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F E D E R A L R E S E R V E BA N K O F N E W Y O R K Fiscal Agent of the United States I Circular No. 5189 ] M ay 16, 1962 OFFERING OF TWO SERIES OF TREASURY BILLS $1,300,000,000 of 91-Day Bills, Additional Amount, Series Dated February 23,1962, Due August 23,1962 (To Be Issued May 24, 1962) $600,000,000 of 183-Day Bills, Dated May 24,1962, Due November 23,1962 To All Incorporated Banks and Trust Companies, and Others Concerned, in the Second Federal Reserve District: Following is the text of a notice issued by the Treasury Department, released for publication today at 4 p.m., Eastern Daylight Saving time: The Treasury Department, by this public notice, invites tenders for two series of Treasury bills to the aggregate amount o f $1,900,000,000, or thereabouts, for cash and in exchange for Treasury bills maturing M ay 24, 1962, in the amount of $1,802,351,000, as follow s: 91-day bills (to maturity date) to be issued M ay 24, 1962, in the amount of $1,300,000,000, or thereabouts, repre senting an additional amount o f bills dated February 23, 1962, and to mature August 23, 1962, originally issued in the amount o f $600,937,000, the additional and original bills to be freely interchangeable. 183-day bills, for $600,000,000, or thereabouts, to be dated M ay 24, 1962, and to mature N ovem ber 23, 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 will be payable without interest. They will be issued in bearer form only, and in denominations o f $1,000, $5,000, $10,000, $50,000, $100,000, $500,000 and $1,000,000 (maturity value). mitting tenders will be advised o f the acceptance or rejection thereof. The Secretary of 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 February 23, 1962 (91 days re maining until maturity date on August 23, 1962) and noncompeti tive tenders for $100,000 or less for the 183-day bills without stated price from any one bidder will 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 com pleted at the Federal Reserve Bank on M ay 24, 1962, in cash or other immediately available funds or in a like face amount o f Treasury bills maturing May 24, 1962. Cash and exchange tenders will re ceive equal treatment. Cash adjustments will be made for 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 for ac count o f customers, provided the names o f the customers are set forth in such tenders. Others than banking institutions will not be permitted to submit tenders except for their own account. Tenders 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 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 of 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 of 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 o f the United States, or by any local taxing authority. For purposes of 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 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 ow ner o f Treasury bills (other than life insurance com panies) issued hereunder need include in his incom e 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 will be opened at the Federal Reserve Banks and Branches, follow in g which public announcement will be made by the Treasury Department of the amount and price range of accepted bids. Those sub Treasury Department Circular No. 418 (current revision) 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. Tenders will be received at Federal Reserve Banks and Branches up to the closing hour, one-thirty p.m., Eastern D ay light Saving time, M onday, May 21, 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 o f competitive tenders the price offered must be expressed on the basis o f 100, with not m ore 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 forwarded in the special envelopes which will be supplied by Federal Reserve Banks or Branches on application therefor. This Bank will receive tenders for both series up to 1 :30 p.m., Eastern Daylight Saving time, Monday, May 21, 1962, 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 May 17, 1962, representing an additional amount o f bills dated February 15, 1962, and maturing August 16, 1962; and 182-day bills dated May 17, 1962, maturing November 15, 1962) are shown on the reverse side of this circular. A lfred H ayes, President. Please note that the Treasury bills maturing November 23, 1962, will be 183-day bills ( over) RESULTS OF LAST OFFERING OF TREASURY BILLS (TWO SERIES TO BE ISSUED MAY 17, 1962) Range of Accepted Competitive Bids 91-Day Treasury Bills Maturing August 16,1962 H i g h .................................... Low .................................... A v e r a g e .............................. Price Approx. equiv. annual rate 99.337 99.329 99.331 2.623% 2.655% 2.646%* 182-Day Treasury Bills Maturing November 15,1962 Price Approx. equiv. annual rate 98.620a 98.606 98.613 2.730% 2.757% 2.744%x a Excepting one tender o f $100,000. 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 2.70 percent for the 91-day bills, and 2.82 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. (35 percent of the amount of 91-day bills bid for at the low price was accepted.) (51 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 August 16, 1962 Applied fo r District Boston .......................... ........ $ 24,727,000 182-Day Treasury Bills Maturing November 15, 1962 Accepted, $ 14,727,000 Applied fo r $ Accepted 11,313,000 $ 11,100,000 New Y o r k .................... ........ 1,646,543,000 854,543,000 909,351,000 458,911,000 Philadelphia.................. ........ 30,524,000 15,524,000 9,270,000 4,270,000 Cleveland ...................... ........ 24,114,000 24,114,000 27,110,000 11,856,000 .................... ........ 12,229,000 12,229,000 2,717,000 2,470,000 ........ 25,711,000 22,581,000 9,353,000 9,003,000 ........................ ........ 240,648,000 128,348,000 100,347,000 62,857,000 ........ 30,309,000 23,984,000 7,630,000 5,630,000 ........ 18,421,000 12,921,000 6,284,000 5,314,000 ........ 46,958,000 35,883,000 16,360,000 11,331,000 ........ 15,787,000 15,587,000 4,314,000 4,114,000 San F ra n cisco.............. ........ 65,011,000 39,806,000 34,673,000 13,183,000 $1,138,722,000 $600,039,000' Richmond Chicago T o t a l.............. $2,180,982,000 $1,200,247,000b b Includes $221,105,000 noncompetitive tenders accepted at the average price of 99.331. c Includes $60,363,000 noncompetitive tenders accepted at the average price of 98.613.
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