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FEDERAL RESER VE BANK O F N E W YORK Fiscal Agent of the United States r Circular No. 5 1 6 5 T L March 14, 1962 J OFFERING OF TWO SERIES OF TREASURY BILLS $1,200,000,000 of 91-Day Bills, Additional Amount, Series Dated December 21,1961, Due June 21,1962 (To Be Issued March 22, 1962) $600,000,000 of 182-Day Bills, Dated March 2 2,1962, Due September 20, 1962 To A ll Incorporated Banks and Trust Companies, and Others Concerned, in the Second Federal Reserve District: Following is the text of a notice issued by the Treasury Department, released for publication today at 4 p.m., Eastern Standard time: The Treasury Department, by this public notice, invites tenders for tw o series o f Treasury bills to the aggregate amount o f $1,800,000,000, or thereabouts, for cash and in exchange for Treasury bills maturing March 22, 1962, in the amount of $1,704,889,000, as follow s: 91-day bills (to maturity date) to be issued March 22, 1962, in the amount o f $1,200,000,000, or thereabouts, representing an additional amount of bills dated D e cember 21, 1961, and to mature June 21, 1962, originally issued in the amount of $601,595,000, the additional and original bills to be freely interchangeable. 182-day bills, for $600,000,000, or thereabouts, to be dated March 22, 1962, and to mature September 20, 1962. T he bills of both series will be issued on a discount basis under competitive and noncompetitive bidding as hereinafter provided, and at maturity their face amount will be payable without interest. Th ey will be issued in bearer form only, and in denominations o f $1,000, $5,000, $10,000, $50,000, $100,000, $500,000 and $1,000,000 (maturity value). Tenders will be received at Federal Reserve Banks and Branches up to the closing hour, one-thirty p.m., Eastern Standard time, M onday, March 19, 1962. Tenders will not be received at the Treasury Department, W ashington. Each tender must be for an even multiple of $1,000, and in the case of competitive tenders the price offered must be expressed on the basis of 100, with not m ore than three decimals, e.g., 99.925. Fractions may not be used. It is urged that tenders be made on the printed form s and forwarded in the special envelopes which will be supplied by Federal Reserve Banks or Branches on application therefor. Banking institutions generally may submit tenders for ac count o f customers, provided the names o f the customers are set forth in such tenders. Others than banking institutions will not be permitted to submit tenders except for their ow n account. Tenders will be received without deposit from incorporated banks and trust companies and from responsible and recognized dealers in investment securities. Tenders from others must be accom panied by payment o f 2 percent o f the face amount of Treasury bills applied for, unless the tenders are accompanied by an express guaranty of payment by an incorporated bank or trust company. Immediately after the closing hour, tenders will be opened at the Federal Reserve Banks and Branches, follow in g which public announcement will be made by the Treasury Department o f the amount and price range of accepted bids. Those submit ting tenders will be advised of the acceptance or rejection thereof. The Secretary o f the Treasury expressly reserves the right to accept or reject any or all tenders, in w hole or in part, and his action in any such respect shall be final. Subject to these reservations, noncom petitive tenders for $200,000 or less for the additional bills dated D ecem ber 21, 1961 (91 days remaining until maturity date on June 21, 1962) and noncom petitive tenders for $100,000 or less for the 182-day bills without stated price from any one bidder will be accepted in full at the average price (in three decimals) of accepted competitive bids for the respec tive issues. Settlement for accepted tenders in accordance with the bids must be made or completed at the Federal Reserve Bank on March 22, 1962, in cash or other immediately available funds or in a like face amount of Treasury bills maturing M arch 22, 1962. Cash and exchange tenders will receive equal treat ment. Cash adjustments will be made for differences between the par value of maturing bills accepted in exchange and the issue price o f the new bills. T h e incom e derived from Treasury bills, whether interest or gain from the sale or other disposition of the bills, does not have any exemption, as such, and loss from the sale or other disposi tion o f Treasury bills does not have any special treatment, as such, under the Internal Revenue Code o f 1954. T he bills are subject to estate, inheritance, gift or other excise taxes, whether Federal or State, but are exempt from all taxation now or here after im posed on the principal or interest thereof by any State, or any of the possessions o f the United States, or by any local taxing authority. For purposes o f taxation the amount o f dis