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FEDERAL RESERVE BANK OF DALLAS F IS C A L A < K N T O F T H E U N ITE D S T A T E S Dallas, Texas, September 6, 1962 To All Banking Institutions and Others Concerned in the Eleventh Federal Reserve District: A press statement issued by the Treasury Department on September 5 announcing an advance refunding is printed below. Subscriptions to this refunding offer will be received at this bank and its branches at El Paso, Houston and San Antonio. Official circulars and subscription forms, together with copies of a special notice regarding this advance refunding, are enclosed and additional copies of this material will be furnished upon request. Since a limited amount of each of the new issues is being offered, subscriptions to both new issues are subject to allotment. For this reason, the eligible securities to be applied in payment should be held by subscribers until allotment notices are received. Deposits required on subscriptions entered through commercial banks should be retained by the banks until allotment has been made. All other required deposits should accompany the subscriptions. If a partial allotment is necessary, forms for furnishing delivery instructions for the new securities and descriptions of securities to be exchanged will accompany the allotment notices. Subscriptions placed in the mail before midnight, September 12, will be considered as having been entered before the close of the subscription books. Yours very truly, Watrous H. Irons President TREASURY DEPARTMENT Washington, D. C. September 5, 1962 ADVANCE REFUNDING OFFER The Treasury is offering holders of $26.8 billion of certificates and notes maturing February 15, 1963, and May 15, 1963, the right to exchange them for either or both of the following new securities: 3% % notes due August 15, 1967 4% bonds due August 15, 1972 The issues eligible for exchange are considerably closer to maturity than the eligible issues in earlier advance refundings. The Treasury’s objective in making this offer is to reduce the extremely congested maturity schedules of February and May 1963 and to improve the structure of the outstanding debt. By refunding these maturing securities in two stages, the Treasury will also assist the smooth function ing o f the money and capital markets. In February 1963, three issues totaling $13.3 billion mature, $9.4 billion of which is held by the public and the remaining $3.9 billion by the Federal Reserve and Government Investment Accounts. In May 1963, three issues totaling $13.5 billion mature, $9.8 billion o f which is held by the public and the remaining $3.7 billion by the Federal Reserve and Government accounts. The offering is designed to be attractive to investors. Market yields on the new issues, as sum marized in paragraph 11 below, compare favorably with those on outstanding issues o f comparable maturities on the date of this offering. After giving effect to the difference between the present and the offered coupon rates, and to the payments that will be made by the Treasury to subscribers in further adjustment of interest differences, the effective yields on the new notes will range between 3.80 and 3.83% ; the effective yields on the new bonds will range between 4.05 and 4.07%. This publication was digitized and made available by the Federal Reserve Bank of Dallas' Historical Library (FedHistory@dal.frb.org). The reinvestment return to holders for the period of the extension would also appear to compare favorably with prospective yields that might be obtained on reinvestment at the time these six outstand ing securities are scheduled to mature. The new 4 year 11 month notes will provide yields for the exten sion period o f 3.89% or 3.90% for holders of February maturities and 3.94% to 3.97% for May holders. The new 9 year 11 month bond will provide a yield for the extra period of holding equivalent to 4.11 % or 4.12% for the subscribers who turn in February maturities and 4.15% or 4.16% for those who turn in May maturities. The transfer of old for new securities will not be treated as a sale and purchase for tax purposes, thereby avoiding immediate charging of book losses on the securities being accepted by the Treasury in exchange for the new issues. Terms and Conditions of the Advance Refunding Offer 1. To all holders o f the following outstanding Treasury securities: Description of securities Issue date Feb. 15, 1962 April 15, 1958 Nov. 15,1961 May 15, 1962 May 15, 1961 April 1, 1959 3% % certificate A-1963 note A-1963 8% % note E-1963 31,4% certificate B-1963 3% % note D-1963 4% note B-1963 25/8 % Final maturity date Feb. Feb. Feb. May May May 15, 15, 15, 15, 15, 15, Remaining term to maturity (Months) Amount outstanding (in billions) 5 5 5 8 8 8 $6.9 2.8 3.6 6.7 5.0 1.7 1963 1963 1963 1963 1963 1963 2. New securities to be issued: Description of securities 3 % % note of Aug. 15, 1967 4% bond of Aug. 15, 1972 Interest starts1 Issue date Interest payable Sept. 15, 1962 Sept. 15, 1962 Sept. 15, 1962 Sept. 15, 1962 Feb. 15 & Aug. 15 Feb. 15 & Aug. 15 1 Interest on the securities surrendered stops on September 15, 1962. 