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FEDERAL RESERVE BANK ©f n ew Y o m F isc a l A g e n t o f th e U n ite d S ta tes Circular No. 10,031 May 2, 1986 Offering of $9,250,000,000 of 364-Day Treasury Bills Dated May 15,1986 Due May 14,1987 To All Banking Institutions, and Others Concerned, in the Second Federal Reserve District: Following is the text of a notice issued by the Treasury Department: The Department of the Treasury, by this public notice, invites tenders for approximately $9,250 million of 364-day Treasury bills to be dated May 15, 1986, and to mature May 14, 1987 (CUSIP No. 912794 MK7). This issue will provide about $700 million of new cash for the Treasury, as the maturing 52-week bill is outstanding in the amount of $8,550 million. Tenders will be received at the Federal Reserve Banks and Branches and at the Bureau of the Public Debt, Washington, D.C. 20239, prior to 1:00 p.m., Eastern Daylight Savings time, Tuesday, May 13, 1986. The bills will be issued on a discount basis under competitive and non competitive bidding, and at maturity their par amount will be payable without interest. This series of bills will be issued entirely in book-entry form in a minimum amount of $10,000 and in any higher $5,000 multiple, on the records either of the Federal Reserve Banks and Branches, or of the Department of the Treasury. The bills will be issued for cash and in exchange for Treasury bills maturing May 15, 1986. In addition to the maturing 52-week bills, there are $13,788 million of maturing bills which were originally issued as 13-week and 26-week bills. The disposition of this latter amount will be announced next week. Federal Reserve Banks currently hold $1,561 million as agents for foreign and international monetary authorities, and $5,408 million for their own account. These amounts represent the com bined holdings of such accounts for the three issues of maturing bills. Tenders from Federal Reserve Banks for their own account and as agents for foreign and international monetary authorities will be accepted at the weighted average bank discount rate of accepted competitive tenders. Ad ditional amounts of the bills may be issued to Federal Reserve Banks, as agents for foreign and international monetary authorities, to the extent that the aggregate amount of tenders for such accounts exceeds the ag gregate amount of maturing bills held by them. For purposes of determin ing such additional amounts, foreign and international monetary authorities are considered to hold $205 million of the original 52-week issue. Tenders for bills to be maintained on the book-entry records of the Department of the Treasury should be submitted on Form PD 4632-1. Each tender must state the par amount of bills bid for, which must be a minimum of $10,(XX). Tenders over $10,000 must be in multiples of $5,(XX). Competitive tenders must also show the yield desired, expressed on a bank discount rate basis with two decimals, e.g., 7.15%. Fractions may not be used. A single bidder, as defined in Treasury’s single bidder guidelines, shall not submit noncompetitive tenders totaling more than $1,(XX),000. Banking institutions and dealers who make primary markets in Govern ment securities and report daily to the Federal Reserve Bank of New York their positions in and borrowings on such securities may submit tenders for account of customers, if the names of the customers and the amount for each customer are furnished. Others are only permitted to submit tenders for their own account. Each tender must state the amount of any net long position in the bills being offered if such position is in excess of $200 million. This information should reflect positions held as of 12:30 p.m., Eastern time, on the day of the auction. Such positions would include bills acquired through “ when issued” trading, and futures and forward transac tions as well as holdings of outstanding bills with the same maturity date as the new offering, e.g., bills with three months to maturity previously offered as six-month bills. Dealers, who make primary markets in Govern ment securities and report daily to the Federal Reserve Bank of New York their positions in and borrowings on such securities, when submitting tenders for customers, must submit a separate tender for each customer whose net long position in the bill being offered exceeds $2CX) million. A noncompetitive bidder may not have entered into an agreement, nor make an agreement to purchase or sell or otherwise dispose of any non competitive awards of this issue being auctioned prior to the designated closing time for receipt of tenders. Payment for the full par amount of the bills applied for must accom pany all tenders submitted for bills to be maintained on the book-entry records of the Department of the Treasury. A cash adjustment will be made on all accepted tenders for the difference between the par payment submitted and the actual issue price as determined in the auction. No deposit need accompany tenders from incorporated banks and trust companies and from responsible and recognized dealers in invest ment securities for bills to be maintained on the book-entry records of Federal Reserve