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F E D E R A L R E S E R V E BANK O F N E W YORK Fiscal A g e n t o f the U nited States r Circular N o. 4 6 8 4 1 January 8, 1959 J L TREASURY FINANCING To A ll Banking In stitution s, and Others Concerned, in the Sccond Federal R eserve D istrict: The follow in g statement was made public toda y: T h e T r e a s u ry D ep a rtm en t a n n ou n ced to d a y th at on M o n d a y , J a n u a ry 1 2 , it w ill o ffe r f o r cash s u b s crip tio n $750 m illio n , o r th ereabouts, o f 4 p e r ce n t T rea su ry B o n d s o f 1980, to be d a ted J a n u a ry 23, 19 5 9, a n d t o m ature F e b r u a r y 15, 1 980. T h e b on d s w ill b e issued a t a p r ic e o f 99 p e r ce n t o f f a c e va lu e, to y ie ld a b ou t 4.07 p e rce n t. I n a d d itio n , th ere w ill b e o ffe re d $ 2 b illio n , o r th erea b ou ts, o f 1 6-m onth T r e a s u ry n otes b ea rin g in terest a t th e rate o f 3^4 p e rce n t, a n d to b e issued a t a p r ic e o f 9 9 % p e r ce n t o f f a c e va lu e, t o y ie ld a b ou t 3.45 p ercen t. T h e notes w ill be d a ted J a n u a ry 2 1 , 1959, a n d w ill m ature M a y 15, 1960. T h e d ecision to raise $ 3 1/4 b illio n at this tim e ra th e r than the $2 b illion , o r th ereabouts, w h ich h ad been p r e v i o u sly in d ica ted as n ecessa ry to co m p le te the cash req u irem en ts f o r the first q u a rter, reflects a d esire to m eet a p p r o x i m ately $1 b illio n m ore o f the first q u a rte r’s fin a n cin g needs th rou gh the o ffe rin g o f a la rg e r a m ou n t o f th e 16-m onth T re a su ry n otes ra th er than th rou gh a d d ition s o f $200 m illion p e r week to the a m ou n t o f T rea su ry bills ou tsta n d in g. I t is p re se n tly con tem p la ted th at th e 2 6 -w eek b ill cy c le w ill be con tin u ed at $400 m illion p e r w eek b u t that th e a m ou n t o f 1 3-w eek bills o ffe re d each w eek w ill be v a rie d a c co rd in g to needs. T h e n et resu lt o f this w ill be that the to ta l cash e x p ected to b e ra ised in the first q u a rter is estim ated to be o n ly a b ou t $250 m illion a b ov e w h at had p r e v io u s ly been in d ica ted . T h is o p e r a tio n g iv es the T rea su ry m ore fle x ib ility in m eetin g its req u irem en ts in the m on th s ahead. T h e o ffe rin g o f the 4 p ercen t b on d is d esign ed p r im a r ily to m eet the in vestm ent needs o f sa v in g s-ty p e in vestors, such as p e n sion a n d retirem en t fu n d s , in su ra n ce co m p a n ie s , sa v in g s banks, a n d oth er sa v in g s in stitu tion s. T o e n co u ra g e su b scrip tion s fr o m such sou rces, th ey w ill be perm itted to p a y f o r b on d s a llotted to them in installm ents u p to A p r il 23 (n o t less than 25 p e r ce n t b y J a n u a ry 2 3 , the issue d a t e ; 50 p e r ce n t b y F e b r u a r y 2 4 ; 7 5 p ercen t b y M a rch 2 3 ; a n d f u ll p a y m en t b y A p r il 2 3 ) . A m o u n ts a llotted t o oth er classes o f su b scrib ers m ust b e p a id f o r in fu ll o n J a n u a ry 23. A ll s u b s crip tio n s e x ce p t fr o m com m ercia l banks f o r th eir ow n a cco u n t a n d e x c e p t fr o m S tates, p o litic a l su b d iv isio n s o r in stru m en talities th e re o f a n d p u b lic fu n d s m ust be a cco m p a n ie d b y a cash d ow n -p a y m e n t o f 15 p ercen t a t the tim e o f su b scrip tio n . C om m ercia l b a n k s u b s crip tio n s w ill b e lim ited to a n a m ou n t n o t ex ce e d in g 4 p ercen t o f the com bin ed a m ou n t o f tim e certificates o f d e p o s it (b u t o n ly those issued in the nam es o f in d ivid u a ls, and o f co rp o ra tio n s , a ssocia tion s, a n d oth er org a n iza tion s n ot op e ra te d f o r p r o fit ) a n d o f sa vin g s d ep osits, o r 10 p erce n t o f th e com bin