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FEDERAL RESERVE BANK OF DALLAS
F IS C A L A S E N T O F T H E U N IT E D ST A T E S

Dallas, Texas, September 7, 1961
PRELIM INARY A N N O U N C E M E N T
TREASURY F IN A N C IN G

To All Banking Institutions and Others Concerned
in the Eleventh Federal Reserve District:

There is quoted below a press statement issued today by the Treasury Department in regard to
advance refunding and current financing:
Treasury Announces Advance Refunding and Cash Borrowing Plans

“The Treasury announced today its first Public Debt offering designed especially to enlist
long-term investors in the Government’s current financing program. At the same time, it out­
lined plans to borrow $5 billion in new cash later in September and during October. Holders of
$7.6 billion of two issues of World War II Treasury bonds will be given an opportunity to
exchange them for additional amounts of other outstanding bonds, all bearing coupons of 3V
^
percent, which mature in 1980, 1990, and 1998. This advance refunding offer is available to all
holders of the 2V percent bonds of March 1965-70 and March 1966-71. Holdings of these
^
particular bonds are concentrated largely in insurance companies, savings banks, and private
individuals (many of them original World War II subscribers).
“The Treasury is making it possible for investors to gain additional income by extending
the maturity of their holdings, as they choose, for additional periods of roughly 10 to 29 years.
In order to equal the terms of this offering, holders of the 1965-70 and 1966-71 bonds would
otherwise have to reinvest the proceeds of their bonds on maturity in comparable securities at
interest rates ranging from 4.28 percent to 4.36 percent. To the extent that investors choose to
extend the maturity of their existing holdings, the Treasury will have accomplished some needed
restructuring of its outstanding debt, without diverting from productive purposes in other sectors
of economy the new savings currently flowing into the long-term capital markets. Books will be
open for subscriptions beginning Monday, September 11, and will remain open through Septem­
ber 15. In addition, individuals will be allowed to subscribe for a further period through Sep­
tember 20.
‘The Treasury will meet its estimated cash needs of roughly $5 billion over the next two
months in three steps. On September 20 it will offer at auction $2 Vz billion of Tax Anticipation
bills due June 22, 1962, for payment on September 27. Commercial banks may pay for such
bills through their Tax and Loan accounts. Near the end of September the Treasury plans to
announce the terms for an early October offering of approximately $2 billion in a Treasury note
maturing in the spring of 1963. On October 10, the Treasury will auction, without Tax and Loan
accoimt credit, $2 billion of one-year Treasury bills, to replace $1V^ billion of outstanding oneyear bills which mature on October 16.
“Recent increases in projected Defense programs have not necessitated any revision in the
Treasury’s cash requirements for the months immediately ahead. Added expenditures will affect
the seasonal cash surplus that normally occurs toward the end of the Fiscal year. For that
reason, the Treasury has reduced the extent of its reliance on a June Tax Anticipation bill, in
comparison with the uses made of similar instruments in recent years. The Treasury is schedul­
ing the maturity of part of its borrowings for the spring of 1963, when the return to a balanced
budget for the Fiscal year will again assure a seasonal cash surplus of substantial size.”
Official circulars and subscription forms for the advance refunding will be mailed to reach all banking
institutions by Monday, September 11. Further information concerning the cash offerings will be mailed
as soon as it is available.
Yours very truly,
Watrous H. Irons

President

This publication was digitized and made available by the Federal Reserve Bank of Dallas' Historical Library (FedHistory@dal.frb.org)


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