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F ederal Reserve Ban k DALLAS. TEXAS of Da lla s 75222 Circular No. 6 9 -I38 June 3, 1969 USDA OFFERS $700 MILLION IN SHORT-TERM SPECIAL SERIES CERTIFICATES OF INTEREST To Banking Institutions and Others Concerned in the Eleventh Federal Reserve District: There is quoted below a press statement issued on June 2, 19&9, by the United States Department of Agriculture in regard to an offering of Special Series Certificates of Interest: The U. S. Department of Agriculture today announced that the Commodity Credit Corporation will offer to banking institu tions, dealers in investment securities, and other interested persons the opportunity to participate in financing approximately $700 million of price support loans on agricultural commodities, by purchasing a Special Series of Certificates of Interest in a pool of such loans. Special Series Certificates of Interest, which are non interest bearing, will be offered for sale at discount on an auction basis — both for competitive and noncompetitive bids as is done for Treasury bills. The Certificates, in bearer form, will be issued June 23, and will mature on August 1, 1969 (39 days). Bids in writing for Special Series Certificates of Interest must be received at the head office of any Federal Reserve Bank (not branch) before 1:30 p.m., (EDT), on Tuesday, June 17, 1 9 6 9 * The Invitation for Bids covering Special Series Certificates of Interest will be available through Federal Reserve Banks about June U. Those submitting successful bids will be advised by the Federal Reserve Banks. Bids will be accepted in multiples of $5,000. Commodity Credit Corporation, a wholly owned agency and instrumentality of the United States with the Department of Agriculture, has statutory authority (15 U.S.C. 71^b(i) and 713a-U) to borrow up to $1^.5 billion, has reserved an amount This publication was digitized and made available by the Federal Reserve Bank of Dallas' Historical Library (FedHistory@dal.frb.org) - 2 - of its uncommitted borrowing authority sufficient to redeem outstanding Special Series Certificates of Interest, and has arranged to borrow from the Secretary of the Treasury of the United States any portion of such uncommitted amount of its borrowing authority whenever needed to redeem such Certificates. Certificates of Interest contain a contractual obligation by Commodity Credit Corporation to redeem such Certificates and this obligation is also a contractual obligation of the United States . Certificates are eligible as security for advances at Federal Reserve Banks and as collateral for Treasury Tax and Loan accounts. Proceeds from the sale of these Certificates will be paid into the United States Treasury to be applied as payments on Commodity Credit Corporation notes held by the Treasury. On or after maturity on August 1, 19&9? Certificates will be redeemed at any Federal Reserve Bank or branch. The official invitation for bids and tender form for the new securities is enclosed. As indicated in the announcement, tenders are to be submitted only to the head office of this bank and will be received up to twelvethirty P.M., Central Daylight Saving Time, Tuesday, June 17, 1 9 & 9 • Federal Reserve Bank of Dallas Fiscal Agent for Commodity Credit Corporation Enclosure FEDERAL. RESERVE BANK O F DALLAS FISCAL. A G EN T O F T H E COMM ODITY C R E D IT C O R P O R A T IO N DALLAS, TEXAS 75222 June 3, 1969 INVITATION FOR BIDS O N COMMODITY CREDIT CORPORATION CERTIFICATES OF INTEREST SPECIAL SERIES To All B a n k in g In stitu tio n s a n d O th e rs C o n c e rn e d in th e E leven th F e d e ra l R eserv e District: Y our a t te n t io n is in v ite d to t h e f o llo w in g s t a t e m e n t g iv in g d e t a il s o f a n is s u e o f C ertificates o f In terest: Commodity Credit Corporation (hereinafter referred to as “CCC” ), an agency and instrumentality of the U nited States within the Department of Agriculture, hereby invites bids for the purchase of a special series of non-interest bearing nego tiable Certificates of Interest in an approximate amount of $700,000,000. These Certificates evidence participation in the financing, and an interest in a pool, of outstanding CCC price support loans on agricultural commodities. The Certificates will be sold on a discount basis and w ill be issued in denominations of $5,000, $10,000, $100,000, and $1,000,000. Denomina tional exchanges may be made only at the Federal Reserve Bank of New York. The Certificates have a maturity date of August 1, 1969, and will be redeemed by CCC on or after the maturity date on presentation at any Federal Reserve Bank or branch thereof. The Certificates are eligible as security for advances at Federal Reserve Banks and as collateral for Treasury Tax and Loan accounts. Bids will be received at the head office of any Federal Reserve Bank up to 1:30 P.M., E.D.T., Tuesday, June 17, 1969. Bids must be in writing in multiples of $5,000 and the price offered must be expressed on the basis of 100, with not more than three decimals, e.g., 99.925. Fractions may not be used. It is urged that bids be made on the printed forms, and forwarded in the special envelopes, to be furnished by Federal Reserve Banks on application therefor. Banking institutions generally may submit bids for accounts of customers provided the names of the customers are set forth in such bids. Others may only submit bids for their own account. Bids will be received without deposit from incorpo rated banks and trust companies and from responsible and recognized dealers in investment securities. Bids from others must be accompanied by a deposit of 2 percent of the face amount of the Certificates bid for, unless such bids are accompanied by an express guaranty of payment by an incorporated bank or trust company. Immediately after the closing hour, CCC w ill open and evaluate the bids, and will then publicly announce the amount and price range of accepted bids. CCC expressly reserves the right to accept or reject any or all bids, in whole or in part, and any such action shall be final. Subject to this reservation, noncompetitive bids from any one bidder for $200,000 or less with out stated price will be accepted in full at the