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F E D E R A L R E S E R V E BA N K O F N EW Y O R K Fiscal Agent of the United States {"Circular No. 5 2 0 2 1 July 11. 1962 J L OFFERING OF TWO SERIES OF TREASURY BILLS $1,300,000,000 of 91-Day Bills, Additional Amount, Series Dated April 19,1962, Due October 18, 1962 (To Be Issued July 19, 1962) $700,000,000 of 182-Day Bills, Dated July 19, 1962, Due January 17, 1963 To A ll Incorporated Banks and Trust Companies, and Others Concerned, in the Second Federal Reserve District: Follow ing is the text of a notice issued by the Treasury Department, released for publication today at 4 p.m., Eastern Daylight Saving tim e: The Treasury Department, by this public notice, invites tenders for two series o f Treasury bills to the aggregate amount o f $2,000,000,000, or thereabouts, for cash and in exchange for Treasury bills maturing July 19, 1962, in the amount of $1,801,436,000, as fo llo w s : 91-day bills (to maturity date) to be issued July 19, 1962, in the amount o f $1,300,000,000, or thereabouts, repre senting an additional amount of bills dated April 19, 1962, and to mature October 18, 1962, originally issued in the amount o f $600,309,000, the additional and orig inal bills to be freely interchangeable. 182-day bills, for $700,000,000, or thereabouts, to be dated July 19, 1962, and to mature January 17, 1963. 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). 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, Monday, July 16, 1962. Tenders will not be received at the Treasury Department, Washington. 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 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. Banking institutions generally may submit tenders for ac count of customers, provided the names of 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 of the face amount of Treasury bills applied for, unless the tenders are accompanied by an express guaranty of payment by an incorporated bank or trust company. 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 of the amount and price range o f accepted bids. Those sub 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 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 April 19, 1962 (91 days remain ing until maturity date on October 18, 1962) and noncompeti tive 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 decimals) of 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 July 19, 1962, in cash or other immediately available funds or in a like face amount of Treasury bills maturing July 19, 1962. Cash and exchange tenders will re ceive equal treatment. Cash adjustments w ill be made for 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 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 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 o f the United States, or by any local taxing authority. For purposes o f 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) of 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. Accordingly, the owner of 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. Treasury Department Circular No. 418 (current revision) and this notice prescribe the terms of 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 Daylight Saving time, Monday, July 16 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 July 12, 1962, representing an additional amount of bills dated April 12, 1962, and maturing October 11, 1962; and 182-day bills dated July 12, 1962, maturing January 10, 1963) are shown on the reverse side of this circular. A lfred H ayes, President. ( over ) RESULTS OF LAST OFFERING OF TREASURY BILLS (TWO SERIES TO BE ISSUED JULY 12, 1962) Range of Accepted Competitive Bids 91-Day Treasury Bills Maturing October 11, 1962 Price Price 2.935% 2.987% 2.974% 1 99.258 99.245 99.248 High L ow . . . Average Maturing January 10, 1963 A pprox. equiv. annual rate Approx. equiv. annual rate 98.454 98.425 98.435 3.058% 3.115% 3.096% 1 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 3.04 percent for the 91-day bills, and 3.19 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 of days in the period, with semiannual compounding if more than one coupon period is involved. (27 percent of the amount o f 91-day bills bid for at the low price was accepted.) (18 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 October 11, 1962 Accepted Applied for District Boston .......................... ........ New Y o r k .................... ........ $ 41,792,000 182-Day Treasury Bills Maturing January 10, 1963 $ 35,332,000 Applied for $ 8,204,000 Accepted $ 8,204,000 1,637,165,000 752,565,000 890,116,000 540,816,000 29,869,000 14,869,000 9,971,000 4,971,000 .................... ........ 45,534,000 31,884,000 27,121,000 12,121,000 Richm ond .................... ........ 19,107,000 19,107,000 4,209,000 4,209,000 A tla n t a .......................... 37,462,000 31,832,000 5,740,000 5,740,000 ... 287,582,000 220,092,000 88,173,000 38,173,000 St. Louis ...................... ........ 37,785,000 32,785,000 7,180,000 6,180,000 Minneapolis 19,112,000 12,517,000 5,065,000 5,065,000 43,160,000 8,328,000 8,328,000 25,279,000 15,549,000 10,540,000 5,540,000 135,861,000 91,371,000 61,767,000 60,767,000 . . Philadelphia Cleveland Chicago ........................ 48,160,000 Kansas City ........ San Francisco Total ............ ........ $2,364,708,000 $1,301,063,000* $1,126,414,000 a Includes $263,543,000 noncompetitive tenders accepted at the average price of 99.248. b Includes $51,735,000 noncompetitive tenders accepted at the average price of 98.435. $700,114,000b