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FEDERAL RESERVE BANK OF NEW YORK Fiscal Agent of the United States r Circular N o. 5 4 1 5 "1 L Novem ber 13, 1963 J OFFERING OF TWO SERIES OF TREASURY BILLS 1,200,000,000 of 91-Day Bills, Additional Amount, Series Dated August 22,1963, Due February 20,1964 (To Be Issued November 21, 1963) $800,000,000 of 182-Day Bills, Dated November 21, 1963, Due May 21, 1964 To All 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 two series of Treasury bills to the aggregate amount of $2,000,000,000, or thereabouts, for cash and in ex change for Treasury bills maturing Novem ber 21, 1963, in the amount of $2,101,341,000, as follow s: 91-day bills (to maturity date) to be issued Novem ber 21, 1963, in the amount o f $1,200,000,000, or thereabouts, representing an additional amount of bills dated August 22, 1963, and to mature February 20, 1964, originally issued in the amount of $800,672,000 (an additional $100,092,000 was issued O ctober 28, 1963), the addi tional and original bills to be freely interchangeable. 182-day bills, for $800,000,000, or thereabouts, to be dated Novem ber 21, 1963, and to mature May 21, 1964. The 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. They will be issued in bearer form only, and in denominations of $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, N ovem ber 18, 1963. 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 o f 100, with not more 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 account of customers, provided the names of 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 accompanied by payment of 2 percent of 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 ing which public announcement will be made by the Treasury Department of the amount and price range of accepted bids. T h ose submit ting tenders will be advised o f the acceptance or rejection thereof. T h e Secretary of the Treasury expressly reserves the right to accept or reject any or all tenders, in whole 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 August 22, 1963 (91 days remaining until maturity date on February 20, 1964) and noncompetitive 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 aver age price (in three decimals) of accepted competitive bids for the respective issues. Settlement for accepted tenders in accord ance with the bids must be made or completed at the Federal Reserve Bank on N ovem ber 21, 1963, in cash or other im m edi ately available funds or in a like face amount of Treasury bills maturing Novem ber 21, 1963. Cash and exchange tenders will receive equal treatment. Cash adjustments will be made for differences between the par value of maturing bills accepted in exchange and the issue price of the new bills. The 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 of Treasury bills does not have any special treatment, as such, under the Internal Revenue Code of 1954. The 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 imposed on the principal or interest thereof by any State, or any of the possessions of the United States, or by any local taxing authority. F or purposes of taxation the amount of dis count at which Treasury bills are originally sold by the United States is considered to be interest. Under Sections 454(b) and 1221(5) of the Internal Revenue Code of 1954 the amount of discount at which bills issued hereunder are sold is not con sidered to accrue until such bills are sold, redeemed or other wise disposed of, and such bills are excluded from consideration as capital assets. A ccordingly, the owner o f 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 subse quent purchase, 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 No. 418 (current revision) and this notice prescribe the terms of the Treasury bills and govern the conditions o f their issue. Copies of the circular may be obtained from any Federal Reserve Bank or Branch. Ihis Bank will receive tenders for both series up to 1:30 p.m., Eastern Standard time, Monday, November 18, 1963, 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. Settlement 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 November 14, 1963, representing an addi tional amount of bills dated August 15, 1963, and maturing February 13, 1964; and 182-day bills dated November 14, 1963, maturing May 14, 1964) are shown on the reverse side of this circular. A lfred Hayes, President. ( o v e r ) RESULTS OF LAST OFFERING OF TREASURY BILLS (TWO SERIES TO BE ISSUED NOVEMBER 14, 1963) Range of Accepted Competitive Bids 91-Day Treasury Bills Maturing February 13,1964 Price High.......... ...... Low .......... ...... Average........ ...... 99.103a 99.097 99.099 182-Day Treasury Bills Maturing May 14,1964 Approx. equiv. annual rate Price 3.549% 3.572% 3.565%! 98.150 98.135 98.141 Approx. equiv. annual rate 3.659% 3.689% 3.678%1 a Excepting one tender of $100,000. 1 On a coupon issue of the same length and for the same amount invested, the return on these bills would provide yields o f 3.66 percent for the 91-day bills, and 3.81 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 o f the bills payable at maturity rather than the amount invested, and their length in actual number of days related to a 360-day year. In contrast, yields on certificates, notes, and bonds are computed in terms o f interest on the amount invested, and relate the number o f days remaining in an interest payment period to the actual number o f days in the period, with semiannual com pounding if m ore than one coupon period is involved. (58 percent of the amount of 91-day bills bid for atthe low price was accepted.) (14 percent ofthe 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 February 13,1964 Applied, for District 182-Day Treasury Bills Maturing May 14,1964 Accepted, Applied for Accepted ... ... ... ... ... ... ... ... ... ... ... $ 44,125,000 1,588,021,000 42,383,000 31,726,000 14,964,000 24,109,000 244,107,000 34,402,000 19,584,000 26,988,000 28,127,000 101,302,000 $ 28,125,000 889,175,000 14,383,000 31,726,000 14,964,000 20,363,000 132,427,000 28,898,000 16,164,000 25,988,000 19,707,000 78,582,000 $ 8,831,000 1,107,366,000 8,983,000 11,796,000 4,396,000 8,166,000 133,400,000 14,231,000 8,112,000 11,735,000 10,721,000 94,159,000 $ 2,831,000 599,266,000 3,983,000 11,796,000 3,536,000 8,166,000 48,900,000 13,231,000 6,682,000 10,535,000 7,721,000 83,579,000 Total.... ... $2,199,838,000 $1,300,502,000b $1,421,896,000 $800,226,000° Boston......... New York ...... Philadelphia ...... Cleveland ....... Richmond....... Atlanta ........ Chicago........ St. Louis........ Minneapolis ...... Kansas City...... Dallas ......... San Francisco .... b Includes $246,209,000 noncompetitive tenders accepted at the average price of 99.099. c Includes $66,006,000 noncompetitive tenders accepted at the average price o f 98.141.
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