count at which Treasury bills are originally sold by the United States is considered to be interest. U nder Sections 454(b) and 1221(5) of the Internal Revenue Code o f 1954 the amount of dis count at which bills issued hereunder are sold is not considered to accrue until such bills are sold, redeemed or otherwise dis posed of, and such bills are excluded from consideration as capital assets. A ccordin gly, the owner of Treasury bills (other than life insurance com panies) issued hereunder need include in his incom e tax return only the difference between the price paid for such bills, whether on original issue or on subsequent pur chase, and the amount actually received either upon sale or redemption at maturity during the taxable year for which the return is made, as ordinary gain or loss. Treasury Department Circular N o. 418 (current revision) and this notice prescribe the terms of the Treasury bills and govern the conditions o f their issue. Copies o f the circular may be obtained from any Federal Reserve Bank or Branch. This Bank will receive tenders for both series up to 1 :30 p.m., Eastern Standard time, Monday, March 19, 1962, at the Securities Department of its Head Office and at its Buffalo Branch. Tender forms for the respective series are enclosed. Please use the appropriate forms to submit tenders and return them in an envelope marked “ Tender for Treasury Bills.” Tenders may be submitted by telegraph, subject to written confirmation; they may not be submitted by telephone. Payment for the Treasury bills cannot be made by credit through the Treasury Tax and Loan Account. Settle ment must be made in cash or other immediately available funds or in maturing Treasury bills. Results of the last offering of Treasury bills (91-day bills to be issued March 15, 1962, representing an additional amount of bills dated December 14, 1961, and maturing June 14, 1962; and 182-day bills dated March 15, 1962, maturing September 13, 1962) are shown on the reverse side of this circular. A lfred H ayes, President. ( over) RESULTS OF LAST OFFERING OF TREASURY BILLS (TWO SERIES TO BE ISSUED MARCH 15, 1962) Range of Accepted Competitive Bids 91-Day Treasury Bills Maturing June 14, 1962 Approx. equiv. annual rate Price Approx. equiv. annual rate 99.295a 2.789% 98.504b 2.959% .......................... ............ 99.289 2.813% 98.494 2.979% .................... ............ 99.291 2.804%1 98.498 2.972%! Price High Low 182-Day Treasury Bills Maturing September 13, 1962 .................... Average ............ a Excepting tw o tenders totaling $125,000. b Excepting one tender of $1,000,000. 1 On a coupon issue o f the same length and for the same amount invested, the return on these bills would provide yields of 2.86 percent for the 91-day bills, and 3.06 percent for the 182-day bills. Interest rates on bills are quoted in terms o f bank discount, with the return related to the face amount of the bills payable at maturity rather than the amount invested, and their length in actual number o f days related to a 360-day year. In contrast, yields on certificates, notes, and bonds are computed in terms of interest on the amount invested, and relate the number of days remaining in an interest payment period to the actual number of days in the period, with semiannual com pounding if m ore than one coupon period is involved. (21 percent of the amount of 91-day bills bid for at the low price was accepted.) (84 percent of the amount of 182-day bills bid for at the low price was accepted.) Total Tenders Applied for and Accepted (By Federal Reserve Districts) 91-Day Treasury Bills Maturing June 14, 1962 Applied fo r District Boston .......................... $ 34,111,000 182-Day Treasury Bills Maturing September 13,1962 Accepted $ 12,794,000 Accepted Applied fo r $ 13,028,000 $ 7,028,000 2,062,700,000 775,576,000 929,311,000 476,241,000 ................ 31,326,000 14,232,000 9,118,000 4,068,000 Cleveland .................... 55,486,000 28,706,000 19,964,000 14,164,000 Richmond .................... 11,157,000 11,157,000 2,175,000 2,175,000 Atlanta .......................... 37.594,000 23,095,000 9,444,000 9,444,000 175,892,000 116,983,000 41,290,000 20,533,000 6,114,000 3,614,000 3,622,000 New York .................... Philadelphia Chicago ........................ St. Louis ...................... 260,770.000 29,533,000 ................ 20,971,000 13,681,000 5,402,000 Kansas City ................ 25,794,000 20,594,000 8,167,000 7,882,000 D a lla s............................ 18,872,000 13,872,000 9,235,000 5,075,000 San F ra n cisco.............. 127,129,000 90,223,000 35,579,000 25,659,000 Minneapolis T otal ............ $2,715,443,000 $1,200,355,000c $1,164,520,000 $600,262,00a1 c Includes $221,142,000 noncom petitive tenders accepted at the average price of 99.291. d Includes $52,595,000 noncompetitive tenders accepted at the average price of 98.498. (
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