ed ca p ita l, su rp lu s and u n d iv id ed p rofits, w h ich ever is g rea ter. I n a d d ition to th e a m ou n t o ffe re d f o r p u b lic su b scrip tion , th e S e cre ta ry o f the T rea su ry m a y a lloca te u p to $75,000,000 o f these b on d s to G overn m en t In vestm en t A cco u n ts . S u b scrip tio n b ook s f o r this issue w ill be o p e n on J a n u a r y 12 a n d J a n u a ry 13. I n o rd e r to en cou ra g e w id e d istrib u tion o f th e 4 p e r ce n t b on d s o f 1980, su b scrip tion s u p to a m axim um o f $25,000 i f th ey a re a cco m p a n ie d b y 100 p e r ce n t p a y m e n t a t the tim e th e su b scrip tion s a re en tered w ill be a llotted in fu ll to all subscribers. T h e S e cre ta ry o f the T rea su ry reserves the rig h t to r e je c t o r red u ce a n y su b scrip tio n , to a llo t less th an the am ou n t o f b o n d s a p p lie d f o r , and t o m a k e differen t p e rce n ta g e a llotm en ts to v a riou s classes o f su bscribers. S a v in g s -ty p e in vestors w h o m a y su b scrib e to th e 4 p ercen t b on d s on a d e fe r r e d p a y m e n t basis a r e : P e n sio n a n d retirem en t fu n d s — p u b lic and p riv a te E n d o w m en t fu n d s In su ra n ce com p a n ies M u tu al sa v in g s banks F r a te rn a l benefit associa tion s a n d la b o r u n ion s’ in su ra n ce fu n d s S a v in g s and loa n associa tion s C re d it u n ion s O th er sa v in g s o rg a n iza tion s ( n o t in clu d in g com m ercia l b a n k s) S tates, p o litica l su b d ivision s o r in stru m en ta lities th e re o f, a n d p u b lic fu n d s W h e r e su b scrib ers in this g r o u p (e x c e p t States, p o litic a l su b d iv ision s o r in stru m en talities th e re o f, a n d p u b lic pen sio n a n d retirem en t and oth er p u b lic fu n d s ) elect to p a y f o r such b o n d s in installm ents, d eliv ery o f 5 p e rccn t o f th e to ta l p a r a m ou n t a llo tte d w ill b e w ith h eld u ntil p a y m en t f o r th e total a m ou n t a llotted has been com pleted. T h e o ffe rin g o f $ 2 % b illio n o f 3^4 p e r ce n t T r e a s u ry n otes w ill b e o p e n o n ly on J a n u a ry 12. A cash d o w n p a y m e n t o f 2 p ercen t w ill be req u ired fr o m n on b a n k su b scrib ers t o this o ffe rin g . S u b sc rip tio n s fr o m com m ercia l bank s to th e n otes w ill b e lim ited in each ca se to an a m o u n t n ot ex ce e d in g 50 p e r ce n t o f th e com b in ed ca p ita l, su rp lu s a n d u n d iv id ed p ro fits o f th e s u b s crib in g bank. C om m ercia l b a n k s and oth er len ders are requ ested to r e fr a in fr o m m a k in g u nsecured loa n s, o r loa n s colla te r a lized in w h ole o r in p a r t b y th e b o n d s o r n otes su b s crib e d f o r , to c o v e r th e d e p o s its req u ired t o b e p a id w hen su b scrip tio n s are en tered, a n d banks w ill be req u ired to m ake th e u su al certifica tion to th at effect. A ll su b scrib ers to th e b on d s o r th e n otes are re q u ire d to a g ree n o t t o p u rch a se o r to sell, o r to m ake a n y a g re e m ents w ith re sp e ct to the pu rch a se o r sale o r oth er d is p o sitio n o f these issues, u ntil a ft e r J a n u a ry 12 in the ca se o f the n otes a n d a ft e r J a n u a ry 13 in the ca se o f the bond s. A n y su b scrip tion s f o r eith er issue a ddressed to a F e d e ra l R eserve B a n k o r B ra n ch , o r to the T rea su rer o f the U n ited States, and p la ce d in the m a il b e fo r e m id n igh t o f th e resp ectiv e clo s in g dates w ill be con sid ered as tim ely. T h e new b o n d s a n d n otes m a y b e p a id f o r b y cre d it in T rea su ry T a x a n d L o a n A ccou n ts. Circulars and subscription form s will be mailed to reach you by M onday, January 12. A l f r e d H a y e s , P resident.
@FedFRASER