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FED ERAL RESERVE BANK O F NEW YORK r Circular N o. 4 8 8 4 1 I M ay 5. 1960 J Fiscal Agent o f the United States OFFERING OF TW O SERIES OF TREASURY BILLS $1,200,000,000 o f 91-Day Bills, Additional Amount, Series Dated Feb. 11, 1960, Due August 11, 1960 (T o Be Issued May 12, 1960) §400,000,000 of 182-Day Bills, Dated May 12, 1960, Due November 10, 1960 T o A ll In corporated Banks and T ru st Companies, and Others Concerned, in the Second Federal R eserv e D istrict: Following is the text o f a notice issued by the Treasury Department, released for publication in morning newspapers, Thursday, M ay 5, 1960: T h e T r e a s u ry D epa rtm en t, b y this p u b lic n otice, invites ten ders fo r tw o series o f T rea su ry bills to th e a g g reg a te a m ou n t o f $1,600,000,000, o r th erea b ou ts, fo r ca sh and in ex ch a n g e fo r T re a su ry bills m a tu rin g M a y 12, I960, in the a m ou n t o f $1,605,523,000, as fo llo w s : 91 -d a y bills ( t o m aturity da te) t o be issued M a y 12, 1960, in the a m ou n t o f $1,200,000,000, o r th ereabou ts, rep re sen tin g an addition al a m ou n t o f bills dated F eb ru a ry 11, 1960, and to mature A u g u s t 11, 1960, o rigin a lly issued in the a m o u n t o f $395,967,000, the a dd ition al and o r ig inal bills to b e fre e ly in terch angeable. 182-day bills, fo r $400,000,000, o r th ereabouts, to be dated M a y 12, 1960, and to m ature N o v e m b e r 10, 1960. T h e b ills o f b o th series w ill be issu ed o n a d is co u n t basis u n d er co m p e titiv e and n o n com p etitiv e b id d in g as h erein a fter p r o vided, and at m a tu rity th eir fa ce a m ou n t w ill b e p a ya b le w ith ou t in terest. T h e y w ill be issued in b ea rer fo r m o n ly , and in d e n om in ation s o f $1,000, $5,000, $10,000, $100,000, $500,000 and $1,000,000 (m a tu rity v a lu e ). T e n d e rs w ill be re ce iv ed at F ed era l R es e rv e B anks and B ra n ch es up to the clo s in g h ou r, on e -th irty o ’ c lo c k p.m ., E astern D a y lig h t S a v in g tim e, M o n d a y , M a y 9, 1960. T en d ers w ill n ot be receiv ed at th e T r e a s u ry D epa rtm en t, W a s h in g to n . E a ch ten der m u st be fo r an even m u ltiple o f $1,000, and in the ca se o f com p e titiv e ten ders th e p rice o ffe re d m u st b e ex p re s se d on the basis o f 100, w ith n o t m o r e th an th ree d ecim a ls, e.g., 99.925. F ra ctio n s m a y n o t be u sed. It is u rg ed th at ten ders be m ade on th e printed fo rm s and fo rw a rd e d in th e sp ecia l e n v e lo p e s w hich w ill be supplied b y F ed era l R e serv e B an ks o r B ra n ch es on a pp lica tion th erefor. O th e rs than b a n k in g in stitu tions w ill n ot b e perm itted to subm it ten ders e x ce p t fo r their o w n a ccou n t. T e n d e rs w ill be re ce iv e d w ith ou t deposit fr o m in co rp o ra te d banks a n d trust c o m panies and fro m re sp o n sib le and re c o g n iz e d d ea lers in in vestm en t securities. T e n d e rs fr o m oth ers m u st b e a cco m p a n ie d b y p a y m en t o f 2 p ercen t o f th e fa ce a m ou n t o f T r e a s u ry bills applied fo r , u nless the ten ders are a cco m p a n ie d b y an ex p re s s gu aranty o f pa ym en t b y an in co rp o ra te d b a n k o r tru st com p a n y . Im m e d ia te ly a fter th e clo s in g h our, ten ders w ill b e op en ed at the F ed eral R e se rv e B anks and B ra n ch es, fo llo w in g w h ich pu blic an n ou n cem en t w ill be m a d e b y the T r e a s u ry D ep a rtm en t o f the a m ou n