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

D allas, Texas, February 15, 1962

PRELIMINARY ANNOUNCEMENT
ADVANCE REFUNDING

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

The Treasury announced today that it will offer holders of nearly $19 billion of outstanding bonds
an opportunity to extend their holdings at higher yields. F or the first time, the T reasury is combining in
one operation a “junior” advance refunding (in which holders of relatively short-term m aturities are given
an opportunity to move into an intermediate m aturity) and a “senior” advance refunding (in which holders
of interm ediate-term securities may exchange into a longer-term issue). The term s and conditions of this
exchange offering are set forth in the official circulars which will be mailed, together with the subscription
forms, on Friday, February 16, 1962. The securities will be offered on the following basis with adjustm ents
of accrued interest as of M arch 1, 1962:
Bonds Eligible for Exchange

Basis for Exchange

Bonds to be Issued

3%

Treasury Bonds of 1964

4% Treasury Bonds of 1971

Par

2% %

Treasury Bonds of 1965

4% Treasury Bonds of 1971
4% Treasury Bonds of 1980

102.00
100.25

2Vz%

Treasury Bonds of 1967-72 (6-1-45)

101.25
P ar

2Vz%

Treasury Bonds of 1967-72 (10-20-41)

2Vz%

Treasury Bonds of 1967-72 (11-15-45)

3Y2% Treasury Bonds of 1990
3 1 / 2 % Treasury Bonds of 1998
3V2% Treasury Bonds of 1990
3 1 / 2 % Treasury Bonds of 1998
3Vz% Treasury Bonds of 1990
3Vz% Treasury Bonds of 1998

101.50
100.25
101.75
100.50

The Treasury is making it possible for investors to gain additional income at term s m utually advan­
tageous to the Treasury and themselves, by extending the m aturity of their holdings for additional periods
ranging between 6 V2 and 2 6 V years. In order to equal the term s of this offering through any alternative
2
investment, investors would otherwise have to reinvest the proceeds of their present holdings, on m aturity,
a t interest rates ranging from 4.30 to 4.38 percent.
The exchange of old for new securities will not be treated as a sale and purchase for tax purposes,
thereby avoiding the immediate charging of book losses on the securities being accepted by the Treasury
in exchange for the new issues.
T o the extent th at investors choose to extend the m aturity of their existing holdings, the Treasury
will have accomplished some needed restructuring of its outstanding debt, without diverting from produc­
tive purposes in other sectors of the economy the new savings currently flowing into the interm ediate and
longer-term capital markets. Books will be open for subscriptions beginning M onday, February 19, and
will remain open through W ednesday, February 21. In addition, individuals will be allowed to subscribe
for a further period through W ednesday, February 28.
Yours very truly,
W atrous 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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