3. Terms o f the exchange: Exchanges will be made on the basis of equal face amounts, with payments by the Treasury, and with adjustments of accrued interest to September 15, 1962, on the securities surrendered (per $100 face amount), as indicated below: Amounts to be paid to subscribers On account of On account of purchase accrued interest to Sept. 15,1962 price of on securities securities to be exchanged to be issued Securities to be exchanged Total Extension of maturity Yrs. — Mos. FOR THE NEW NOTES 31/ % certificate A-1963 2 2 % % note A-1963 $ .50 .10 .40 .40 .40 1.00 3% % note E-1963 ,% certificate B-1963 31 4 31/ % note D-1963 4 4% n >te B-1963 < $ .294837 .221128 .273777 1.086277 1.086277 1.336957 $ .794837 .321128 .673777 1.486277 1.486277 2.336957 4— 6 4— 6 4— 6 4— 3 4— 3 4— 3 $ .994837 .521128 .873777 1.686277 1.686277 2.536957 9— 6 9— 6 9— 6 9— 3 9— 3 9— 3 FOR THE NEW BONDS 31/2% certificate A-1963 $ .70 .30 .60 .60 .60 1.20 25/8% note A-1963 3 % % note E-1963 3 % % certificate B-1963 31/4% note D-1963 4% n »te B-1963 < $ .294837 .221128 .273777 1.086277 1.086277 1.336957 The following coupons should be attached to the securities in bearer form when they are surrendered: Securities Coupons to be attached 31/ 2 % ctf. A-1963, 25/8 % note A-1963, S% % note E-1963 3 1 4 % ctf. B-1963, 4% note B-1963, 3% % note D-1963 Feb. 15, 1963 Nov. 15, 1962 and May 15, 1963 Accrued interest to September 15, 1962, will be paid to subscribers, in the case o f bearer securi ties following their acceptance, and in the case of registered notes following discharge of registration in accordance with the assignments on the notes surrendered. Payment for and delivery o f the new notes and bonds will be made on September 20, 1962. 4. Limitation on amount o f securities to be issued: While it is not practicable to estimate the extent of investor acceptance, the Treasury is placing an outside limit of $6 billion, or thereabouts, on the aggregate amount of notes, and $3 billion, or thereabouts, on the aggregate amount of bonds to be issued to the public. In the event the limit on either issue is exceeded, subscriptions to the respective issue will be subject to allotment. In addition, exchange subscriptions for the notes and bonds from Government Investment Accounts will be allotted in full. 5. Books open for subscription for the new securities: The books will be open for the receipt of subscriptions from Monday, September 10, through Wednesday, September 12, 1962. Subscriptions placed in the mail by midnight o f September 12, 1962, addressed to the Treasurer, U. S., Washington 25, D. C., or any Federal Reserve Bank or Branch, will be considered as timely. The use of registered mail is recommended for security holders’ protection in submitting securities to be exchanged. 6. Requirements applicable to subscriptions: Subscriptions will be received at the Federal Reserve Banks and Branches and at the Office of the Treasurer of the United States, Washington 25, D. C. Banking institutions generally may submit subscriptions for account of customers, provided the names of the customers are set forth in such subscriptions. Subscriptions from banking institutions for their own account, Federally-insured savings and loan associations, States, political subdivisions or instrumentalities thereof, public pension and retire ment and other public funds, international organizations in which the United States holds member ship, foreign central banks and foreign States, Federal Reserve Banks, and Government Investment Accounts will be received without deposit. Subscriptions from all others must be accompanied by deposit of eligible securities in an amount equal to 10% of the securities applied for. 7. Denominations and other characteristics of new securities: The notes will be issued in denominations o f $1,000, $5,000, $10,000, $100,000, $1,000,000, $100,000,000 and $500,000,000 in coupon and registered forms. The bonds will be issued in denomina tions of $500, $1,000, $5,000, $10,000, $100,000 and $1,000,000 in coupon and registered forms. The notes and bonds will be acceptable to secure deposits o f public moneys. They will not be acceptable in payment o f taxes. 8. Nonrecognition of gain or loss for Federal income tax purposes solely on account o f exchange of old for new securities: The Secretary of the Treasury has declared pursuant to section 1037 (a) of the Internal Revenue Code that no gain or loss shall be recognized for Federal income tax purposes solely on account of the exchange of the securities; however, section 1031 (b) of the Code requires recognition of any gain realized on the exchange to the extent that money (other than interest) is received by the security holder in connection with the exchange. Accordingly, if the fair market value1 of the 3% % notes or 4% bonds plus the amount paid to the investor (discount) exceeds the cost basis of the old securities to the investor, the gain (but not to exceed the amount of the payment) must be recognized and accounted for as gain for the taxable year of exchange. He will carry the new securities on his books at the same amount as he is now carrying the old securities except that he will reduce the cost basis by the amount of the payment and increase it by the amount of the gain recognized. If the fair market value of the new securities plus the amount of the payment does not exceed the cost basis of the old securities, the basis in the new securities will be the cost basis in the old securities reduced by the amount of the payment. Gain to the extent not recognized (or loss), if any, upon the securities surrendered in exchange will be taken into account upon the disposition or redemption of the new notes or bonds. 