t and price ran ge o f a ccep ted b ids. T h o s e su b m ittin g ten ders w ill b e a d vised o f the a cce p ta n ce o r r e je c tio n th ereof. T h e S ecreta ry o f the T r e a s u ry ex p re s sly reserves th e righ t to a cce p t o r r e je c t a n y o r all ten ders, in w h o le or in part, and his a ction in any such re s p e ct shall be final. S u b je ct to th ese reser vations, n on co m p e titiv e ten ders f o r $200,000 o r less fo r th e a d d i tional bills dated F eb ru a ry 11, 1960, (91 days rem ain in g until m aturity date on A u g u st 11, 1960) and n on com p etitiv e tenders fo r $100,000 o r less fo r the 182-day bills w ith ou t stated p rice fro m a n y on e b id d e r w ill b e a cce p te d in fu ll at the a v era g e p rice (in th ree d e c im a ls ) o f a cce p te d co m p e titiv e b id s fo r the re sp ective issues. S ettlem en t fo r a ccep ted ten ders in a cco rd a n ce w ith the b id s m u st be m a d e o r co m p le te d at th e F ed era l R e s e rv e B ank on M a y 12, 1960, in cash o r oth er im m ediately available funds o r in a like face a m ou n t o f T rea su ry bills m aturing M a y 12, 1960. Cash and e x ch a n g e ten ders w ill receiv e equal treatm ent. Cash ad ju stm en ts w ill b e m a d e f o r d ifferen ces b etw een th e par va lu e o f m a tu rin g b ills a ccep ted in e x ch a n g e a n d the issue price o f the n ew bills. T h e in co m e d eriv ed fr o m T rea su ry bills, w h eth er interest o r gain fr o m th e sale o r o th e r d isp osition o f the bills, d o e s n o t have an y ex em p tion , as such, a n d lo s s fr o m the sale o r o th e r d is p o si tion o f T r e a s u ry b ills d o e s n ot have a n y special treatm ent, as su ch , u n d er th e In tern al R even u e C o d e o f 1954. T h e bills are s u b je ct to estate, in heritance, g ift o r oth er ex cise ta xes, w h eth er Fed eral o r State, b u t are ex em p t fr o m all ta xation n o w o r h ere after im p o s e d on th e principal o r in terest th ereof b y a n y State, o r a n y o f the p oss e s s io n s o f the U n ited States, o r b y a n y loca l ta x in g a u th ority. F o r p u rp oses o f taxation the a m ou n t o f dis cou n t at w h ich T r e a s u ry b ills are orig in a lly s o ld b y th e U n ited States is co n sid e re d t o be interest. U n d e r S e ctio n s 4 5 4 (b ) and 1221(5) o f the In tern al R e v en u e C od e o f 1954 the a m ou n t o f dis co u n t at w h ich bills issued hereun der are s o ld is n ot co n sid e re d to a ccru e u ntil such bills are sold, red eem ed o r oth erw ise dis p o s e d o f, and su ch bills are e x clu d e d fr o m con sid era tion as capital assets. A c c o r d in g ly , the o w n e r o f T r e a s u ry bills (o th e r than life in su ra n ce co m p a n ie s ) issued hereunder n eed in clu d e in his in co m e tax return o n ly th e differen ce betw een the price paid fo r su ch b ills, w h e th e r on origin a l issue o r on su b seq u en t pu r chase, and th e a m ou n t a ctu a lly receiv ed either u p on sale o r re d e m p tio n at m a tu rity d u rin g the taxable year f o r w h ich the return is m ade, as ord in a ry gain o r loss. T rea su ry D ep a rtm en t C ircu lar N o. 418, R evised , and this n otice, p rescrib e th e term s o f the T rea su ry bills and g o v e r n the co n d itio n s o f th eir issue. C op ies o f the circu la r m a y b e ob ta in ed fro m any F ed era l R e serv e B ank o r B ranch. This Bank will receive tenders for both series up to 1 :30 p.m., Eastern Daylight Saving time, Monday, May 9, 1960, at the Securities Department o