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Dallas, Texas, November 18,1958


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 the new exchange offering:
“ The Treasury Department announced today two further steps in its program to
achieve a more orderly scheduling of its short-term debt maturities.
“ The first of these steps is the offering to holders of $9,853 million of 3% percent
certificates of indebtedness maturing December 1, 1958, and the holders of $2,368 million
of 2% percent Treasury bonds maturing December 15, 1958, the opportunity to exchange
these holdings for either of two new issues: a 3% percent, 11% month certificate due
Novem ber 15, 1959, to be issued at a price o f 99.95 percent o f face value, to yield
3.43 percent, or a 3% percent, 2-year 5% month note due May 15, 1961, to be issued at
a price of 99% percent of face value, to yield 3.68 percent.
“ With the completion of this financing, over 80 percent of outstanding Treasury
marketable securities maturing within the next ten years (excluding regular Treasury
bills and tax anticipation securities) will fall due in February, May, August, or November.
“ For some time, the Treasury has been working toward scheduling its maturities on
these quarterly dates to reduce the number of times each year its financing will interfere
with other borrowers such as corporations, States, municipalities, etc.; to minimize the
“ churning” in the money markets on the major quarterly corporate income tax dates; and
facilitate the effective execution by the Federal Reserve of its monetary policy. In addition,
the present offering also works in the direction of a more even distribution of the amounts
of certificates maturing on each of the four quarterly dates.
“ Another important debt management objective, from the standpoint of marketing
techniques, is to place on a routine basis, so far as practicable, the roll-over of the
Treasury debt maturing within one year. The amount outstanding at a given time will
tend to vary considerably, depending on the liquidity needs of the economy and on the
ability of the Treasury to extend the debt. The composition of the short-term debt,
however, influences to a degree the amount o f market disturbance occasioned by
refinancing, and also affects Treasury borrowing costs.
“ As the second step in its program to achieve a better composition of the short-term
debt, the Treasury also announced that it plans a re-arrangement of the structure of its
weekly bill maturities. Accordingly, on December 11, 1958, the Treasury will inaugurate
a program to move gradually over the next 6 months from the present cycle of 13-week
bills ($23.4 billion total) to a new cycle which will include both 13-week and 26-week bills
($26.0 billion total). Full details of the program will be announced during the week
preceding the offering.

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“ The shift of part of the volume of Treasury bills outstanding to a 26-week cycle will
enable certain corporations and other investors to meet their requirements for a regular
bill which is longer than the present 13-week maturity. In the course of the transition
to the new cycle of Treasury bills, a total of $2.6 billion of new money will be raised during
the next three months, thus meeting more than half of the Treasury’s anticipated cash
borrowing needs of $4-$4Vk billion through March 1959. Increases in the amount of
outstanding bills under this program, together with continuing efforts to extend the debt,
should permit a reduction in Treasury certificates of indebtedness outstanding over the
period ahead, so that the over-all volume of short-term debt would not be increased.
“ Both the new 3% percent certificate and the new 3% percent note will be dated
December 1, 1958.
“ Interest will be payable on the new certificates on a semiannual basis on May 15
and November 15, 1959. Interest on the new notes will be payable on a semiannual basis
on May 15 and November 15, in each year.
“ Exchanges will be made as of December 1, 1958, and in the case of the maturing
bonds with an adjustment of interest as of that date. Coupons dated December 1, 1958,
should be detached from the maturing certificates and cashed when due. In the case of
the bonds, coupons dated December 15, 1958, must be attached to the bonds when
surrendered and accrued interest from June 15, 1958, to December 1, 1958, will be paid
following acceptance of the bonds. A payment of $.50 per $1,000 face value of the new
certificates, and $1.25 per $1,000 face value of the new notes representing the discount
from the face values will be paid to holders upon issuance of the new securities.
“ The subscription books will be open November 19 through November 21 for this
exchange offering. Any subscription for either issue addressed to a Federal Reserve
Bank or Branch, or to the Treasurer of the United States, and placed in the mail before
midnight Friday, November 21, will be considered as timely.”
Official circulars and subscription forms for the exchange offering will be mailed as soon as
possible. However, if the circulars and forms are not received by Friday, November 21, subscriptions
may be entered by mail, telegraph or telephone, subject to confirmation with official subscription
Yours very truly,
Watrous H. Irons

Federal Reserve Bank of St. Louis, One Federal Reserve Bank Plaza, St. Louis, MO 63102