9. Book value of new securities to banking institutions: The Comptroller of the Currency, Board of Governors of the Federal Reserve System, and the Federal Deposit Insurance Corporation have indicated to the Treasury that banks under their super vision may place the new notes and bonds received in exchange on their books at the amount at which the eligible securities surrendered are carried on their books, reduced by the amount of discount, if any, received by the subscriber and increased by the amount of gain, if any, which will be recognized as indicated in paragraph 8. They will so advise their examiners. 10. Computation of reinvestment rate for the extension o f maturity: A holder of the outstanding eligible certificates and notes has the option of accepting the Treasury’s exchange offer or of holding them to maturity. Consequently, he can compare the interest he will receive resulting from exchanging now with the interest that he might obtain by reinvesting the proceeds of the eligible securities at maturity. 1 The mean of the bid and asked quotations on date subscriptions are submitted. The interest income before tax for making the extension now through exchange will be the coupon rates on the new issues. If a holder o f the eligible certificates and notes does not make the exchange he would receive the coupon rates on the eligible issues to their maturity and would have to reinvest at that time at a rate equal to that indicated in paragraph 11 below for the remaining terms of the issues now offered, in order to equal the interest he would receive by accepting the exchange offer. For example, if the 31 /4% certificates or notes o f 5/15/63 are exchanged for the 4% bonds of 8/15/72, the rate for the entire nine years and eleven months will be 4% . If the exchange is not made, a 31 /4% rate will be received until May 15, 1963, requiring reinvestment of the proceeds of the 314 ’s at that time at a rate of at least 4.15% for the remaining nine years and three months, all at compound interest, to average out to a 4% rate for nine years and eleven months. This minimum reinvestment rate for the extension period is shown in the table under paragraph 11. The minimum reinvestment rates for the other issues included in the exchange are also shown in the table under paragraph 11. 11. Investment rates on the new notes and bonds offered in exchange to holders of the eligible securities: 31/ 2% 2% % Notes 2/15/63 C /Is 2/15/63 Eligible securities 3'A% Notes 2/1 5 /63 C /Is 5/15/63 Notes 5/15/63 4% Notes 5/15/63 $0.40 $1.00 FOR THE NEW 3 % % NOTES OF AUGUST 15, 1967 Payments on account of $100 issue price to subscriber—— $0.50 $0.10 $0.40 $0.40 Approximate investment yield from exchange date (9/15/62) to maturity of notes offered in exchange based on price of securities eligible for exchange1 .. . 3.81% 3.80% 3.81% 3.81% 3.81% 3.83% Approximate minimum reinvest ment rate for the extension period2 _ . _ 3.89 3.90 3.94 3.94 3.97 $0.60 $1.20 3.90 FOR THE NEW Payments on account o f $100 issue price to subscriber.__ 4% $0.70 BONDS OF AUGUST 15, 1972 $0.30 $0.60 $0.60 Approximate investment yield from exchange date (9/15/62) to maturity o f bonds offered in exchange based on price of securities eligible for exchange1 . _______ . . . 4.06% 4.05% 4.06% 4.06% 4.06% 4.07% Approximate minimum reinvest ment rate for the extension period2 ___ ___ ______ 4.12 4.11 4.12 4.15 4.15 4.16 1 Yield to nontaxable holder or before tax. Based on mean of bid and asked prices (adjusted for payments on account of issue price) at noon on September 4, 1962. 2 Bate for nontaxable holder or before tax. For explanation see paragraph 10 above. UNITED STATES OF AM ERICA 3% PERCENT TREASURY NOTES OF SERIES A-1967 Dated and bearing interest from September 15, 1962 Due August 15, 1967 TREASURY DEPARTM ENT Office o f the Secretary Washington, September 10, 1962 Department Circular Public Debt Series — No. 15-62 I. OFFERING OF NOTES 1. The Secretary of the Treasury, pursuant to the authority of the Second Liberty Bond Act, as amended, invites subscriptions from the people of the United States for notes o f the United States, designated 33 percent A Treasury N otes o f Series A -1967: ( 1 ) at 99.50 percent o f their face value in exchange for 3*6 percent Treasury Certificates o f Indebt edness o f Series A-1963, dated February 15, 1962, due February 15, 1963; ( 2 ) at 99.90 percent of their face value in exchange for 2 % percent Treasury N otes o f Series A-1963, dated April 15, 1958, due February 15, 1963; ( 3 ) at 99.60 percent of their face value in exchange for 3 l percent Treasury N otes of Series £-1963, A dated N ovem ber 15, 1961, due February 15, 1963; ( 4 ) at 99.60 percent of their face value in exchange for 33 percent Treasury Certificates o f Indebt A edness o f Series B-1963, dated M ay 15, 1962, due M ay 15, 1963; ( 5 ) at 99.60 percent of their face value in exchange for 3 Vi percent Treasury N otes o f Series D-1963, dated