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FEDERAL RESER VE BANK O F N EW YORK Fiscal A g e n t o f the U nited States r C ircular N o. 4 9 9 3 T L F ebruary 1 , 1961 J OFFERING OF TWO SERIES OF TREASURY BILLS $1,100,000,000 of 91-Day Bills, Additional Amount, Series Dated Nov. 10, 1960, Due May 11, 1961 (To Be Issued February 9, 1961) $500,000,000 of 182-Day Bills, Dated February 9, 1961, Due August 10, 1961 T o A ll Incorporated B anks and Trust Companies, and Others Concerned, in the Second Federal R eserv e D istrict: Following is the text of a notice issued by the Treasury Department, released for publication today at 4 p.m., Eastern Standard time : The Treasury Department, by this public notice, invites tenders for tw o series o f Treasury bills to the aggregate amount o f $1,600,000,000, or thereabouts, for cash and in exchange for Treasury bills maturing February 9, 1961, in the amount of $1,600,403,000, as fo llo w s : 91-day bills (to maturity date) to be issued February 9, 1961, in the amount o f $1,100,000,000, or thereabouts, representing an additional amount o f bills dated N o vember 10, 1960, and to mature M ay 11, 1961, originally issued in the amount o f $400,206,000, the additional and original bills to be freely interchangeable. 182-day bills, for $500,000,000, or thereabouts, to be dated February 9, 1961, and to mature August 10, 1961. The bills o f both series w ill be issued on a discount basis under competitive and noncompetitive bidding as hereinafter provided, and at maturity their face amount w ill be payable without interest. They w ill be issued in bearer form only, and in denominations o f $1,000, $5,000, $10,000, $100,000, $500,000 and $1,000,000 (maturity value). Tenders w ill be received at Federal Reserve Banks and Branches up to the closing hour, one-thirty o ’clock p.m., East ern Standard time, M onday, February 6, 1961. Tenders will not be received at the Treasury Department, Washington. Each tender must be for an even multiple o f $1,000, and in the case o f competitive tenders the price offered must be expressed on the basis o f 100, with not more than three decimals, e.g., 99.925. Fractions may not be used. It is urged that tenders be made on the printed forms and forwarded in the special envelopes which w ill be supplied by Federal Reserve Banks or Branches on application therefor. Others than banking institutions w ill not be permitted to submit tenders except for their own account. Tenders w ill be received without deposit from incorporated banks and trust companies and from responsible and recognized dealers in in vestment securities. Tenders from others must be accompanied by payment o f 2 percent o f the face amount o f Treasury bills applied for, unless the tenders are accompanied by an express guaranty o f payment by an incorporated bank or trust company. Immediately after the closing hour, tenders w ill be opened at the Federal Reserve Banks and Branches, follow ing which public announcement w ill be made by the Treasury Department o f the amount and price range o f accepted bids. Those sub mitting tenders w ill be advised o f the acceptance or rejection thereof. The Secretary o f the Treasury expressly reserves the right to accept or reject any or all tenders, in whole or in part, and his action in any such respect shall be final. Subject to these reservations, noncompetitive tenders for $200,000 or less for the additional bills dated November 10, 1960, (91 days re maining until maturity date on M ay 11, 1961) and noncom petitive tenders for $100,000 or less for the 182-day bills without stated price from any one bidder will be accepted in full at the average price (in three decimals) o f accepted competitive bids for the respective issues. Settlement for accepted tenders in accordance with the bids must be made or completed at the Federal Reserve Bank on February 9, 1961, in cash or other immediately available funds or in a like face amount o f Treasury bills maturing February 9, 1961. Cash and exchange tenders w ill receive equal treatment. Cash adjustments w ill be made for differences between the par value o f maturing bills accepted in exchange and the issue price o f the new bills. The income derived from Treasury bills, whether interest or gain from the sale or other disposition o f the bills, does not have any exemption, as such, and loss from the sale or other disposition o f Treasury bills does not have any special treat ment, as such, under the Internal Revenue Code o f 1954. The bills are subject to estate, inheritance, gift or other excise taxes, whether Federal or State, but are exempt from all taxa tion now or hereafter imposed