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FEDERAL RESERVE BANK OF DALLAS
F IS C A L A G E N T O F TH E U N ITE D ST A T E S

Dallas, Texas, June 6, 1960

PRELIMINARY ANNOUNCEM ENT
ADVANCE REFUNDING EXCHANGE OFFERING

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 an
offering of 3 3 percent Treasury notes, maturing M ay 15, 1964, or 3 % percent Treasury bonds, maturing
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M ay 15, 1968, in exchange for 2 V2 percent Treasury bonds, maturing November 15, 1961:
‘T h e Treasury Department is for the first time, in respect to marketable securities, making
use of advance refunding legislation passed last fall in offering holders of a specific issue of
marketable bonds the option, well in advance of maturity, to exchange such bonds for either
a marketable note or bond of longer maturity.
“Accordingly, the Treasury Department is offering the holders of $11,177,152,000 of the
outstanding 2 V2 percent Treasury bonds maturing November 15, 1961, the option to exchange
them during the period from June 8 to June 13, inclusive, for like face amounts of either 3 3
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percent Treasury notes maturing M ay 15, 1964 or 3 % percent Treasury bonds maturing M ay
15, 1968.
“Exchange subscriptions to the 3 3 percent notes of M ay 15, 1964, are invited up to an
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amount not to exceed $ 3 % billion, and subscriptions to the 3 7 percent bonds of 1968 are
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invited up to an amount not to exceed H V 2 billion. However, if subscriptions to the respective
issues exceed these amounts by more than 10 percent, they will be subject to allotment. As is
customary, the lowest denominations of the new note will be $1,000 and of the new bond will
be $500.
‘T h e new 3 3 percent notes and 3 7 percent bonds will be dated and bear interest from
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/s
June 23, 1960, payable on November 15 and M ay 15. Accrued interest from M ay 15, 1960 to
June 23, 1960 on the 2 Vz percent bonds of November 15, 1961 will be paid on the bonds
accepted for exchange.
“N o gain or loss shall be recognized for Federal income tax purposes upon the exchange
of the 2Vz percent bonds of 1961. The official offering circulars applicable to the new notes and
new bonds contain the following provision:
“ ‘Pursuant to the provisions of Section 1037 (a ) of the Internal Revenue Code of 1954
as added by Public Law 86-346 (approved September 22, 1959), the Secretary of the Treasury
hereby declares that no gain or loss shall be recognized for Federal income tax purposes upon the
exchange with the United States of the 2Vz percent Treasury Bonds of 1961 solely for the 3 3
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percent Treasury Notes of Series D-1964 (or 3 % percent Treasury Bonds of 1968). Gain or
loss, if any, upon the obligations surrendered in exchange will be taken into account upon the
disposition or redemption of the new obligations.’

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

“Exchange subscriptions to the new 3 % percent Treasury notes maturing M ay 15, 1964,
and to the new 3 % percent bonds maturing M ay 15, 1968, will be received subject to allot­
ment, and will be received 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, Government Investment
Accounts, and the Federal Reserve System without deposit. Subscriptions from all others must
be accompanied by the deposit of 2 % percent bonds of 1961 in the amount of not less than
10 percent of the face amount of the notes or bonds applied for.
“The Comptroller of the Currency, the Board of Governors of the Federal Reserve System,
and the Federal Deposit Insurance Corporation have indicated that they intend to issue rulings
advising banks under their supervision that they may place the securities received in exchange
on their books at an amount not greater than the amount at which the securities being tendered
by them for exchange are carried on their books.
“The subscription books will be open only on June 8 to June 13, inclusive, for the receipt
of subscriptions for the new issues. Any subscription for the new notes or bonds addressed to a
Federal Reserve Bank or Branch or to the Treasurer of the United States and placed in the
mail before midnight, June 13, will be considered as timely.”
Official circulars and subscription forms for the new exchange offering will be mailed as soon as
possible.
Yours very truly,
Watrous H. Irons
President

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