M ay 15, 1961, due M ay 15, 1963; or ( 6 ) at 99.00 percent o f their face value in exchange for 4 percent Treasury Notes o f Series B-1963, dated April 1, 1959, due M ay 15, 1963. Interest adjustments as o f September 15, 1962, and the cash payments due to the subscriber on account o f the issue prices o f the new notes w ill be made as set forth in Section IV hereof. Subscriptions are invited up to an amount not to exceed $6,000,000,000, or thereabouts. If subscriptions exceed this amount they w ill be received subject to allotment. In addition to the amount offered for public subscription, exchange subscriptions from Government Investment Accounts w ill be allotted in full. D elivery o f the new notes w ill be made on Septem ber 20, 1962. The books w ill be open only on September 10 through September 12, 1962, for the receipt of subscriptions for this issue. 2. In addition to the offering under this circular, holders o f the eligible securities are offered the privilege o f exchanging all or any part o f such securities for 4 percent Treasury Bonds o f 1972, which offering is set forth in Department Circular, Public D ebt Series— N o. 16-62, issued simultaneously with this circular. 3. Nonrecognition of gain or loss for Federal income tax purposes. — Pursuant to the provisions o f section 1037 (a ) of the Internal Revenue Code of 1954 as added by Public Law 86-346 (approved September 22, 1959), the Secretary o f the Treasury hereby declares that no gain or loss shall be recognized for Federal income tax purposes upon the exchange with the United States o f the eligible securities enumerated in paragraph one of this section solely for the 33 percent Treasury N otes of Series A-1967. Section 1 0 3 1 (b ) o f the Code, however, A requires recognition o f any gain realized on the exchange to the extent that m oney is received by the security holder in connection with the exchange. T o the extent not recognized at the time o f the exchange, gain or loss, if any, upon the obligations surrendered in exchange w ill be taken into account upon the disposition or redemp tion of the new obligations. II. DESCRIPTION OF NOTES 1. The notes w ill be dated September 15, 1962, and w ill bear interest from that date at the rate o f 3 3 A percent per annum, payable on a semiannual basis on February 15 and August 15, 1963, and thereafter on February 15 and August 15 in each year until the principal amount becom es payable. They w ill mature August 15, 1967, and w ill not be subject to call for redemption prior to maturity. 2. The income derived from the notes is subject to all taxes im posed under the Internal Revenue Code of 1954. The notes are subject to estate, inheritance, gift or other excise taxes, whether Federal or State, but are exempt from all taxation now or hereafter im posed on the principal or interest thereof by any State, or any of the possessions of the United States, or by any local taxing authority. 3. The notes w ill be acceptable to secure deposits of public moneys. They w ill not be acceptable in pay ment o f taxes. 4. Bearer notes with interest coupons attached, and notes registered as to principal and interest, w ill be issued in denominations of $1,000, $5,000, $10,000, $100,000, $1,000,000, $100,000,000 and $500,000,000. Pro vision w ill be made for the interchange of notes of different denominations and o f coupon and registered notes, and for the transfer o f registered notes, under rules and regulations prescribed by the Secretary o f the Treasury. 5. The notes w ill be subject to the general regulations of the Treasury Department, now or hereafter prescribed, governing United States notes. ill. SUBSCRIPTION AND ALLOTMENT 1. Subscriptions w ill be received at the Federal Reserve Banks and Branches and at the Office o f the Treasurer of the United States, W ashington 25, D. C. Banking institutions generally may submit subscriptions for account of customers, provided the names o f the customers are set forth in such subscriptions, but only the Federal Reserve Banks and the Treasury Department are authorized to act as official agencies. Subscriptions will be received without deposit from banking institutions for their own account, Federally-insured savings and loan associations, States, political subdivisions or instrumentalities thereof, public pension and retirement and other public funds, international organizations in which the United States holds membership, foreign central banks and foreign States, Federal Reserve Banks and Government Investment Accounts. Subscriptions from all others must be accom panied by the deposit o f any o f the eligible securities enumerated in paragraph one o f Section I hereof, in the face amount of not less than 10 percent o f the amount o f notes applied for, not subject to withdrawal until after allotm ent. Registered securities submitted as deposits should not be assigned. After allotm ent detached assignment form s m ay be used as provided in Section V hereof. 