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FED ER AL RESERVE BANK O F NEW YORK Fiscal A gen t o f the U nited States t Circular No. 5 2 6 9 1 December 12,1962 J O F F E R IN G OF T W O S E R IE S OF T R E A S U R Y BILLS $1,300,000,000 of 91-D ay Bills, Additional Amount, Series Dated September 20 ,1 9 6 2 , Due March 21,1963 (To Be Issued December 20, 1962) $800,000,000 of 182-D ay Bills, Dated December 20, 1962, Due June 20, 1963 To All Incorporated Banks and Trust Companies, and Others Concerned, in the Second Federal Reserve District: F ollow in g is the text o f a notice issued by the Treasury Departm ent, released for publication today at 4 p.m., Eastern Standard tim e : The Treasury Department, by this public notice, invites tenders for two series of Treasury bills to the aggregate amount of $2,100,000,000, or thereabouts, for cash and in exchange for Treasury bills maturing December 20, 1962, in the amount of $2,001,754,000, as follow s: 91-day bills (to maturity date) to be issued December 20, 1962, in the amount of $1,300,000,000, or thereabouts, rep resenting an additional amount of bills dated Septem ber 20, 1962, and to mature March 21, 1963, originally issued in the amount of $700,445,000 (an additional $100,131,000 was issued November 15, 1962), the addi tional and original bills to be freely interchangeable. 182-day bills, for $800,000,000, or thereabouts, to be dated December 20, 1962, and to mature June 20, 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 Standard time, Monday, December 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 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 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, following which public announcement will be made by the Treasury Department of the amount and price range of accepted bids. Those sub mitting tenders will be advised of the acceptance or rejection thereof. The Secretary of 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 September 20, 1962 (91 days re maining until maturity date on March 21,1963) 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 December 20, 1962, in cash or other imme diately available funds or in a like face amount of Treasury bills maturing December 20, 1962. Cash and exchange tenders will receive equal treatment. 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 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 of Treasury bills does not have any special treat ment, 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 taxa tion now or hereafter imposed on the principal or interest thereof by any State, or any of the possessions of the United States, or by any local taxing authority. For purposes of 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 of 1954 the amount of 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 of the circular may be obtained from any Federal Reserve Bank or Branch. T h is Bank will receive tenders for both series up to 1 :30 p.m., Eastern Standard time, M onday, D ecem ber 17, 1962, at the Securities D epartm ent o f its Head Office and at its Buffalo Branch. Tender form s for the respective series are enclosed. Please use the appropriate form s to subm it tenders and return them in an envelope marked “ T en der for Treasury B ills.” Tenders m ay be submitted by telegraph, su bject 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 L,oan Account. Settlement must be made in cash or other immediately available funds or in maturing Treasury bills. Results o f the last offerin g of Treasury bills (91-day bills to be issued D ecem ber 13, 1962, representing an additional am ount o f bills dated Septem ber 13, 1962, and m aturing M arch 14, 1963; and 182-day bills dated D ecem ber 13, 1962, m aturing June 13, 1963) are shown on the reverse side o f this circular. A lfred H ayes, President. ( over) RESULTS OF LA ST O FFE R IN G OF T R E A SU R Y BILLS (T W O SERIES TO BE ISSUED DECEM BER 13, 1962) Range of Accepted Competitive Bids 182-Day Treasury Bills Maturing June 13, 1963 91-Day Treasury Bills Maturing March 14, 1963 Price H igh ....................... .......... L o w ......................... .......... A verage ................. ........ Approx. equiv. annual rate 99.299 99.286 99.290 Price Approx. equiv. annual rate 98.562 98.548 98.554 2.773% 2.825% 2.807% 1 2.844% 2.872% 2.861% 1 1 On a coupon issue of the same length and for the same amount invested, the return on these bills would provide yields of 2.87 percent for the 91-day bills, and 2.94 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 of 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 compounding if more than one coupon period is involved. (80 percent o f the am ount of 91-day bills bid for at the low price was accepted.) (60 percent o f the am ount o f 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 March 14, 1963 District Applied for B oston ......................... ........... $ 25,171,000 182-Day Treasury Bills Maturing June 13, 1963 Accepted $ 25,171,000 Accepted Applied for $ 7,049,000 $ 7,049,000 N ew Y o r k ................... .......... 1,425,733,000 833,733,000 1,044,988,000 619,788,000 Philadelphia ............................ 30,444,000 15,444,000 8,721,000 3,721,000 Cleveland ..................... .......... 26,496,000 26,496,000 31,378,000 19,878,000 R ich m on d ..................... .......... 26,736,000 26,136,000 15,795,000 8,535,000 A t la n t a ...................................... 33,292,000 31,392,000 8,412,000 8,012,000 C hicago ......................... .......... 197,900,000 149,700,000 118,221,000 63,821,000 St. Louis ....................... ........ 33,162,000 29,162,000 8,749,000 8,049,000 ................. ........ 27,703,000 25,703,000 8,121,000 6,621,000 Kansas C ity ................. ........ 32,432,000 31,432,000 11,185,000 6,185,000 D a l l a s .............................. 27,768,000 22,568,000 10,884,000 9,484,000 San Fran cisco ............. 85,520,000 83,120,000 46,118,000 38,918,000 M inneapolis T ota l ............. ........ $1,972,357,000 $1,300,057,000a $1,319,621,000 a Includes $261,894,000 noncompetitive tenders accepted at the average price of 99.290. b Includes $64,179,000 noncompetitive tenders accepted at the average price of 98.554. $800,061,000b IM P O R T A N T N O T IC E 1. Tenders on the enclosed forms, which are for the December 27 issue of bills, should not be submitted until after 1:30 p.m., Monday, December 17. 2. Bidders should not use the enclosed tender forms to submit bids intended for the auction of Monday, December 17, which is for the December 20 issue of bills. December 14, 1962 F E D E R A L R E S E R V E B A N K OF N E W Y O R K Fiscal Agent of the LTnited States