average price (in three decimals) of accepted com petitive bids. Those sub mitting successful bids will be so advised by the Federal Reserve Bank to which the bid was submitted, and settlem ent there for must be made at such Bank on June 23, 1969, in U. S. dollars, either in cash or other immediately available funds. Pay ment cannot be made by credit through the Treasury Tax and Loan account. CCC has statutory authority to borrow up to $14.5 billion and reserves an amount of its uncommitted borrowing authority sufficient to redeem outstanding special series Certificates of Interest. CCC has an arrangement to borrow from the Secretary of the Treasury of the United States any portion of the uncommitted amount of its borrowing authority whenever needed to redeem such Certificates, which arrangement is confirmed in the following quoted letter: “ THE SECRETARY OF THE TREASURY WASHINGTON Dear Mr. Palmby: M ay 29, 1969 Reference is made to the request that an arrangement be made between Commodity Credit Corporation and the Secretary of the Treasury to borrow any portion of the uncommitted amount of Commodity Credit Corporation’s borrowing authority whenever it is needed to redeem outstanding Special Series Certificates of Interest. The Commodity Credit Corporation has statutory authority (15 U.S.C. 714b (i) and 713a-4) to borrow up to $14.5 billion, provided the approval of the Secretary of the Treasury is obtained. I am advised that the unused balance of Commodity Credit Corporation’s authorized borrowing authority presently exceeds $.9 billion. I understand that the Commodity Credit Corporation has reserved $700 million of this unused balance to be used only for the redemption of Special Series Certificates at maturity on August 1, 1969. Accordingly, on the records of the Treasury Department, we are reserving $700 million of your total unused borrowing authority for the purpose of redeeming outstanding Special Series Certificates of Interest. I understand that in the opinion of the General Counsel ofthe Department of Agriculture these Certifi cates contain a contractual obligation by the Commodity Credit Corporation to redeem such Certificates and that this obligation is also a contractual obligation of the United States Sincerely yours, T he Honorable Clarence D. Palmby President Commodity Credit Corporation Department of Agriculture Washington, D . C. 20250” I s I David M. Kennedy In a c c o r d a n c e w ith th e a b o v e a n n o u n c e m e n t , t e n d e r s will b e re c e iv e d a t th is b a n k u p to tw e lv e - th ir ty p .m ., C e n tral D a y lig h t S a v in g Time, T u e s d a y , J u n e 17, 1 969. T e n d e rs m a y n o t b e e n t e r e d b y t e le p h o n e . Yours very truly, P. E. Coldwell President (See reverse for tender form) TENDER FOR COMMODITY CREDIT CORPORATION CERTIFICATES OF INTEREST SPECIAL SERIES 39 DAYS TO MATURITY Maturing August 1,1969 Dated June 23, 1969 To: Federal Reserve Bank, Station K, Dallas, Texas 75222 (D ate) P ursuant to the provisions of the invitation for bids printed on the reverse hereof, the undersigned offers to pur chase Certificates of Interest in the amount shown below, and agrees to pay fo r the amount allotted, on or before the issue date, by the method and a t the rate indicated. .NOT TO EXCEED $200,000 NONCOMPETITIVE TENDER $. Noncompetitive tenders for $200,000 or less from any one bidder, without stated price, will be accepted in full at the average price (in three decimals) of accepted competitive bids. Prices should be ex -------? ------------------------------------ pressed on the basis of -@ $ 100, with not more than COMPETITIVE TENDERS th re e d e c im a l places ____ <j$_______________________ e. g., 99.925. Fractions (a ). must not be used. TENDERS MAY NOT BE ENTERED BY TELEPHONE. TENDERS BY WIRE, IF RECEIVED BEFORE THE CLOSING HOUR, ARE ACCEPTABLE. Num ber of Pieces Payment for this issue of Certificates cannot be made by credit to T reasury Tax and Loan Account. Denominations Desired M aturity Value <a> $ 5,000 <a> $ 10,000 (3> $ 100,000 © $i ,000,000 ? $ $ METHOD OF PAYMENT $ Delivery Instructions: □ Hold in Custody Account—Member banks for own account only □ Pledge to secure Treasury Tax and Loan Account □ Ship to_________________________ □ Payment to be made by______________ □ Charge our reserve account on payment date □ Draft enclosed (Effectual delivery of enclosed d ra ft shall be on latest day which will perm it present m ent in order to obtain irrevocably collected funds on paym ent date) (Subscriber’s full name or corporate title) (Address) By. (Authorized official signature and title) (For the account of, if tender is for another subscriber) (Address) IM PO RTANT 1. No tender fo r less than $5,000 will be considered and each tender m ust be for an amount in multiples of $5,000 (m aturity value). 2. Tenders should be forwarded in an envelope clearly addressed to this bank as Fiscal Agent of the Commodity Credit Corporation, with notation on the envelope reading “TEN D ER FOR CERTIFICA TES OF IN T E R E ST ”. Since enve lopes received with this legend will not be opened until after the closing time specified in the public announcement, com munications relating to other m atters should not be enclosed. 3. Any qualified or conditional tender will be rejected. 4. If a corporation makes the tender, the form should be signed by an officer of the corporation authorized to make the tender and the signing of the form by an officer of the corporation will be construed as a representation by him th at he has been so authorized. If the tender is made by a partnership it should be signed by a member of the firm, who should sign in the form “___________________________ , a copartnership, by---------------------------------- -------------------- , a member of the firm”. 5. Tenders from those other than incorporated banks and tru st companies or responsible and recognized dealers in invest ment securities will be disregarded, unless accompanied by a deposit of 2 percent of the total amount (m aturity value) of the Certificates applied for, or unless the tenders are accompanied by an express guaranty of full payment by an incorporated bank or tru st company. (See reverse for announcement)