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FED ERAL RESER VE BANK O F N EW YO R K Fiscal Agent of the United States [Circular No. 5 0 8 0 1 L September 6, 1961 J OFFERING OF TW O SERIES OF TREASURY BILLS $1,100,000,000 o f 91-Day Bills, Additional Amount, Series Dated June 15, 1961, Due Dec. 14, 1961 (To Be Issued September 14, 1961) $600,000,000 o f 182-Day Bills, Dated September 14, 1961, Due March 15, 1962 T o A ll Incorporated Banks and Trust Companies, and O thers 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 Daylight Saving tim e: T he Treasury Department, by this public notice, invites tenders for tw o series o f Treasury bills to the aggregate amount o f $1,700,000,000, or thereabouts, fo r cash and in exchange fo r Treasury bills maturing September 14, 1961, in the amount o f $1,700,712,000, as fo llo w s : 91-day bills (to maturity date) to be issued September 14, 1961, in the amount o f $1,100,000,000, or thereabouts, representing an additional amount o f bills dated June 15, 1961, and to mature December 14, 1961, originally issued in the amount o f $500,368,000, the additional and original bills to be freely interchangeable. 182-day bills, fo r $600,000,000, or thereabouts, to be dated September 14, 1961, and to mature M arch 15, 1962. T he bills o f both series will 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 (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 D aylight Saving time, M onday, September 11, 1961. Tenders w ill not be received at the Treasury Department, W ash ington. Each 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 e x pressed 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 or Branches on application therefor. Others 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 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 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 or rejection thereof. T he 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 fo r $200,000 or less fo r the additional bills dated June IS, 1961 (91 days re maining until maturity date on December 14, 1961) and noncom petitive tenders fo r $100,000 or less fo r the 182-day bills without stated price from any one bidder w ill be accepted in full at the average price (in three decimals) o f accepted competitive bids fo r the respective issues. Settlement fo r accepted tenders in accordance with the bids must be made or completed at the Federal Reserve Bank on September 14, 1961, in cash or other immediately available funds or in a like face amount of Treasury bills maturing September 14, 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. 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 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. The bills are subject to estate, inheritance, g ift or other excise taxes, whether Federal or State, but are exem pt 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 4 5 4 (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 o f, and such bills are excluded from 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 tax 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 or redemption at maturity during the taxable year fo r which the return is made, as ordinary gain or 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 or Branch. This Bank will receive tenders for both series up to 1 :30 p.m., Eastern Daylight Saving time, Monday, September 11, 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 fo r 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 of the last offering of Treasury bills (91-day bills to be issued September 7, 1961, representing an additional amount of bills dated June 8, 1961, and maturing December 7, 1961; and 182-day bills dated September 7, 1961, maturing March 8, 1962) are shown on the reverse side of this circular. A lfred H a y e s , President. ( over) RESULTS OF LAST OFFERING OF TREASURY BILLS (TWO SERIES TO BE ISSUED SEPTEMBER 7, 1961) Range of Accepted Competitive Bids 91-Day Treasury Bills Maturing Decem ber 7, 1961 182-Day Treasury Bills Maturing March 8,19 62 A p p rox. equiv. annual rate P rice P rice A p p rox. equiv. annual rate H i g h ............................................... 9 9 .4 0 2 a 2.366% 98.650 2.670% L o w .................................................. 99.393 2.401% 98.633 2.7 0 4 % Average ........................................ 99.395 2 .3 9 2 % x 98.639 2.692% x a Excepting one tender o f $300,000. 1 O n a coupon issue o f the same length and for the same amount invested, the return on these bills w ould provide yields o f 2.44 percent fo r the 91-day bills, and 2.77 percent fo r the 182-day bills. Interest rates on bills are quoted in terms o f bank discount, with the return related to the face amount of 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 com pounding if m ore than one coupon period is involved. (65 percent of the amount of 91-day bills bid for at the low price was accepted.) (91 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-D ay Treasury Bills Maturing Decem ber 7, 1961 Applied f o r D istrict Boston ............................. ........ $ 24,745,000 182-Day Treasury Bills Maturing March 8,19 62 A ccepted $ A pplied f o r 20,745,000 $ A ccep ted 10,550,000 $ 10,550,000 New Y o r k ...................... ........ 1,668,890,000 745,340,000 915,006,000 473,683,000 Philadelphia ................. ........ 24,749,000 9,514,000 7,841,000 2,609,000 Cleveland........................ ........ 30,742,000 28,525,000 27,064,000 26,964,000 Richmond ...................... ........ 16,305,000 13,955,000 2,052,000 2,052,000 Atlanta............................. ........ 17,432,000 15,180,000 3,062,000 2,862,000 Chicago .......................... ........ 253,528,000 148,028,000 73,974,000 32,424,000 St. L o u is ........................ ........ 19,744,000 14,394,000 4,275,000 3,275,000 Minneapolis.................... ........ 20,448,000 14,598,000 7,193,000 2,693,000 Kansas City ................. ........ 35,601,000 24,601,000 10,943,000 10,743,000 D allas............................... ........ 16,387,000 12,037,000 7,146,000 4,056,000 San Francisco............... 85,294,000 54,170,000 38,261,000 28,261,000 $1,107,367,000 $600,172,000 T o ta l............... ........ $2,213,865,000 $1,101,087,000b b Includes $186,967,000 noncompetitive tenders accepted at the average price of 99.395. c Includes $37,861,000 noncompetitive tenders accepted at the average price of 98.639.