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F E D E R A L R E S E R V E BANK O F NEW YO R K Fiscal Agent of the United States I" Circular No. 5 2 1 1 1 L August 8, 1962 J OFFERING OF TWO SERIES OF TREASURY BILLS $1,300,000,000 of 91-Day Bills, Additional Amount, Series Dated May 17, 1962, Due November 15, 1962 (To Be Issued August 16, 1962) $700,000,000 of 182-Day Bills, Dated August 16, 1962, Due February 14, 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 o f $2,000,000,000, or thereabouts, for cash and in exchange for Treasury bills maturing August 16, 1962, in the amount of $1,800,826,000, as follow s: 91-day bills (to maturity date) to be issued August 16, 1962, in the amount of $1,300,000,000, or thereabouts, representing an additional amount of bills dated May 17, 1962, and to mature Novem ber 15, 1962, originally issued in the amount of $600,140,000, the additional and original bills to be freely interchangeable. 182-day bills^ for $700,000,000, or thereabouts, to be dated August 16, 1962, and to mature February 14, 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 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 13, 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 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 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 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 of 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 May 17, 1962 (91 days remaining until maturity date on N ovem ber 15, 1962) and noncompetitive 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 16, 1962, in cash or other immediately available funds or in a like face amount of Treasury bills maturing August 16, 1962. Cash and exchange tenders will receive equal treat ment. Cash adjustments will be made for differences between the par value of 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 of 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. F or purposes of 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 of 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 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 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 of 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 13, 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 9, 1962, representing an additional amount of bills dated May 10, 1962, and maturing November 8, 1962; and 182-day bills dated August 9, 1962, maturing February 7, 1963) are shown on the reverse side o f this circular. A lfred H ayes, President. ( o ver ) RESULTS OF LAST OFFERING OF TREASURY BILLS (TWO SERIES TO BE ISSUED AUGUST 9, 1962) Range of Accepted Competitive Bids 91-Day Treasury Bills Maturing November 8 , 1962 182-Day Treasury Bills Maturing February 7, 1963 Price Approx. equiv. annual rate Price Approx. equiv. annual rate High .......................... ............ Low .......................... ............ 99.304 2.753% 98.496a 2.975% 99.282 2.840% 98.474 3.018% .................... ............ 99.292 2.802%1 98.489 2.990%J Average a Excepting tw o tenders totaling $565,000. 1 On a coupon issue o f the same length and for the same amount invested, the return on these bills would provide yields o f 2.86 percent for the 91-day bills, and 3.08 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 o f 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 com puted 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 com pounding if m ore than one coupon period is involved. (11 percent of the amount of 91-day bills bid for at the low price was accepted.) (3 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 8 , 1962 Boston .......................... $ 24,378,000 Applied for Accepted Applied for District 182-Day Treasury Bills Maturing February 7, 1963 $ 14,378,000 $ 4,212,000 Accepted $ 4,212,000 1,488,389,000 907,109,000 1.006,801,000 574,281,000 ................ 29,253,000 14,253,000 7,394,000 2,394,000 Cleveland ...................... 19,909,000 19,595,000 8,424,000 6,424,000 Richmond .................... 14,562,000 14,562,000 6,554,000 6,554,000 Atlanta .......................... 20,359,000 20,359,000 5,539,000 5,539,000 ........................ 220,586,000 162,586,000 108,237,000 52,267,000 St. Louis ...................... 29,939,000 26,049,000 7,488,000 6,143,000 M inneapolis.................. 20,873,000 20,873,000 5,095,000 5,095,000 Kansas C it y .................. 29,884,000 29,584,000 8,650,000 8,250,000 Dallas ............................ 26,259,000 24,069,000 9,240,000 8,240,000 San F ran cisco.............. 47,034,000 47,034,000 24,712,000 20,712,000 T o t a l .............. $1,971,425,000 $1,202,346,000 $700,111,000° New York .................... Philadelphia Chicago $1,300,45 l,000b b Includes $216,660,000 noncom petitive tenders accepted at the average price of 99.292. c Includes $49,819,000 noncom petitive tenders accepted at the average price of 98.489.