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FEDERAL R ESER VE BANK OF NEW YORK Fiscal Agent of the United States r Circular No. 5 6 7 7 T L July 21, 1965 J OFFERING OF TWO SERIES OF TREASURY BILLS $1,200,000,000 of 91-Day Bills, Additional Amount, Series Dated April 29, 1965, Due October 28, 1965 (To Be Issued July 29, 1965) $1,000,000,000 of 182-Day Bills, Dated July 29, 1965, Due January 27, 1966 T o A ll Incorporated Banks and Trust Companies, and Others Concerned, in the Second Federal R eserv e D istrict: Following is the text of a notice issued by the Treasury Department, released for publication today at 4 p.m., Eastern Daylight Saving time: The Treasury Department, by this public notice, invites tenders for two series of Treasury bills to the aggregate amount of $2,200,000,000, or thereabouts, for cash and in ex change for Treasury bills maturing July 29, 1965, in the amount of $2,204,331,000, as follows: 91-day bills (to maturity date) to be issued July 29, 1965, in the amount of $1,200,000,000, or thereabouts, representing an additional amount of bills dated April 29, 1965, and to mature October 28, 1965, originally issued in the amount of $1,003,275,000, the additional and original bills to be freely interchange able. 182-day bills, for $1,000,000,000, or thereabouts, to be dated July 29, 1965, and to mature January 27, 1966. 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 Daylight Saving time, Monday, July 26, 1965. Tenders will not be received at the Treasury Department, Washington. 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 more than three decimals, e.g., 99.925. Fractions may not be used. It is urged that tenders be made on the printed forms 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 institu tions will not be permitted to submit tenders except for their own 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. Those submitting tenders will be advised of the acceptance or rejection thereof. The 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, noncompetitive tenders for each issue for $200,000 or less 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 respective issues. Settlement for accepted tenders in accord ance with the bids must be made or completed at the Federal Reserve Bank on July 29, 1965, in cash or other immediately available funds or in a like face amount of Treasury bills maturing July 29, 1965. 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 income 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 disposition 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 hereafter 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. For purposes of taxation the amount of discount at which Treas ury 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 considered to ac crue until such bills are sold, redeemed or otherwise disposed of, and such bills are excluded from consideration as capital assets. Accordingly, the owner of Treasury bills (other than life insurance companies) issued hereunder need include in his income tax return only the difference between the price paid for such bills, whether on original issue or on subsequent 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 of their issue. Copies of 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 Daylight Saving time, Monday, July 26, 1965, 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 weekly offering of Treasury bills (91-day bills to be issued July 22, 1965, representing an additional amount of bills dated April 22, 1965, maturing October 21, 1965; and 182-day bills dated July 22, 1965, maturing January 20, 1966) are shown on the reverse side of this circular. A lfred H ayes, President. ( over) RESULTS OF LAST WEEKLY OFFERING OF TREASURY BILLS (TWO SERIES TO BE ISSUED JULY 22, 1965) Range of Accepted Competitive Bids 91 -D ay Treasury Bills Maturing October 21,1965 182-Day Treasury Bills Maturing January 20,1966 Price A p p rox. equiv. annual rate 99.034a 3.822% 98.024b 3.909% Low ....................... ............ 99.030 3.837% 98.021 3.915% A v e ra g e ................. ............ 99.031 3.833%! 98.022 3.913%1 ..................... ............ High P rice A p p rox. equiv. annual rate a Excepting one tender of $5,000. b Excepting one tender of $800,000. 1 On a coupon issue of the same length and for the same amount invested, the return on these bills would provide yields of 3.92 percent for the 91-day bills, and 4.05 percent for the 182-day bills. Interest rates on bills are quoted in terms of 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 of 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 compounding if more than one coupon period is involved. (73 percent of the amount of 91-day bills bid for at the low price was accepted.) (97 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 October 21,1965 A ccepted A pplied for D istrict $ 47,007,000 182-Day Treasury Bills Maturing January 20,1966 $ 33,218,000 A ccepted Applied for $ 32,860.000 $ 11,560,000 New Y o r k ..................... 1,427,623,000 774,143,000 1,620,427,000 809,328,000 Philadelphia ................. 30,196,000 18,196.000 13,746,000 4,921,000 Cleveland ..................... 30,412,000 29,552,000 28,089,000 15,531,000 Richmond ................... 16,273,000 14,322.000 5,667.000 3,617,000 Atlanta ......................... 35,116,000 24,025,000 22,160.000 8,760,000 ....................... 291,942.000 152,812,000 279,935,000 97,050.000 St. L o u is ....................... 42,563,000 35,612,000 15,614,000 10,214,000 Minneapolis ................. 22,581,000 17,256,000 9,730,000 6,200,000 Kansas City ................. 27,928,000 26,748,000 9,532.000 8,317.000 Dallas ........................... 27,525,000 17,147,000 11,397,000 6,397,000 San Fran cisco ............... 129,829,000 58,662.000 143,884,000 22,699,000 Chicago T o t a l ................ $2,128,995,000 $1,201,693,000° c Includes $269,612,000 noncompetitive tenders accepted at the average price of 99.031. d Includes $91,299,000 noncompetitive tenders accepted at the average price of 98.022. $2,193,041,000 $1,004,594,000d