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FEDERAL RESER VE BANK O F NEW YORK Fiscal A g e n t o f the U nited States r C ir c u la r N o. 5 1 0 5 I, N o v e m b e r 8, 1961 ~l J O FFE R IN G OF T W O SERIES OF T R E A S U R Y BILLS $1,100,000,000 o f 91-Day Bills, Additional Amount, Series Dated August 17, 1961, Due Feb. 15, 1962 (T o Be Issued November 16, 1961) $600,000,000 of 182-Day Bills, Dated November 16, 1961, Due M ay 17, 1962 T o A ll Incorporated B anks and Trust Companies, and O thers Concerned, in the Second Federal 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 h e T reasu ry D epartm ent, by this pu blic n otice, invites tenders fo r tw o series o f T reasu ry bills to the aggregate amount o f $1,700,000,000, or thereabouts, for cash and in exch ange for T reasu ry bills m aturing N ovem ber 16, 1961, in the amount o f $1,701,665,000, as f o llo w s : 91-day bills (to m aturity date) to be issued N ovem ber 16, 1961, in the amount o f $1,100,000,000, or thereabouts, representing an a ddition al amount o f bills dated A u gust 17, 1961, and to m ature February 15, 1962, origin a lly issued in the amount o f $600,027,000, the a ddition al and origin a l bills to be freely interchangeable. 182-day bills, fo r $600,000,000, or thereabouts, to be dated N ovem ber 16, 1961, and to mature M a y 17, 1962. Th e bills o f both series w ill be issued on a discou nt basis under com petitive and noncom petitive bidd in g as hereinafter provided, and at m aturity their face am ount w ill be payable w ithout interest. T h ey w ill be issued in bearer form only, and in denom inations o f $1,000, $5,000, $10,000, $100,000, $500,000 and $1,000,000 (m aturity v a lu e). Ten ders w ill be received at F ederal R eserve Banks and Branches up to the clo sin g hour, on e-thirty o ’clo ck p.m., E ast ern Standard time, M on day, N ovem ber 13, 1961. T en ders w ill not be received at the T reasu ry D epartm ent, W ash in gton . E ach tender must be fo r an even m ultiple o f $1,000, and in the case o f com petitive tenders the price offered must be expressed on the basis o f 100, w ith not m ore than three decim als, e.g., 99.925. F raction s m ay not be used. It is urged that tenders be made on the printed form s and forw a rd ed in the special envelopes w hich w ill be supplied by F ederal R eserve Banks o r Branches on application therefor. O thers than banking institutions w ill not be perm itted to subm it tenders except fo r their ow n account. T enders w ill be received w ithout deposit from in corporated banks and trust com panies and from responsible and recogn ized dealers in in vestm ent securities. T enders from others must be accom panied by paym ent o f 2 percent o f the face am ount o f T reasu ry bills applied for, unless the tenders are accom panied by an express guaranty o f paym ent by an in corpora ted bank or trust com pany. Im m ediately after the closin g hour, tenders w ill be opened at the Federal R eserve Banks and Branches, fo llo w in g w hich pu blic announcem ent w ill be made by the T reasu ry D epartm ent o f the amount and price range o f accepted bids. T h ose sub m itting tenders w ill be a dvised o f the acceptance or rejection thereof. T h e S ecretary o f the T reasu ry expressly reserves the right to accept or reject any or all tenders, in w hole or in part, and his action in any such respect shall be final. S u b ject to these reservations, noncom petitive tenders for $200,000 or less for the a ddition al bills dated A u gust 17,1961 (91 days rem aining until m aturity date on February 15, 1962) and noncom petitive tenders fo r $100,000 or less fo r the 182-day bills w ithout stated price from any one bidder w ill be accepted in fu ll at the average price (in three decim als) o f accepted com petitive bids fo r the respective issues. Settlem ent for accepted tenders in a ccord a n ce w ith the bids must be made or com pleted at the Federal R eserve Bank on N ovem ber 16, 1961, in cash or other im m ediately available funds or in a like fa ce am ount o f Treasu ry bills m aturing N ovem ber 16, 1961. Cash and exch ange tenders w ill receive equal treatment. Cash adjustm ents w ill be made fo r differences between the par value o f m aturing bills accepted in exch ange and the issue price o f the new bills. The incom e derived from T reasu ry bills, w hether interest or gain from the sale or other disposition o f the bills, does not have any exem ption, as such, and loss from the sale or other disp osition o f T reasu ry bills does not have any special treat ment, as such, under the Internal Revenue C ode 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 ta x a tion n ow