on the principal or interest thereof by any State, or any o f the possessions o f the United States, or by any local taxing authority. F or purposes o f taxa tion the amount o f discount at which Treasury bills are originally sold by the United States is considered to be interest. Under Sections 454(b) and 1221(5) o f the Internal Revenue Code o f 1954 the amount o f discount at which bills issued hereunder are sold is not considered to accrue until such bills are sold, redeemed or otherwise disposed of, and such bills are excluded from consideration as capital assets. A ccordingly, the owner o f Treasury bills (other than life insurance com panies) issued hereunder need include in his income tax return only the difference between the price paid for such bills, whether on original issue or on subsequent purchase, and the amount actually received either upon sale or redemption at maturity during the taxable year for which the return is made, as ordinary gain or loss. Treasury Department Circular No. 418, Revised, and this notice, prescribe the terms o f the Treasury bills and govern the conditions o f their issue. Copies o f the circular may be obtained from any Federal Reserve Bank or Branch. This Bank will receive tenders for both series up to 1:30 p.m., Eastern Standard time, Monday, February 6, 1961, at the Securities Department of 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 for Treasury Bills.” Tenders may be submitted by telegraph, subject to written confirmation; they may not be submitted by telephone. Payment for 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. R esults o f the last offerin g o f T reasury bills (91-day bills to be issued February 2, 1961, representing an additional am ount o f bills dated N ovem ber 3, 1960, and m aturing M ay 4, 1961 ; and 182-day bills dated February 2, 1961, m aturing A u g u st 3, 1961) are show n on the reverse side o f this circular. A lfred H ayes, President. ( over) RESULTS OF LAST OFFERING OF TREASURY BILLS (TW O SERIES TO BE ISSUED FEBRUARY 2, 1961) Range of Accepted Competitive Bids 91-Day Treasury Bills Maturing M ay 4, 1961 182-Day Treasury Bills Maturing A ugust 3, 1961 P r ice A p p ro x . equiv. annual rate ... 99.428 2.263% 98.748a 2.476% Low .......... ... Average ...... ... 99.414 2.318% 98.730 2.512% 99.419 2.299%1 98.738 2.497%! High P r ice A p p ro x . equiv. annual rate a Excepting tw o tenders totaling $1,800,000. 1 On a coupon issue o f the same length and for the same amount invested, the return on these bills would provide yields o f 2.34 percent for the 91-day bills, and 2.56 percent for the 182-day bills. Interest rates on bills are quoted in terms o f bank discount, with the return related to the face amount o f the bills payable at maturity rather than the amount invested, and their length in actual number o f days related to a 360-day year. In contrast, yields on certificates, notes, and bonds are computed in terms o f interest on the amount invested, and relate the number o f days remaining in an interest payment period to the actual number o f days in the period, with semiannual compounding if more than one coupon period is involved. (64 percent of the amount of 91-day bills bid for at the low price was accepted.) (62 percent of the amount of 182-day bills bid for at the low price was accepted.) Total Tenders Applied for and Accepted (By Federal Reserve Districts) 91-Day Treasury Bills Maturing M ay 4, 1961 D istrict A cccptcd A pplied for Boston .......... .... $ 28,604,000 182-Day Treasury Bills Maturing August 3, 1961 $ 13,604,000 A pplied fo r $ A ccep ted 23,300,000 $ 23,300,000 New Y o r k ....... .... Philadelphia ...... .... 1,453,953,000 646,333,000 896,341,000 382,777,000 26,766,000 11,766,000 6,586,000 1,586,000 Cleveland ....... .... Richmond ....... .... 29,704,000 24,704,000 17,414,000 9,644,000 18,137,000 18,137,000 4,547,000 4,547,000 Atlanta ......... .... 21,648,000 20,338,000 5,221,000 4,371,000 Chicago ......... .... St. Louis ........ .... 249,154,000 168,322,000 73,310,000 40,845,000 20,084,000 18,404,000 6,627,000 5,747,000 Minneapolis ...... .... 14,353,000 10,103,000 7,045,000 3,445,000 Kansas City ...... .... 43,385,000 34,305,000 15,250,000 7,400,000 Dallas .......... .... 19,714,000 17,714,000 5,960,000 3,346,000 131,061,000 116,901,000 20,626,000 13,262,000 $1,082,227,000 $500,270,000' San Francisco .... Total .... .... $2,056,563,000 $1,100,631,000b b Includes $207,898,000 noncompetitive tenders accepted at the average price o f 99.419. c Includes $41,720,000 noncompetitive tenders accepted at the average price o f 98.738.
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