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F E D E R A L R E S E R V E BANK O F N EW YO R K Fiscal Agent of the United States I" Circular No. 5 2 2 3 L September 12, 1962 J OFFERING OF T W O SERIES OF TR E A SU R Y BILLS $ 1,300,000,000 of 91-Day Bills, Additional Amount, Series Dated June 21,1962, Due December 20,1962 (To Be Issued September 20, 1962) $700,000,000 of 182-Day Bills, Dated September 20, 1962, Due March 21, 1963 To All Incorporated Banks and Trust Companies, and Others Concerned, in the Second Federal Reserve District: 4 Following is the text of a notice issued by the Treasury Department, released for publication today at p.m., Eastern Daylight Saving tim e : 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 September 20, 1962, in the amount of $1,900,824,000, as fo llo w s: 91-day bills (to maturity date) to be issued September 20, 1962, in the amount o f $1,300,000,000, or thereabouts, representing an additional amount o f bills dated June 21, 1962, and to mature December 20, 1962, originally issued in the amount o f $700,552,000, the additional and orig inal bills to be freely interchangeable. 182-day bills, for $700,000,000, or thereabouts, to be dated September 20, 1962, and to mature March 21, 1963. The bills of 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 Day light Saving time, Monday, September 17, 1962. Tenders will not be received at the Treasury Department, Washington. 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 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 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 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. 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 o f 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 June 21, 1962 (91 days remain ing until maturity date on December 20, 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) 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 September 20, 1962, in cash or other imme diately available funds or in a like face amount of Treasury bills maturing September 20, 1962. Cash and exchange tenders will receive equal treatment. 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 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 of 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 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 of 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 o f the Treasury bills and govern the conditions of 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, September 17, 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 September 13, 1962, representing an additional amount of bills dated June 14, 1962, and maturing December 13, 1962; and 182-day bills dated September 13, 1962, maturing March 14, 1963) are sh6wn on the reverse side of this circular. A lfred H a y e s , President. RESULTS OF LAST OFFERING OF TREASURY BILLS (TWO SERIES TO BE ISSUED SEPTEMBER 13, 1962) Range of Accepted Competitive Bids 91-Day Treasury Bills Maturing December 13, 1962 Price H igh ........ ....... Low ....................... Average ............... ....... 182-Day Treasury Bills Maturing March 14, 1963 A pprox. equiv. annual rate 99.298 99.292 99.295 Price Approx. equiv. annual rate 98.538 98.521 98.528 2.777% 2.801% 2.789% 1 2.892% 2.925% 2.911% 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 2.85 percent for the 91-day bills, and 3.00 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 of days related to a 360-day year. In contrast, yields on certificates, notes, and bonds are computed in terms of 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. (2 percent of the amount of 91-day bills bid for at the low price was accepted.) (25 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 December 13, 1962 District Applied for Boston .................................. $ 67,974,000 182-Day Treasury Bills Maturing March 14, 1963 Applied for Accepted $ 46,892,000 $ 12,978,000 Accepted $ 6,578,000 New Y o r k ................... ......... 1,842,666,000 948,366,000 1,087,498,000 574,498,000 Philadelphia ............... ........ 37,152,000 18,902,000 8,462,000 3,462,000 ................... ........ 30,798,000 25,644,000 13,654,000 13,654,000 Richmond ................... ........ 22,599,000 22,599,000 9,080,000 9,080,000 A t la n t a ......................... ........ 34,095,000 31,495,000 8,048,000 8,048,000 Chicago ....................... ........ 194,707,000 100,555,000 106,785,000 47,685,000 St. Louis ..................... ........ 31,737,000 26,737,000 8,806,000 7,556,000 ............... ........ 29,714,000 21,714,000 10,407,000 10,407,000 Kansas City ............... ........ 39,481,000 26,285,000 10,249,000 10,049,000 D a lla s ........................... ........ 27,845,000 17,845,000 9,381,000 4,381,000 San Francisco ........... 17,667,000 13,147,000 4,812,000 4,812,000 Cleveland Minneapolis Total ........... ........ $2,376,435,000 $1,300,181,000a $1,290,160,000 a Includes $271,217,000 noncompetitive tenders accepted at the average price of 99.295. b Includes $69,915,000 noncompetitive tenders accepted at the average price of 98.528. $700,210,000b
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