2. The Secretary of the Treasury reserves the right to reject or reduce any subscription, to allot less than the amount o f notes applied for, and to make different percentage allotments to various classes o f subscribers; and any action he m ay take in these respects shall be fin al The basis o f the allotm ent w ill be publicly announced and allotm ent notices w ill be sent out prom ptly upon allotment. IV. PAYMENT 1. Paym ent for the face amount o f notes allotted hereunder must be made on or before September 20,1962, or on later allotment, and m ay be made only in a like face amount o f securities o f the six issues enumerated in paragraph one of Section I hereof. In every case where paym ent is not so com pleted, the payment with appli cation up to 10 percent o f the notes allotted shall, upon declaration made by the Secretary o f the Treasury in his discretion, be forfeited to the United States. 2. 3 Vi percent certificates of indebtedness of Series A -1 96 3.— Coupons dated February 15, 1962, must be attached to the certificates when surrendered. Accrued interest from August 15 to September 15, 1962 ($2.94837 per $1,000) plus the payment ($5.00 per $1,000) due to the subscriber on account o f the issue price o f the notes w ill be paid to subscribers follow ing acceptance o f the certificates. 3. 2% percent notes of Series A -1 96 3.— Coupons dated February 15, 1963, must be attached to the notes when surrendered. Accrued interest from August 15 to September 15, 1962 ($2.21128 per $1,000) plus the paym ent ($1.00 per $1,000) due to the subscriber on account o f the issue price o f the new notes w ill be paid to subscribers follow ing acceptance o f the notes. 4. 314 percent notes of Series E-1963. — Coupons dated February 15, 1963, must be attached to the notes in bearer form when surrendered. Accrued interest from August 15 to September 15,1962 ($2.73777 per $1,000) plus the payment ($4.00 per $1,000) due to the subscriber on account o f the issue price o f the new notes w ill be paid to subscribers. Payments will be made in the case of bearer notes follow ing their acceptance and in the case of registered notes follow ing discharge of registration. In the case o f registered notes, the paym ent w ill be made b y check drawn in accordance with the assignments on the notes surrendered, or b y credit in any account maintained by a banking institution with the Federal Reserve Bank o f its D istrict 5. 314 percent certificates of indebtedness of Series B-1963.— Coupons dated N ovem ber 15, 1962, and M ay 15, 1963, must be attached to the certificates when surrendered. Accrued interest from M ay 15 to Septem ber 15, 1962 ($10.86277 per $1,000) plus the paym ent ($4.00 per $1,000) due to the subscriber on account of the issue price o f the notes w ill be paid to subscribers follow ing acceptance o f the certificates. 6. 314 percent notes of Series D-1963. — Coupons dated N ovem ber 15, 1962, and M ay 15, 1963, must be attached to the notes in bearer form when surrendered. Accrued interest from M ay 15 to September 15, 1962 ($10.86277 per $1,000) plus the payment ($4.00 per $1,000) due to the subscriber on account o f the issue price of the new notes w ill be paid to subscribers. Payments w ill be made in the case o f bearer notes follow ing their acceptance and in the case o f registered notes follow ing discharge o f registration. In the case o f registered notes, the payment w ill be made by check drawn in accordance with the assignments on the notes surrendered, or by credit in any account maintained by a banking institution with the Federal Reserve Bank o f its D istrict 7. 4 percent notes of Series B-1963.— Coupons dated N ovem ber 15, 1962, and M ay 15, 1963, must be attached to the notes when surrendered. Accrued interest from M ay 15 to September 15, 1962 ($13.36957 per $1,000) plus the paym ent ($10.00 per $1,000) due to the subscriber on account o f the issue price o f the new notes w ill be paid to subscribers follow ing acceptance o f the notes. V . ASSIGNMENT OF REGISTERED SECURITIES 1. After allotm ent Treasury N otes o f Series D-1963 and Series E-1963 in registered form tendered in payment for notes offered hereunder should be assigned by the registered payees or assignees thereof, in accord ance with the general regulations o f the Treasury Department governing assignments for transfer or exchange, in one o f the form s hereafter set forth, and thereafter should be surrendered to a Federal Reserve Bank or Branch or to the Office o f the Treasurer o f the United States, W ashington 25, D. C. The securities must be delivered at the expense and risk o f the holder. If the new notes are desired registered in the same name as the securities surrendered in exchange, the assignment should be to “The Secretary o f the Treasury for exchange for 3 % percent Treasury N otes o f Series A-1967”; if the new notes are desired registered in another name, the assignment should be to “The Secretary o f the Treasury for exchange for 3 3 percent Treasury N otes o f A Series A-1967 in the name of__________________________ if new notes in coupon form are desired, the assign ment should be to “The Secretary o f the Treasury for exchange for 33 percent Treasury N otes o f Series A-1967 A in coupon form to be delivered to__________________________ ”. Detached assignment form s m ay be used for the convenience o f subscribers. VI. GENERAL PROVISIONS 1. As fiscal agents of the United States, Federal Reserve Banks are authorized and requested to receive subscriptions, to make allotments on the basis and up to the amounts indicated by the Secretary o f the Treasury to the Federal Reserve Banks o f the respective Districts, to issue allotm ent notices, to receive payment for notes allotted, to make delivery o f notes on full-paid subscriptions allotted, and they m ay issue interim receipts pending delivery o f the definitive notes. 