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FE D E R A L R E S E R V E BANK O F N E W YORK Fiscal Agent of the United States [Circular No. 5 1 2 2 1 LD e c e m b e r 13, 1 9 6 1 J OFFERING OF TWO SERIES OF TREASURY BILLS $1,100,000,000 o f 91-Day Bills, Additional Amount, Series Dated Sept. 21,1961, Due March 22,1962 (To Be Issued December 21, 1961) $600,000,000 o f 182-Day Bills, Dated December 21, 1961, Due June 21, 1962 To A ll Incorporated Banks and Trust Companies, and O thers Concerned, in the Second Federal R eserve D istrict: F ollow in g is the text o f a notice issued by the Treasury Department, released fo r 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 $1,700,000,000, or thereabouts, fo r cash and in exchange for Treasury bills maturing December 21, 1961, in the amount of $1,700,536,000, as fo llo w s : 91-day bills (to maturity date) to be issued December 21, 1961, in the amount o f $1,100,000,000, or thereabouts, representing an additional amount o f bills dated Septem ber 21, 1961, and to mature M arch 22, 1962, originally issued in the amount o f $600,213,000, the additional and original bills to be freely interchangeable. 182-day bills, fo r $600,000,000, or thereabouts, to be dated December 21, 1961, and to mature June 21, 1962. The 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 (maturity value). Tenders will be received at Federal Reserve Banks and Branches up to the closing hour, one-thirty o’clock p.m., Eastern Standard time, Monday, Decem ber 18, 1961. Tenders will not be received at the Treasury Department, W ashington. 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 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 will be supplied by Federal Reserve Banks or Branches on application therefor. mitting tenders will 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 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 September 21, 1961 (91 days remain ing until maturity date on M arch 22, 1962) 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 decim als) o f accepted competitive bids for the respective issues. Settlement fo r accepted tenders in accordance with the bids must be made or completed at the Federal Reserve Bank on December 21, 1961, in cash or other immediately available funds or in a like face amount o f Treasury bills maturing December 21, 1961. Cash and exchange tenders will 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. Banking institutions generally may submit tenders fo r account o f customers, provided the names o f the customers are set forth in such tenders. Others than banking institutions will not be per mitted to submit tenders except fo r their own account. Tenders will 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. 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, g ift 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 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 ccordin gly, 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. Immediately after the closing hour, tenders will be opened at the Federal Reserve Banks and Branches, follow ing which public announcement will be made by the Treasury Department o f the amount and price range o f accepted bids. Those sub 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 from any Federal Reserve Bank or Branch. This Bank will receive tenders fo r both series up to 1 :30 p.m ., Eastern Standard time, M onday, Decem ber 18, 1961, at the Securities Department o f its H ea d Office and at its B uffalo Branch. T ender form s fo r the respective series are enclosed. Please use the appropriate form s to submit tenders and return them in an envelope marked “ T ender fo r Treasury Bills.” Tenders may be submitted by telegraph, subject to written confirm ation; 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. maturing Treasury bills. Settlement must be made in cash or other immediately available funds or in Results of the last offering of Treasury bills (91-day bills to be issued December 14, 1961, representing an additional amount of bills dated September 14, 1961, and maturing March 15, 1962; and 182-day bills dated December 14, 1961, maturing June 14, 1962) are shown on the reverse side of this circular. A lfred H ayes, President. ( over) RESU LTS OF LAST O FFE R IN G OF T R E A SU R Y BILLS (T W O SERIES TO BE ISSUED D E C E M B E R 14, 1961) R a n g e o f A cc e p te d C o m p e titiv e B id s 91-Day Treasury Bills Maturing March 15, 1962 182-Day Treasury Bills Maturing June 14, 1962 A p p rox. equiv. annual rate P rice P rice A p p rox. equiv. annual rate H igh ............................ .................. 99.3 5 2 » 2 .5 6 4 % 98.555 2 .8 5 8 % L o w .............................. .................. 99.346 2 .5 8 7 % 98.544 2 .8 8 0 % A verage ..................... .................. 99.348 2 .5 7 9 % 1 98.547 2 .8 7 4 % 1 a E xcepting one tender o f $200,000. 1 On 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 2.63 percent for the 91-day bills, and 2.96 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 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 com pounding if more than one coupon period is involved. (8 4 percent o f the amount o f 91-day bills bid fo r at the low price was accepted.) (3 percent o f the amount o f 182-day bills bid fo r at the low price was accepted.) Total Tenders Applied for and Accepted (By Federal Reserve Districts) 91-Day Treasury Bills Maturing March 15, 1962 D istrict Boston A pplied f o r ....................... ......... $ 31,354,000 182-Day Treasury Bills Maturing June 14, 1962 A ccep ted $ 24,045,000 $ A pplied f o r A ccep ted 18,092,000 $ 16,972,000 N ew Y o r k ............................... 1,408,840,000 656,887,000 1,107,545,000 460,748,000 ................. ......... 29,116,000 13,290,000 9,105,000 2,697,000 C le v ela n d ........................ ......... 59,170,000 38,095,000 25,463,000 19,261,000 R ichm ond ...................... ....... 13,986,000 13,636,000 3,378,000 2,978,000 A tla n ta ...................................... 30,216,000 22,101,000 7,517,000 5,732,000 C hicago ........................... ........ 234,090,000 129,074,000 124,299,000 64,679,000 St. L ouis ........................ ........ 28,991,000 23,967,000 7,339,000 6,339,000 M in n ea p olis.................... ........ 21,778,000 13,178,000 7,152,000 3,892,000 Kansas City .................. ........ 37,682,000 25,682,000 8,159,000 6,098,000 D a lla s ......................... ...... 16,968,000 16,668,000 3,608,000 3,608,000 161,909,000 123,949,000 53,244,000 7,687,000 Philadelphia San F r a n c is c o ............... T o t a l............... ........ $2,074,100,000 $1 ,1 0 0 ,5 7 2 ,0 0 0 b $1,374,901,000 b Includes $238,246,000 noncompetitive tenders accepted at the average price o f 99.348. c Includes $57,597,000 noncompetitive tenders accepted at the average price o f 98.547. $600,691,000 •