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FEDERAL RESERVE BANK O F N EW YORK Fiscal A gen t o f the U nited States [ C ir c u l a r N o. 5 0 2 7 1 1 A p r il 26, 1961 J OFFERING OF TW O SERIES OF TREASURY BILLS $1,100,000,000 o f 91-Day Bills, Additional Amount, Series Dated Feb. 2, 1961, Due Aug. 3, 1961 (To Be Issued May 4, 1961) $500,000,000 o f 182-Day Bills, Dated May 4, 1961, Due November 2, 1961 T o A ll Incorporated Banks and Trust Companies, and Others Concerned, in the Second F ederal R eserve 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: T he Treasury Department, b y this public notice, invites tenders fo r tw o series o f Treasury bills to the aggregate amount o f $1,600,000,000, o r thereabouts, fo r cash and in exchange for Treasury bills maturing M ay 4, 1961, in the amount o f $1,501,013,000, as fo llo w s : 91-day bills ( t o maturity date) to be issued M ay 4, 1961, in the amount o f $1,100,000,000, or thereabouts, repre senting an additional amount o f bills dated February 2, 1961, and to mature August 3, 1961, originally issued in the amount o f $500,388,000, the additional and original bills to be freely interchangeable. 182-day bills, fo r $500,000,000, or thereabouts, to be dated M a y 4, 1961, and to mature Novem ber 2, 1961. T he 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. T h ey will 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 (m aturity valu e). Tenders w ill be received at Federal Reserve Banks and Branches up to the closing hour, one-thirty o ’clock p.m., Eastern Daylight Saving time, M onday, M ay 1, 1961. Tenders w ill not be received at the Treasury Department, W ashington. E ach tender must be fo r 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 form s and forw arded in the special envelopes which w ill be supplied by Federal Reserve Banks o r Branches on application therefor. O thers than banking institutions will not be permitted to submit tenders except fo r their own account. Tenders w ill be received without deposit from incorporated banks and trust companies and fro m 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 Treasu ry bills applied for, unless the tenders are accompanied b y an express guaranty o f payment by an incorporated bank or trust company. Immediately a fter the closing hour, tenders w ill be opened at the Federal Reserve Banks and Branches, follow in g which public announcement will 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 o r rejection thereof. T he Secretary o f the Treasury expressly reserves the right to accept o r reject any or all tenders, in w hole or in part, and his action in any such respect shall be final. Subject to these reservations, noncompetitive tenders fo r $200,000 or less fo r the additional bills dated February 2, 1961, (91 days re maining until maturity date on August 3, 1961) and noncom petitive tenders for $100,000 or less fo r the 182-day bills without stated price fro m any one bidder will be accepted in full at the average price (in three decim als) o f accepted competitive bids fo r the respective issues. Settlement fo r accepted tenders in accordance with the bids must be made o r com pleted at the Federal Reserve Bank on M ay 4, 1961, in cash or other immediately available funds or in a like face amount o f Treasury bills maturing M ay 4, 1961. Cash and exchange tenders w ill receive equal treatment. Cash adjustments will be made fo r differences between the par value o f maturing bills accepted in exchange and the issue price o f the new bills. T he income derived from Treasury bills, whether interest or gain from the sale or other disposition o f the bills, does not have any exem ption, as such, and loss fro m 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. T he bills are subject to estate, inheritance, g ift or other excise taxes, whether Federal or State, but are exem pt from all taxa tion n ow or hereafter imposed on the principal o r 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 Treasu ry bills are originally sold by the United States is considered to be interest. Under Sections 4 5 4 (b ) and 1221(5) o f the Internal Revenue Code o f 1954 the amount o f discount at w hich bills issued hereunder are sold is not considered to accrue until such bills are sold, redeemed or otherwise disposed o f , and such bills are excluded fro m consideration as capital assets. A ccordingly, the ow ner o f Treasury bills (other than life insurance com panies) issued hereunder need include in his income ta x return only the difference between the price paid fo r such bills, whether on original issue or on subsequent purchase, and the amount actually received either upon sale o r redemption at maturity during the taxable year fo r which the return is made, as ordinary gain o r loss. Treasury Department Circular N o. 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 m ay be obtained fro m any Federal Reserve Bank o r Branch. This Bank will receive tenders for both series up to 1 :30 p.m., Eastern Daylight Saving time, Monday, May 1, 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 Tax and Loan Account. Settlement must be made in cash or other immediately available funds or in maturing Treasury bills. Results o f the last offerin g o f T reasury bills (9 1 -d a y bills to be issued A p ril 27, 1961, representing an additional amount o f bills dated January 26, 1961, and m aturing July 27, 1 961; and 182-day bills dated A pril 27, 1961, m aturing O ctober 26, 1961) are shown on the reverse side o f this circular. A lfred H ayes , President. ( over) RESULTS OF LAST OFFERING OF TREASURY BILLS (TWO SERIES TO BE ISSUED APRIL 27, 1961) Range of Accepted Competitive Bids 91-Day Treasury Bills Maturing July 27, 1961 182-Day Treasury Bills Maturing October 26, 1961 A p p rox. equiv. annual rate P rice P rice A p p ro x . equiv. annual rate High ........................................ 99.451 a 2.172% 98.842 2.291% L ow .......................................... 99.444 2.200% 98.832 2.310% Average .................. ................ 99.448 2.186% 1 98.837 2.300% 1 a Excepting one tender o f $750,000. 1 O n a coupon issue o f the same length and fo r the same amount invested, the return on these bills would provide yields o f 2.23 percent fo r the 91-day bills, and 2.36 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. (73 percent of the amount of 91-day bills bid for at the low price was accepted.) (34 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 July 27, 1961 Applied f o r D istrict Boston ........................ ........ $ 31,887,000 182-Day Treasury Bills Maturing October 26, 1961 A pplied f o r A ccepted $ 13,445,000 $ 5,485,000 A ccepted $ 3,163,000 New Y o rk .................. ....... 1,513,132,000 720,012,000 858,631,000 321,924,000 Philadelphia ...................... 29,131,000 14,050,000 7,248,000 1,825,000 Cleveland.................... ....... 26,210,000 20,022,000 22,439,000 9,762,000 Richmond .................. ....... 8,650,000 8,500,000 1,264,000 914,000 Atlanta........................ ....... 22,929,000 17,146,000 7,909,000 6,109,000 Chicago ...................... ....... 223,341,000 146,583,000 67,655,000 24,790,000 St. L ouis..................... ....... 22,182,000 19,047,000 5,221,000 3,561,000 Minneapolis................. ....... 13,476,000 7,276,000 3,631,000 1,131,000 Kansas City ............... ....... 31,262,000 19,087,000 10,362,000 4,744,000 Dallas.......................... ....... 10,502,000 10,502,000 3,593,000 2,893,000 147,887,000 104,906,000 34,415,000 19,298,000 San Francisco............. Total............. ....... $2,080,589,000 $1,100,576,000b *>Includes $191,613,000 noncompetitive tenders accepted at the average price of 99.448. c Includes $44,831,000 noncompetitive tenders accepted at the average price of 98.837. $1,027,853,000 $400,114,000'