2. The Secretary o f the Treasury m ay at any time, or from time to time, prescribe supplemental or amendatory rules and regulations governing the offering, which w ill be communicated prom ptly to the Federal Reserve Banks. DOU GLAS D ILLO N , Secretary o f the Treasury. UNITED STATES OF AM ERICA 4 PERCENT TREASURY BONDS OF 1972 Dated and bearing interest from September 15, 1962 Due August 15, 1972 interest payable February 15 and August 15 Department Circular TREASURY DEPARTM ENT ----------Public Debt Series — No. 16-62 Office o f the Secretary Washington, September 10, 1962 I. OFFERING OF BONDS 1. The Secretary o f the Treasury, pursuant to the authority of the Second Liberty Bond Act, as amended, invites subscriptions from the people of the United States for bonds of the United States, designated 4 percent Treasury Bonds o f 1972: ( 1 ) at 99.30 percent o f their face value in exchange for 3 % percent Treasury Certificates o f Indebted ness of Series A-1963, dated February 15, 1962, due February 15, 1963; ( 2 ) at 99.70 percent of their face value in exchange for 2 % percent Treasury N otes o f Series A-1963, dated April 15, 1958, due February 15, 1963; ( 3 ) at 99.40 percent o f their face value in exchange for 3 Vi percent Treasury N otes o f Series E-1963, dated N ovem ber 15, 1961, due February 15, 1963; ( 4 ) at 99.40 percent o f their face value in exchange for 3 Vi percent Treasury Certificates of Indebted ness o f Series B-1963, dated M ay 15, 1962, due M ay 15, 1963; ( 5 ) at 99.40 percent o f their face value in exchange for 3Vi percent Treasury N otes o f Series D -1963, dated M ay 15, 1961, due M ay 15, 1963; or ( 6 ) at 98.80 percent o f their face value in exchange for 4 percent Treasury N otes of Series B-1963, dated April 1, 1959, due M ay 15, 1963. Interest adjustments as of September 15, 1962, and the cash payments due to the subscriber on account o f the issue prices o f the new bonds will be made as set forth in Section IV hereof. Subscriptions are invited up to an amount not to exceed $3,000,000,000, or thereabouts. If subscriptions exceed this amount they w ill be received subject to allotment. In addition to the amount offered for public subscription, exchange subscriptions from Government Investment Accounts w ill be allotted in full. D elivery o f the new bonds will be made on September 20, 1962. The books w ill be open only on September 10 through September 12, 1962, for the receipt o f subscrip tions for this issue. 2. In addition to the offering under this circular, holders o f the eligible securities are offered the privilege o f exchanging all or any part of such securities for 3 % percent Treasury Notes o f Series A-1967, which offering is set forth in Department Circular, Public D ebt Series — N o. 15-62, issued simultaneously with this circular. 3. Nonrecognition of gain or loss for Federal income tax purposes. — Pursuant to the provisions o f section 1037 (a ) of the Internal Revenue Code o f 1954 as added by Public Law 86-346 (approved September 22, 1959), the Secretary o f the Treasury hereby declares that no gain or loss shall be recognized for Federal incom e tax purposes upon the exchange with the United States o f the eligible securities enumerated in paragraph one o f this section solely for the 4 percent Treasury Bonds of 1972. Section 1 0 3 1 (b ) o f the Code, however, requires recognition o f any gain realized on the exchange to the extent that m oney is received by the security holder in connection with the exchange. T o the extent not recognized at the time of the exchange, gain or loss, if any, upon the obligations surrendered in exchange will be taken into account upon the disposition or redemp tion of the new obligations. II. DESCRIPTION OF BONDS 1. The bonds will be dated September 15, 1962, and will bear interest from that date at the rate of 4 percent per annum, payable on a semiannual basis on February 15 and August 15, 1963, and thereafter on February 15 and August 15 in each year until the principal amount becom es payable. T hey will mature August 15, 1972, and w ill not be subject to call for redem ption prior to maturity. 2. The incom e derived from the bonds is subject to all taxes im posed under the Internal Revenue Code o f 1954. The bonds are subject to estate, inheritance, gift or other excise taxes, whether Federal or State, but are exem pt from all taxation now or hereafter im posed on the principal or interest thereof by any State, or any o f the possessions o f the United States, or by any local taxing authority. 3. The bonds w ill be acceptable to secure deposits o f public moneys. They w ill not be acceptable in payment o f taxes. 4. Bearer bonds with interest coupons attached, and bonds registered as to principal and interest, will be issued in denominations of $500, $1,000, $5,000, $10,000, $100,000 and $1,000,000. Provision will be made for the interchange o f bonds o f different denominations and o f coupon and registered bonds, and for the trans fer of registered bonds, under rules and regulations prescribed by the Secretary o f the Treasury. 