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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 YO R K Fiscal Agent of the United States I" Circular No. 5 2 5 6 T November 14, 1962 J L OFFER ING OF T W O SERIES OF T R E A SU R Y BILLS $1,300,000,000 of 90-Day Bills, Additional Amount, Series Dated August 23,1962, Due February 21,1963 (To Be Issued November 23, 1962) $800,000,000 of 181-Day Bills, Dated November 23, 1962, Due May 23, 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 Standard tim e: The Treasury Department, by this public notice, invites tenders for two series o f Treasury bills to the aggregate amount o f $2,100,000,000, or thereabouts, for cash and in exchange for Treasury bills maturing November 23, 1962, in the amount of $1,901,122,000, as fo llo w s: 90-day bills (to maturity date) to be issued November 23, 1962, in the amount of $1,300,000,000, or thereabouts, rep resenting an additional amount of bills dated August 23, 1962, and to mature February 21, 1963, originally issued in the amount of $699,743,000 (an additional $100,131,000 was auctioned November 7 and will be outstanding November 15, 1962), the additional and original bills to be freely interchangeable. 181-day bills, for $800,000,000, or thereabouts, to be dated November 23, 1962, and to mature May 23, 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 Standard time, Monday, November 19, 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 of 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 o f 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 w ill 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 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 August 23, 1962 (90 days remain ing until maturity date on February 21, 1963) and noncompeti tive tenders for $100,000 or less for the 181-day bills without stated price from any one bidder w ill 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 November 23, 1962, in cash or other imme diately available funds or in a like face amount of Treasury bills maturing November 23, 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 o f 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 of 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) 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. 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 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 Standard time, Monday, November 19, 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 November 15, 1962, representing an additional amount of bills dated August 16, 1962, and maturing February 14, 1963; and 182-day bills dated November 15, 1962, maturing May 16, 1963) are shown on the reverse side of this circular. A lfred H ayes, President. Please note that the current offering is for 90-day and 181-day Treasury bills. ( o ver ) RESULTS OF LAST OFFERING OF TREASURY BILLS (TWO SERIES TO BE ISSUED NOVEMBER 15, 1962) Range of Accepted Competitive Bids 91-Day Treasury Bills Maturing February 14, 1963 Price Approx. equiv. annual rate 99.295 99.290 99.292 High Low ........................ ........ Average 182-Day Treasury Bills Maturing May 16, 1963 Price 2.789% 2.809% 2.801% 1 Approx. equiv. annual rate 98.570 a 98.559 98.561 2.829% 2.850% 2.846% 1 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 2.86 percent for the 91-day bills, and 2.93 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. (19 percent of the amount of 91-day bills bid for at the low price was accepted.) (63 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 February 14, 1963 District Applied for Boston .......................... ........ $ 32,918,000 182-Day Treasury Bills Maturing May 16, 1963 Applied for Accepted $ 16,113,000 $ 17,637,000 Accepted $ 7,287.000 1,167,276,000 581.426,000 New Y o r k .................... ........ 1,628,755,000 858,353,000 Philadelphia ................ ........ 32,020,000 16,377,000 9,991,000 4,991,000 .................... ........ 31,671,000 31,171,000 19,219,000 10,935,000 Richmond .................... ........ 25,879,000 13,576,000 3,602,000 3,602,000 A t la n ta .......................... ........ 26,168,000 17,796,000 9,568,000 6,712,000 Chicago ........................ ........ 297,379,000 187,854,000 111,988,000 37,588,000 St. Louis ...................... ........ 33,402,000 26,592,000 7,480,000 4,980,000 ................ ........ 22,357,000 12,827,000 8,942,000 4,442,000 Kansas City ................ 43,108,000 34,369,000 16,604,000 11.504,000 D a lla s ............................ 36,163,000 18,163,000 10,535,000 5,535,000 San Francisco ............ 113,505,000 67,717,000 52,597,000 22,077,000 $1,435,439,000 $701,079,000 Cleveland Minneapolis T otal ............ ........ $2,323,325,000 $1,300,908,000'’ b Includes $238,708,000 noncompetitive tenders accepted at the average price of 99.292. c Includes $62,262,000 noncompetitive tenders accepted at the average price of 98.561.
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