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FEDERAL RESERVE BANK OF NEW YORK Fiscal Agent o f the United States r Circular No. 5 2 0 8 1 L August 1, 1962 J OFFERING OF TWO SERIES OF TREASURY BILLS $1,300,000,000 of 91-Day Bills, Additional Amount, Series Dated May 10, 1962, Due November 8, 1962 (To Be Issued August 9, 1962) $700,000,000 of 182-Day Bills, Dated August 9, 1962, Due February 7, 1963 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 of $2,000,000,000, or thereabouts, for cash and in exchange for Treasury bills maturing August 9, 1962, in the amount of $1,804,290,000, as follow s: 91-day bills (to maturity date) to be issued August 9, 1962, in the amount of $1,300,000,000, or thereabouts, representing an additional amount of bills dated May 10, 1962, and to mature N ovem ber 8, 1962, originally issued in the amount of $601,639,000, the additional and original bills to be freely interchangeable. 182-day bills, for $700,000,000, or thereabouts, to be dated August 9, 1962, and to mature February 7, 1963. The bills o f both series will be issued on a discount basis under competitive and noncom petitive 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 of $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, M onday, August 6, 1962. Tenders will not be received at the Treasury Department, W ashington. Each tender must be for an even multiple of $1,000, and in the case of competitive tenders the price offered must be expressed on the basis of 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. Banking institutions generally may submit tenders for ac count of 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 of 2 percent of 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. 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. T h ose submit ting 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 w hole or in part, and his action in any such respect shall be final. Subject to these reservations, noncom petitive tenders for $200,000 or less for the additional bills dated M ay 10, 1962 (91 days remaining until maturity date on N ovem ber 8, 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 decimals) of accepted competitive bids for the respec tive issues. Settlement for accepted tenders in accordance with the bids must be made or com pleted at the Federal Reserve Bank on August 9, 1962, in cash or other immediately available funds or in a like face amount o f Treasury bills maturing August 9, 1962. Cash and exchange tenders will receive equal treat ment. Cash adjustments will be made for differences between the par value o f maturing bills accepted in exchange and the issue price of the new bills. The incom e 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 disposi tion of Treasury bills does not have any special treatment, 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 taxation now or here after 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 o f taxation the amount o f dis count 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 dis count at which bills issued hereunder are sold is not considered to accrue until such bills are sold, redeemed or otherwise dis posed of, 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 incom e tax return only the difference between the price paid for such bills, whether on original issue or on subsequent pur chase, 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 N o. 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, August 6, 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 Treas ury 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. Settle ment 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 August 2, 1962, representing an additional amount of bills dated May 3, 1962, and maturing November 1, 1962; and 182-day bills dated August 2, 1962, maturing January 31, 1963) are shown on the reverse side o f this circular. A lfred H ayes, President. ( over ) RESULTS OF LAST OFFERING OF TREASURY BILLS (TWO SERIES TO BE ISSUED AUGUST 2, 1962) Range of Accepted Competitive Bids 91-Day Treasury Bills Maturing November 1,1962 High ........................................ Low 182-Day Treasury Bills Maturing January 31,1963 Price Approx. equiv. annual rate Price Approx. equiv. annual rate 99.279 2.852% 98.458 3.050% ........................................ 99.271 2.884% 98.444 3.078% Average .................................. 99.274 2.874%* 98.446 3.075%1 1 On a coupon issue o f the same length and for the same amount invested, the return on these bills would provide yields of 2.94 percent for the 91-day bills, and 3.17 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 o f days remaining in an interest payment period to the actual number of days in the period, with semiannual com pounding if more than one coupon period is involved. (97 percent of the amount of 91-day bills bid for at the low price was accepted.) (80 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 November 1,1962 Boston .......................... $ 26,110,000 Applied fo r Accepted Applied fo r District 182-Day Treasury Bills Maturing January 31,1963 $ 16,110,000 $ 6,445,000 Accepted $ 5,945,000 New York .................... 1,640,510,000 891,460,000 1,304,549,000 594,949,000 Philadelphia.................. 29,946,000 14,946,000 7,949,000 2,316,000 Cleveland ...................... 24,974,000 24,374,000 30,620,000 11,487,000 R ichm ond...................... 15,994,000 13,211,000 6,138,000 1,138,000 Atlanta .......................... 14,592,000 12,337,000 3,919,000 3,053,000 ........................ 208,793,000 170,348,000 122,304,000 41,800,000 St. Louis ...................... 26,735,000 21,735,000 8,381,000 4,831,000 M inneapolis.................. 24,855,000 17,310,000 6,511,000 3,451,000 Kansas C it y .................. 49,339,000 44,879,000 23,635,000 12,967,000 Dallas ............................ 23,063,000 12,713,000 8,993,000 3,198,000 San F ran cisco.............. 76,246,000 61,331,000 45,951,000 14,929,000 T o t a l.............. $2,161,157,000 Chicago $1,300,754,000* $1,575,395,000 a Includes $225,070,000 noncom petitive tenders accepted at the average price of 99.274. t> Includes $54,172,000 noncom petitive tenders accepted at the average price of 98.446. $700,064,000b
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