Banks and Branches. A deposit of 2 percent of the par amount of the bills applied for must accompany tenders for such bills from others, unless an express guaranty of payment by an incorporated bank or trust company accompanies the tenders. Public announcement will be made by the Department of the Treasury of the amount and yield range of accepted bids. Competitive bidders will be advised of the acceptance or rejection of their tenders. The Secretary of the Treasury expressly reserves the right to accept or reject any or all tenders, in whole or in part, and the Secretary’s action shall be final. Sub ject to these reservations, noncompetitive tenders for each issue for $1,000,000 or less without stated yield from any one bidder will be ac cepted in full at the weighted average bank discount rate (in two decimals) of accepted competitive bids for the respective issues. The calculation of purchase prices for accepted bids will be carried to three decimal places on the basis of price per hundred, e.g., 99.923, and the determinations of the Secretary of the Treasury shall be final. Settlement for accepted tenders for bills to be maintained on the bookentry records of Federal Reserve Banks and Branches must be made or completed at the Federal Reserve Bank or Branch on the issue date, in cash or other immediately-available funds or in Treasury bills maturing on that date. Cash adjustments will be made for differences between the par value of the maturing bills accepted in exchange and the issue price of the new bills. In addition, Treasury Tax and Loan Note Option Depositaries may make payment for allotments of bills for their own accounts and for account of customers by credit to their Treasury Tax and Loan Note Accounts on the settlement date. In general, if a bill is purchased at issue after July 18, 1984, and held to maturity, the amount of discount is reportable as ordinary income in the Federal income tax return of the owner at the time of redemption. Accrual-basis taxpayers, banks, and other persons designated in section 1281 of the Internal Revenue Code must include in income the portion of the discount for the period during the taxable year such holder held the bill. If the bill is sold or otherwise disposed of before maturity, the por tion of the gain equal to the accrued discount will be treated as ordinary income. Any excess may be treated as capital gain. Department of the Treasury Circulars, Public Debt Series—Nos. 26-76 and 27-76, Treasury’s single bidder guidelines, and this notice prescribe the terms of these Treasury bills and govern the conditions of their issue. Copies of the circulars, guidelines, and tender forms may be obtained from any Federal Reserve Bank or Branch, or from the Bureau of the Public Debt. T end ers w ill b e received p rior to 1:00 p .m ., E astern D a y lig h t S avin gs tim e , T u esd a y , M a y 13, 1986 at th e Securities D ep a rtm en t o f this B a n k ’s H e a d O ffic e , at ou r B u ffa lo B ra n ch , or at th e B u reau o f th e P u b lic D e b t. A ten d er fo rm is en clo sed . P le a se b e sure to u se th a t fo rm to su b m it th e ten d er a n d return it in th e en c lo se d en v e lo p e . F o rm s fo r su b m ittin g ten ders d irectly to th e T reasu ry are a v a ila b le fro m th e G o v e rn m e n t B o n d D iv isio n o f th is B a n k . T en d ers n o t requiring a d ep o sit m a y b e su b m itted b y teleg ra p h , su b ject to w ritten c o n firm a tio n ; n o ten d ers m a y b e su b m itted b y te le p h o n e . S ettle m en t m u st b e m a d e in ca sh or o th er im m e d ia te ly a v a ila b le fu n d s or in T reasu ry secu rities m a tu rin g o n or b e fo r e th e issue d ate. T reasu ry T ax an d L o a n N o te O p tio n D ep o sita rie s m a y m a k e p a y m en t fo r T reasu ry b ills b y cred it to their T reasury T ax an d L o a n N o te A c c o u n ts. R esu lts o f th e p r e v io u s 5 2 -w e e k b ill o ffe r in g are s h o w n o n th e rev erse sid e o f th is circu la r. E . G e r a l d C o r r ig an , President. (OVER) RESULTS OF PREVIOUS 52-WEEK OFFERING OF TREASURY BILLS (ISSUED APRIL 17, 1986) RANGE OF ACCEPTED COMPETITIVE BIDS % Discount Investment Rate Rate (Equivalent Coupon -Issue Yield) 6,30% Low 5*93% 6.32% High So95% 6.311 Average 5.94% Price 91.004 93 o984 93.994 Tenders at the high discount rate were allotted 65%. TENDERS RECEIVED AND ACCEPTED (In Thousands) Received location Boston New fork Philadelphia Cleveland Richmond Atlanta Chisago St * Louis Minneapolis Kansas City Balias San Francisco Treasury TOTALS $ 13,220 24,807,635 8,405 14 i620 48,460 43,380 1,720,345 62,000 14,250 39,830 16,370 2,572,220 175,200 Accepted $ 13,220 8,312,385 8,405 14,620 18,460 13,380 255,595 34,000 14,250 33,175 9,620 355,470 175,200 $29,535 p935 $9,257,780 $26,609,990 600,945 $27,210,935 $6,331,838 600,945 ‘$6,932,780 2,200,000 2,200,000 125,000 125,000 $29,535,935 $9,257,780 ‘Sms. Competitive loneompetitive Subtotalo Public Federal Reserve Foreign Official Institutions TOTALS An additional$450*000 thousand of the bills will be issued to foreign official institutions for new cash.
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