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FEDERAL RESERVE BANK OF N E W YORK Fiscal A gent of the United States r Circular No. 5 1 3 0 ~1 t, January 2, 1962 J O F F E R IN G OF T W O SER IES OF T R E A S U R Y BILLS $1,100,000,000 of 91-Day Bills, Additional Amount, Series Dated October 13, 1961, Due April 12, 1962 (To Be Issued January 11, 1962) $600,000,000 of 182-Day Bills, Dated January 11,1962, Due July 12, 1962 To A ll Incorporated Banks and Trust Companies, and Others Concerned, in the Second Federal Reserve D istrict: Follow ing is the text of a notice issued by the Treasury Department, released for publication today at 4 p.m., Eastern Standard tim e: The Treasury Department, by this public notice, invites tenders for two series of Treasury bills to the aggregate amount of $1,700,000,000, or thereabouts, for cash and in exchange for Treasury bills maturing January 11, 1962, in the amount of $1,700,573,000, as fo llo w s : 91-day bills (to maturity date) to be issued January 11, 1962, in the amount o f $1,100,000,000, or thereabouts, representing an additional amount o f bills dated O cto ber 13, 1961, and to mature April 12, 1962, originally issued in the amount o f $600,142,000, the additional and original bills to be freely interchangeable. 182-day bills, for $600,000,000, or thereabouts, to be dated January 11, 1962, and to mature July 12, 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 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, January 8, 1962. Tenders will not be received at the Treasury Department, W ashington. Each tender must be for an even multiple o f $1,000, and in the case of competitive tenders the price offered must be expressed on t^e kas*s 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 will be supplied by Federal Reserve Banks or Branches on application therefor. 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 October 13, 1961 (91 days remain ing until maturity date on April 12, 1962) and noncompetitive tenders for $100,000 or less for 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 for the respective issues. Settlement for accepted tenders in accordance with the bids must be made or completed at the Federal Reserve Bank on January 11, 1962, in cash or other immediately available funds or in a like face amount of Treasury bills maturing January 11, 1962. Cash and exchange tenders w ill receive equal treatment. Cash adjustments w ill be made for differences between the par value of maturing bills accepted in exchange and the issue price o f the new bills. Banking institutions generally may submit tenders for ac count o f customers, provided the names o f the customers are set forth in such tenders. Others than banking institutions w ill not be permitted to submit tenders except for their own account, lenders will be received without deposit from incorporated banks and trust companies and from responsible and recognized dealers in investment securities. Tenders from others must be accompanied by payment o f 2 percent o f the face amount of i reasury 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 speciaj 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 of the United States, or by any local taxing authority. For purposes of taxa tion the amount of 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. Immediately after the closing hour, tenders w ill be opened at the Federal Reserve^ Banks and Branches, follow in g which public announcement w ill be made by the Treasury Department of the amount and price range o f accepted bids. Those sub 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, January 8, 1962, at the Securities Department of its Head Office and at its Buffalo Branch. Tender forms for tie lespective series^ are enclosed. Please use the appropriate forms to submit tenders and return them in an enve ope marked len der for Treasury Bills.” Tenders may be submitted by telegraph, subject to written con irmatioii, they may not be submitted by telephone. Payment for the Treasury bills cannot be made by credit in oug i ie 1 ■)easury Tax and Loan Account. Settlement must be made in cash or other immediately available funds or m maturing Treasury bills. a d d i t i o n ^ ast offering o f Treasury bills (91-day bills to be issued January 4, 1962, representing an Tanuarv 4 196?m °+ ^llls datecl 1(^ ^ ° ber 1961, and maturing April 5, 1962; and 182-day bills dated January 4, 1962, maturing July 5, 1962) are shown on the reverse side of this circular. A lfred H a y e s, President. (o v e r ) RESULTS OF LAST OFFERING OF TREASURY BILLS (TW O SERIES TO BE ISSUED JANUARY 4, 1962) Range of Accepted Competitive Bids 91-Day Treasury Bills Maturing April 5, 1962 Price 182-Day Treasury Bills Maturing July 5, 1962 Approx. equiv. annual rate Price Approx. equiv. annual rate H i g h .................................. 99.325a 2.670% 98.528b 2.912% L o w .................................. 99.312 2.722% 98.499 2.969% A v e r a g e ............................ 99.317 2.703%! 98.513 2.941%* a Excepting three tenders totaling $600,000. b Excepting one tender o f $550,000. 1 On a coupon issue of the same length and for the same amount invested, the return on these bills would provide yields o f 2.76 percent for the 91-day bills, and 3.03 percent for the 182-day bills. Interest rates on bills are quoted in terms of 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 of 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 of days remaining in an interest payment period to the actual number of days in the period, with semiannual compounding if more than one coupon period is involved. (79 percent of the amount of 91-day bills bid for at the low price was accepted.) (8 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 April 5, 1962 .......... $ 23,841,000 Applied for Accepted, A pplied for District 182-Day Treasury Bills Maturing July 5, 1962 $ 11,841,000 $ 6,780,000 Accepted $ 6,780,000 1,296,790,000 562,620,000 874,673,000 487,673,000 Philadelphia ................ 22,110,000 7,110,000 12,155,000 7,155,000 C le v e la n d .................... 59,256,000 49,256,000 16,941,000 6,941,000 Richm ond .................. 11,054,000 11,054,000 2,111,000 2,111,000 A tla n t a ........................ 20,237,000 18,537,000 3,153,000 2,969,000 Chicago ...................... 402,180,000 326,970,000 • 92,456,000 47,456,000 St. Louis .................... 28,256,000 21,256,000 7,208,000 6,208,000 Minneapolis .............. 19,872,000 14,872,000 4,082,000 3,622,000 Kansas City .............. 32,071,000 24,861,000 4,443,000 4,443,000 10,678,000 10,678,000 2,843,000 2,843,000 62,059,000 41,534,000 23,113,000 22,113,000 New Y o r k .................. San F r a n c is c o ............ T o t a l ............ ........ $1,988,404,000 $1,100,589,000c $1,049,958,000 c Includes $170,561,000 noncompetitive tenders accepted at the average price o f 99.317. d Includes $36,831,000 noncompetitive tenders accepted at the average price o f 98.513. $600,314,000d