddering.”

The idea is to assure yourself a steady, predictable income by owning bonds with maturities of two, five, 10, 20 and 30 years, for example.

That way, you get the higher yields of the long-term bonds and always have some bonds near maturity. If you need to raise cash, you can sell the bonds that are close to maturing, since their prices would suffer less if interest rates rise.

Bottom line: When the 30-year bond is offered next year, it will be worth a close look. But the typical small investor probably won’t want to buy too many of them.