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FEDERAL RESERVE BANK OF NEW YORK Fiscal Agent o f the United States r Circular N o. 5 2 8 3 1 L January 9, 1963 J OFFERING OF TW O SERIES OF TREASURY BILLS $1,300,000,000 of 91-Day Bills, Additional Amount, Series Dated October 18,1962, Due April 18,1963 (To Be Issued January 17, 1963) $800,000,000 of 182-Day Bills, Dated January 17, 1963, Due July 18, 1963 To All Incorporated, Banks and Trust Companies, and Others Concerned, in the Second Federal Reserve District: Following is the text o f a notice issued by the Treasury Department, released for publication today at 4 p.m., Eastern Standard time: The Treasury Department, by this public notice, invites tenders for tw o series of Treasury bills to the aggregate amount of $2,100,000,000, or thereabouts, for cash and in ex change for Treasury bills maturing January 17, 1963, in the amount of $2,100,520,000, as follow s: 91-day bills (to maturity date) to be issued January 17, 1963, in the amount of $1,300,000,000, or thereabouts, representing an additional amount o f bills dated O cto ber 18, 1962, and to mature April 18, 1963, originally issued in the amount of $700,038,000, the additional and original bills to be freely interchangeable. 182-day bills, for $800,000,000, or thereabouts, to be dated January 17, 1963, and to mature July 18, 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. Th ey 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, M onday, January 14, 1963. 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 o f competitive tenders the price offered must be expressed on the basis o f 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 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 will be received without deposit from incor porated banks and trust companies and from responsible and recognized dealers in investment securities. Tenders from others must be accom panied by payment of 2 percent of the face amount o f 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 Depart ment of the amount and price range of accepted bids. Those submitting tenders will be advised o f the acceptance or rejec tion 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, noncom petitive tenders for $200,000 or less for the additional bills dated O ctober 18, 1962 (91 days re maining until maturity date on A pril 18, 1963) and n oncom 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 respective issues. Settlement for accepted tenders in accordance with the bids must be made or com pleted at the Federal Reserve Bank on January 17, 1963, in cash or other immediately available funds or in a like face amount of Treasury bills maturing January 17, 1963. 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 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 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 im posed 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. A ccordin gly, the owner of 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 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. This Bank will receive tenders for both series up to 1 :30 p.m., Eastern Standard time, Monday, January 14, 1963, at the Securities Department o f 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 fo r 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 o f the last offering o f Treasury bills (91-day bills to be issued January 10, 1963, representing an additional amount o f bills dated October 11, 1962, and maturing April 11, 1963; and 182-day bills dated January 10, 1963, maturing July 11, 1963) are shown on the reverse side o f this circular. A lfred H ayes, President. (o v e r) RESULTS OF LA ST O FFE R IN G OF T R E A S U R Y BILLS (T W O SERIES TO BE ISSUED JA N U A R Y 10, 1963) Range o f A ccepted Com petitive Bids 91-Day Treasury Bills Maturing April 11, 1963 Price High ............................ .......... 99.267a 182-Day Treasury Bills Maturing July 11, 1963 Approx. equiv. annual rate Price Approx. equiv. annual rate 2.900% 98.508 2.951% ............................ ........... 99.259 2.931% 98.496 2.975% Average ..................... ........... 99.262 2.920% ! 98.501 2.966% ! L ow a Excepting two tenders totaling $350,000. 1 On a coupon issue of the same length and for the same amount invested, the return on these bills would provide yields of 2.98 percent for the 91-day bills, and 3.05 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 of the bills payable at maturity rather than the amount invested, and their length in actual number o f 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 com pounding if more than one coupon period is involved. (35 percent o f the amount o f 91-day bills bid for at the low price was accepted.) (7 percent o f the amount o f 182-day bills bid for at the low price was accepted.) Total Tenders A pp lied for and Accepted (B y Federal Reserve Districts) 91-Day Treasury Bills Maturing April 11, 1963 Applied fo r District Boston ................................ $ 27,630,000 182-Day Treasury Bills Maturing July 11, 1963 Applied fo r Accepted, $ 17,630,000 $ Accepted 16,227,000 $ 10,367,000 New Y o r k .......................... 1,555,133,000 801,133,000 1,194,787,000 656,027,000 ..................... 29,188,000 14,188.000 10,721,000 5,721,000 Cleveland ............................ 35,426,000 35,426,000 38,509,000 11,093,000 ......................... 22,458,000 21,808,000 8,486,000 7,486,000 Atlanta ................................ 36,590,000 32,610,000 7,492,000 6,313,000 .............................. 251,675,000 189,795,000 155,566,000 47,776,000 St. Louis ............................ 38,530,000 32,530,000 7,679,000 5,679,000 M in n eap olis....................... 19,598,000 14,123,000 5,841,000 3,341,000 ..................... 41,694,000 40,482,000 21,303,000 15,185,000 ................................ 33,706,000 28,056,000 10,965,000 6,035,000 San F r a n c is c o ................... 104,133,000 72,601,000 64,140,000 25,525,000 T o t a l s ................. $2,195,761,000 Philadelphia Richmond Chicago Kansas City Dallas $1,300,382,000b $1,541,716,000 Includes $293,462,000 noncom petitive tenders accepted at the average price of 99.262. c Includes $63,918,000 noncom petitive tenders accepted at the average price o f 98.501. $800,548,000°
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