f its Head Office and at its Buffalo Branch. Tender forms for the respective series are enclosed. Please use the appropriate forms to submit tenders and return them in an envelope marked “ Tender fo r Treasury Bills.” Tenders may be submitted by telegraph, subject to written confirmation; they may not be submitted by telephone. Payment f o r the Treasury bills cannot be made by credit through the Treasury T ax and Loan Account. Settlement must be made in cash or other immediately available funds or in maturing Treasury bills. Results o f the last offering o f Treasury bills (9 1 -day b ills to be issued May 5, 1960, representing an additional amount o f bills dated February 4, 1960, and maturing A u g u s t 4, 1960; and 182-day bills dated May 5. 1960, maturing November 3, 1960) are shown on the reverse side o f this circular. A lfred H ayes, President. ( over ) RESULTS OF L A ST O FFE R IN G OF T R E A S U R Y BILLS (T W O SERIES ISSUED M A Y 5, 1960) Range o f A ccepted Com petitive Bids 91-Day Treasury Bills Maturing August 4,1960 Price A pprox. equiv. annual rate 182-Day Treasury Bills Maturing N ovem ber 3,1960 Price Approx. equiv. annual rate 99.265a 2.908% 98.326b 3.311% Low 99.191 3.200% 98.294 3.375% Average 99.241 3.003% 1 98.307 3.349% x H igh .. a E x c e p tin g on e ten d er o f $100,000. b E x c e p tin g on e ten der o f $1,324,000. 1 A v e ra g e rate on a co u p o n issue equivalent yield basis is 3.07% fo r the 91 -d a y bills and 3 .4 5% fo r the 182-day bills. Interest rates on bills are quoted on the basis o f bank discount, with their length in actual number o f days related to a 360-day year. In contrast, yields on certificates, notes, and bonds are computed on the basis o f interest on the investment, with the number o f days remaining in a semiannual interest payment period related to the actual number o f days in the period, and w ith semiannual com pounding if m ore than one coupon period is involved. (T h e entire amount o f 182-day bills bid for at the low price was accepted.) (82 percent o f the amount o f 91-day bills bid for at the low price was accepted.) T otal Tenders A p p lied fo r and A ccepted (B y Federal Reserve Districts) 91-Day Treasury Bills Maturing August 4,1960 Applied for District Boston ............................ $ 20,402,000 182-Day Treasury Bills Maturing N ovem ber 3,1960 Accepted $ 10,402,000 A pplied for $ 3,229,000 Accepted $ 3,229,000 New Y ork ..................... 1,219,890,000 669,090,000 594,694,000 278,194,000 Philadelphia................... 28,060,000 28,060,000 7,119,000 2,119,000 Cleveland ....................... . . 25,046,000 24,746,000 16,265,000 16,265,000 R ic h m o n d ........................ 11,740,000 11,740,000 1,078,000 1,078,000 Atlanta ............................ 16,553,000 16,553,000 5,119,000 5,119,000 182,357,000 134,357,000 83,340,000 37,840,000 St. Louis ....................... . . 17,589,000 17,589,000 6,484,000 6,484,000 Minneapolis ................... 10,665,000 10,665,000 2,696,000 2,496,000 Kansas C i t y ................... 20,957,000 20,957,000 6,852,000 6,802,000 Dallas .............................. 1 1 ,6 6 8 , 0 0 0 1 1 ,6 6 8 , 0 0 0 2 ,6 8 8 , 0 0 0 2 ,6 8 8 , 0 0 0 San Francisco ............... 44,263,000 44,263,000 37,793,000 37,793,000 T o t a l ............... $1,609,190,000 Chicago .......................... $1,000,090,000c $767,357,000 c In clu d es $200,638,000 n on com p etitive tenders a ccep ted at the a vera ge price o f 99.241. d In clu d es $43,566,000 n on com p etitive tenders a ccep ted at the a vera ge price o f 98.307. $400,107,000d