5. The bonds w ill be subject to the general regulations of the Treasury Department, now or hereafter prescribed, governing United States bonds. III. SUBSCRIPTION AND ALLOTMENT 1. Subscriptions w ill be received at the Federal Reserve Banks and Branches and at the Office o f the Treasurer o f the United States, W ashington 25, D. C. Banking institutions generally may submit subscriptions for accounts o f customers, provided the names o f the customers are set forth in such subscriptions, but only the Federal Reserve Banks and the Treasury Department are authorized to act as official agencies. Subscriptions w ill be received without deposit from banking institutions for their own account, Federally-insured savings and loan associations, States, political subdivisions or instrumentalities thereof, public pension and retirement and other public funds, international organizations in which the United States holds membership, foreign central banks and foreign States, Federal Reserve Banks and Government Investment Accounts. Subscriptions from all others must be accom panied by the deposit o f any o f the eligible securities enumerated in paragraph one o f Section I hereof, in the face amount o f not less than 10 percent o f the amount o f bonds applied for, not subject to withdrawal until after allotment. Registered securities submitted as deposits should not be assigned. A fter allotm ent detached assignment form s may be used as provided in Section V hereof. 2. The Secretary o f the Treasury reserves the right to reject or reduce any subscription, to allot less than the amount o f bonds applied for, and to make different percentage allotments to various classes o f subscribers; and any action he m ay take in these respects shall be final. The basis of the allotm ent w ill be publicly announced and allotm ent notices w ill be sent out prom ptly upon allotm ent IV. PAYMENT 1. Paym ent for the face amount o f bonds allotted hereunder must be made on or before September 20, 1962, or on later allotm ent and m ay be made only in a like face amount o f securities o f the six issues enumerated in paragraph one o f Section I hereof. In every case where paym ent is not so com pleted, the paym ent with application up to 10 percent of the bonds allotted shall, upon declaration made b y the Secretary o f the Treasury in his discretion, be forfeited to the United States. 2. 3Va percent certificates of indebtedness of Series A -1963. — Coupons dated February 15, 1963, must be attached to the certificates when surrendered. Accrued interest from August 15 to September 15, 1962 ($2.94837 per $1,000) plus the paym ent ($7.00 per $1,000) due to the subscriber on account o f the issue price o f the bonds w ill be paid to subscribers follow ing acceptance o f the certificates. 3. 2% percent notes of Series A-1963. — Coupons dated February 15, 1963, must be attached to the notes when surrendered. Accrued interest from August 15 to September 15, 1962 ($2.21128 per $1,000) plus the paym ent ($3.00 per $1,000) due to the subscriber on account o f the issue price o f the bonds w ill be paid to subscribers follow ing acceptance o f the notes. 4. 3Y4 percent notes of Series E-1963. — Coupons dated February 15, 1963, must be attached to the notes in bearer form when surrendered. Accrued interest from August 15 to September 15, 1962 ($2.73777 per $1,000) plus the paym ent ($6.00 per $1,000) due to the subscriber on account o f the issue price o f the bonds will be paid to subscribers. Paym ents w ill be made in the case o f bearer notes follow ing their acceptance and in the case o f registered notes, follow ing discharge of registration. In the case o f registered notes, the paym ent w ill be made b y check drawn in accordance with the assignments on the notes surrendered, or by credit in any account maintained by a banking institution with the Federal Reserve Bank o f its District. 5. 3 Vi percent certificates of indebtedness of Series B-1963. — Coupons dated N ovem ber 15, 1962, and M ay 15, 1963, must be attached to the certificates when surrendered. Accrued interest from M ay 15 to Septem ber 15, 1962 ($10.86277 per $1,000) plus the paym ent ($6.00 per $1,000) due to the subscriber on account o f the issue price o f the bonds w ill be paid to subscribers follow ing acceptance o f the certificates. 6. 3 Vi percent notes of Series D-1963.— Coupons dated N ovem ber 15, 1962, and M ay 15, 1963, must be attached to the notes in bearer form when surrendered. Accrued interest from M ay 15 to September 15, 1962 ($10.86277 per $1,000) plus the paym ent ($6.00 per $1,000) due to the subscriber on account o f the issue price o f the bonds w ill be paid to subscribers. Payments will be made in the case o f bearer notes follow ing their acceptance and in the case of registered notes, follow ing discharge o f registration. In the case o f registered notes, the paym ent w ill be made by check drawn in accordance with the assignments on the notes surrendered, or by credit in any account maintained by a banking institution with the Federal Reserve Bank o f its D istrict 7. 