or h ereafter im posed on the principal or interest th ereof by any State, or any o f the possessions o f the U nited States, or by any loca l ta x in g authority. F or purposes o f ta x a tion the am ount o f discount at w hich T reasu ry bills are o rigin a lly sold by the U nited States is con sidered to be interest. U n der Sections 454(b) and 1221(5) o f the Internal Revenue C ode o f 1954 the am ount o f discount at w hich bills issued hereunder are sold is not con sidered to accrue until such bills are sold, redeem ed or otherw ise disposed of, and such bills are exclu d ed from con sideration as capital assets. A ccord in g ly , the ow ner o f T reasu ry bills (oth er than life insurance co m panies) issued hereunder need include in his incom e ta x return on ly the difference between the price paid fo r such bills, whether on origin a l issue or on subsequent purchase, and the am ount actually received either upon sale or redem ption at m aturity during the taxable year fo r w hich the return is made, as ord in a ry gain or loss. T reasu ry Departm ent C ircu lar N o. 418, R evised, and this n otice, prescribe the terms o f the T reasu ry bills and govern the con ditions o f their issue. Copies o f the circu la r m ay be obtained from any F ederal R eserve Bank or Branch. This Bank will receive tenders for both series up to 1 :30 p.m., Eastern Standard time, Monday, November 13, 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 of the last offering of Treasury bills (91-day bills to be issued November 9, 1961, representing and additional amount of bills dated August 10, 1961, and maturing February 8, 1962; and 182-day bills dated November 9, 1961, maturing May 10, 1962) are shown on the reverse side of this circular. A lfred H a y e s, President. ( over) RESULTS OF LA ST O F FE R IN G OF T R E A S U R Y BILLS (T W O SERIES TO BE ISSUED N O V E M B E R 9, 1961) Range of Accepted Competitive Bids 91-Day Treasury Bills Maturing February 8,1962 P rice 182-Day Treasury Bills Maturing May 10, 1962 A p p ro x . equiv. annual rate P rice A p p rox. equiv. annual rate 99.413a 2.322% 98.718 2.536% L ow ........................ ........ 99.402 2.366% 98.706 2.560% ................ ........ 99.406 2.349%* 98.709 2.554%! H igh ...................... ........ Average a E x ce p tin g one tender o f $100,000. 1 O n a cou pon issue o f the same length and fo r the same amount invested, the return on these bills w ou ld provide yield s o f 2.40 percent fo r the 91-day bills, and 2.62 percent fo r the 182-day bills. Interest rates on bills are quoted in terms o f bank discount, w ith the return related to the fa ce am ount o f the bills payable at m aturity rather than the amount invested, and their length in actual num ber o f days related to a 360-day year. In contrast, yield s on certificates, notes, and bonds are com puted in terms o f interest on the am ount invested, and relate the num ber o f days rem ainin g in an interest paym ent p eriod to the actual num ber o f days in the period, w ith sem iannual com pou n din g if m ore than one cou pon period is in volved. (87 percent of the amount of 91-day bills bid for at the low price was accepted.) (26 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 February 8,1962 A pplied fo r D istrict Boston .......................... .......... $ 32,416,000 182-Day Treasury Bills Maturing May 10,1962 A ccep ted $ 20,156,000 A pplied for $ 2,526,000 A ccepted $ 2,526,000 New Y o r k .................... .......... 1,428,860,000 757,130,000 914,039,000 394,984,000 Philadelphia ................ .......... 33,445,000 18,445,000 9,187,000 3,387,000 .................... ........ 32,255,000 32,255,000 22,401,000 7,351,000 Richm ond .................... .......... 13,307,000 13,307,000 2,253,000 1,919,000 ........................ ........ 19,552,000 19,122,000 4,580,000 4,370,000 Chicago ........................ ........ 211,432,000 159,833,000 100,991,000 48,385,000 St. L o u i s ...................... ........ 26,612,000 22,482,000 9,199,000 8,199,000 Minneapolis ................ ........ 26,947,000 24,947,000 6,007,000 3,507,000 Kansas City ................ ........ 39,773,000 35,993,000 22,811,000 11,250,000 .......................... ........ 13,593,000 13,593,000 7,004,000 6,104,000 93,262,000 83,132,000 50,152,000 8,270,000 Cleveland Atlanta Dallas San Francisco ............ Total ............ $1,971,454,000 $1,200,395,000b * $1,151,150,000 b Includes $229,283,000 noncompetitive tenders accepted at the average price of 99.406. c Includes $54,879,000 noncompetitive tenders accepted at the average price of 98.709. $500,252,000°
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