4 percent notes of Series B-1963. — Coupons dated N ovem ber 15, 1962, and M ay 15, 1963, must be attached to the notes when surrendered. Accrued interest from M ay 15 to September 15, 1962 ($13.36957 per $1,000) plus the payment ($12.00 per $1,000) due to the subscriber on account o f the issue price o f the bonds will be paid to subscribers follow ing acceptance o f the notes. V. ASSIGNMENT OF REGISTERED SECURITIES 1. After allotm ent Treasury N otes o f Series D-1963 and Series E-1963 in registered form tendered in payment for bonds offered hereunder should be assigned by the registered payees or assignees thereof, in accordance with the general regulations o f the Treasury Departm ent governing assignments for transfer or exchange, in one o f the form s hereafter set forth, and thereafter should be surrendered to a Federal Reserve Bank or Branch or to the Office o f the Treasurer of the United States, W ashington 25, D . C. T h e securities must be delivered at the expense and risk o f the holder. If the new bonds are desired registered in the same name as the securities surrendered in exchange, the assignment should be to “The Secretary o f the Treasury for exchange for 4 percent Treasury Bonds o f 1972”; if the new bonds are desired registered in another name, the assignment should be to “The Secretary o f the Treasury for exchange for 4 percent Treasury Bonds o f 1972 in the name o f _______________________________ ”; if new bonds in coupon form are desired, the assignment should be to “The Secretary o f the Treasury for exchange for 4 percent Treasury Bonds o f 1972 in coupon form to be delivered to_______________________________ ”. D etached assignment form s m ay be used for the convenience o f subscribers. VI. GENERAL PROVISIONS 1. As fiscal agents o f the United States, Federal Reserve Banks are authorized and requested to receive subscriptions, to make allotments on the basis and up to the amounts indicated by the Secretary o f the Treasury to the Federal Reserve Banks o f the respective Districts, to issue allotment notices, to receive paym ent for bonds allotted, to make delivery o f bonds on full-paid subscriptions allotted, and they m ay issue interim receipts pending delivery o f the definitive bonds. 2. The Secretary o f the Treasury may at any time, or from time to time, prescribe supplemental or amendatory rules and regulations governing die offering, which w ill be com m unicated prom ptly to the Federal Reserve Banks. DOU GLAS D ILLO N , Secretary o f the Treasury. ADVANCE REFUNDING U.S. TREASURY DEPARTMENT During period September 10 to September 12, 1962* OFFERS TO ISSUE: With dotes of Securities Issue Moturlty In amount up to (or thereabouts) 3-3/4%Treasury Notes, Series A-1967 Sept.15,1962 Aug. 15, 1967 $6 Billion 4% Treasury Bonds of 1972 Sept. 15,1962 Aug. 15, 1972 3 Billion IN EXCHANGE FOR OUTSTANDING: Amount (B illio n s) $6.9 2.8 3.6 6.7 5.0 1.7 With dotes of Treasury Securities Issue 3-1/2% Certificates of Series A-1963 25/8% Notes of Series A-1963 3- 1/4% Notes of Series E-1963 3-1/4% Certificates of Series B-1963 3-1/4%-Notes of Series D-1963 4% Notes of Series B-1963 Feb.15,1962 Apr. 15, 1958 Nov. 15,1961 May 15,1962 May 15,1961 Apr. 1,1959 Maturity Feb. Feb. Feb. May May May 15, 1963 15,1963 15,1963 15,1963 15,1963 15, 1963 Exchanges to be made on the basis of par for par in multiples of $1,000 for the new notes and in multiples of $500 for the new bonds with cash payments to subscribers per $100 face amount as follow s: AM O UN TS T O B E PAID SUBSCRIBERS SECURITIES TO BE EXCHANGED ON O F P S E A C C O U N T PU R C H A SE R ICE OF C U R ITIES TO BE ISSUED ON A C C O U N T O F A C C R U E D IN T E R E S T TO S E P T . 15, 1962 ON SEC U R ITIES TO BE EX C H A N G E D $ .50 .10 .40 .40 .40 1.00 $ .294837 .221128 .273777 1.086277 1.086277 1.336957 $ .794837 .321128 .673777 1.486277 1.486277 2.336957 $ .70 .30 .60 .60 .60 1.20 $ .294837 .221128 .273777 1.086277 1.086277 1.336957 $ .994837 .521128 .873777 1.686277 1.686277 2.536957 t o t a l AM OUN T F O R T H E 3 -3 /4 % N O T E S O F S E R IE S A -1 96 7 3-1/2% Certificates of Series A-1963 2-5/8% Notes of Series A-1963 3-1/4% Notes of Series E-1V63 3-1/4% Certificates of Series B-1963 3-1/4% Notes of Series D-1963 4% Notes of Series B-1963 FO R T H E 4% BO N D S O F 1972 3-1/2% Certificates of Series A-1963 2-5/8% Notes of Series A-1963 3-1/4% Notes of Series E-1963 3-1/4% Certificates of Series B-1963 3-1/4% Notes of Series D-1963 4% Notes of Series B-1963 Subscriptions will be subject to allotment if total subscriptions exceed amount of respective offerings. Interest adjustments will be made as of September 15, 1962. The new securities will be subject to payment and delivery on Septem ber 20, 1962. FULL INFORMATION CONCERNING TERMS OF THE EXCHANGE OFFERINGS AND TERMS OF NEW SECURITIES MAY BE OBTAINED FROM MOST COM MERCIAL BANKS, FEDERAL RESERVE BANKS AND BRANCHES, OR THE TREASURER OF THE UNITED STATES, WASHINGTON 25, D. C. Subscriptions placed in the mail by midnight Wednesday, September 12,1962, addressed to the Treasurer of the United States, Washington 25, D. C., or any Federal Reserve Bank or Branch, will be considered timely sent. The use o f registered mail in sending securities is recommended for the protection of security holders.
@FedFRASER