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F E D E R A L R E S E R V E BANK O F N E W YORK Fiscal A g en t o f the U nited States r Circular N o. 5 3 1 4 ~ 1 L M arch 14, 1963 J TREASURY’ S LATEST ADVANCE REFUNDING Public Exchanges Total $7.7 Billion To All Banking Institutions, and Others Concerned, in the Second Federal Reserve D istrict: Tlie following statement was made public today by the Treasury Department: The total dollar amount of Government securities exchanged by public holders in the T reasu ry’s latest advance refunding was larger than in any o f the six previous advance refundings undertaken b y the Treasury. Final figures show that of the total $8,007 million o f the new securities subscribed for, $7,682 million was exchanged by the public, the remaining $325 million being exchanged by Government investment accounts. The percentage exchanged by the public amounted to 38% of their holdings of the eligible issues. Tables are attached showing the amounts involved in the advance refunding, and the distribution o f sub scriptions by Federal Reserve Districts and by certain classes of investors. This advance refunding constitutes a m ajor step forw ard in the Treasury’s continuing program to so arrange the m aturity composition of the marketable debt as to avoid contributing to the generation of inflationary pressures in the future. A s a result of this operation, the debt m aturing within one year has been reduced by about $6 billion and the debt m aturing in one to three years has been reduced by $1.1 billion. The advance refunding produced an increase on balance in the debt maturing in three-to-five years o f $3.3 billion, and increases of $1.5 billion and $2.2 billion in the debt maturing in five-to-ten years and overten years, respectively. This m ajor restructuring of the debt will give the Treasury much more flexibility in its debt manage ment operations in the months ahead, perm itting the Treasury to adapt its future cash financing to chang ing market conditions and balance of payments requirements without running the risk o f producing an excessive increase in the very short, liquid debt. A n attached table describes changes in the m aturity distribution o f the marketable debt during recent years. It shows that the combined result o f all debt operations in the first three months of calendar 1963 has been a decline o f $5.7 billion in the under-one-year debt, a decline of $500 million in the one-to-five year debt and a rise o f $6.4 billion in the debt m aturing beyond five years. The table also shows that during the twelve months ending March 31, 1963 (taking into account the retirement of $3 billion o f March tax bills and the issuance o f $1.5 billion of June tax bills), the under-oneyear debt will have declined by $5.7 billion, the one-to-five year debt will have increased by $1.5 billion and the over-five-year debt will have risen by $10.9 billion. The increase in the debt maturing beyond five years will be very much greater than the total increase in the marketable debt, both fo r the twelve-month and the twenty-six-month periods ending this March. The impact o f the recently completed advance refunding on the ownership composition of the debt will not be known fo r a number o f months— until such time as the new securities pass out of the hands o f transitional holders into the hands o f ultimate investors. However, it is possible to examine the im pact o f debt management operations and other factors on the ownership o f the debt during the past year, figures which reflect the advance refundings conducted in March and September o f 1962. D uring the twelve months ending January 31, 1963 (the latest month fo r which detailed ownership figures are available), all of the deficit was financed outside the banking system (see attached table). D u r ing this twelve-month period, holdings o f Government securities by Federal Reserve Banks rose by $1.8 bil lion, but this increase was com pletely offset by a decline o f $1.8 billion in the Government security holdings o f commercial banks. On net balance, all o f the $7.1 billion increase in the debt during the year ending last January was financed outside the domestic banking system. A bout $800 million o f this total was taken by Government investment accounts. The remaining $6.3 billion was divided among foreign and international accounts ($2.4 billion ), corporate pension funds and individuals ($1.0 b illion ), State and local governments ($0.9 b illion ), business corporations ($0.7 b illion ), and other investors ($1.3 b illion ). The tables referred to in the above statement are printed on the following pages. A lfred H ayes, President. AM OU N TS OF SECURITIES E LIG IB LE F O R E XC H A N G E AN D AM OU N TS OF N EW SECURITIES TO BE ISSUED N S e c u r it ie s T o B e I s s u e d ew (millions) E l ig ib l e for E xchange Amounts ( millio?is ) Securities P u b l ic H 3%yo Notes S/15/67 37 /8% Bonds 1974 5% % Bonds 1971 4% Bonds 1980 $ $ Total unexchangec % ( millions) exchanged Total o l d in g s 17 49 2 24 196 420 99 201 $1,635 2,855 290 1,065 331 633 349 524 54% 72 27 41 10 22 26 24 $ 1,368 1,097 772 1,523 2,936 2,258 987 1,681 $ 921 $1,008 $7,682 38 $12,622 30 152 123 325 4 8,416 $1,515 $1,073 $1,131 $8,007 28 $21,038 31 / 2 % C tf s., C -1963........... 2 14 % Bonds o f 1963......... 3i/8 % C tf s ., D -1963........... 3 % Bonds o f 1964............. 31 / % Notes, B -1965........... 2 3 % % Notes, B -1966 ........... 3°/o Bonds of 1966............. 3 % % Bonds of 1966 $ 3,003 3,952 1,062 2,588 3,267 2,891 1,336 2,205 $ 955 2,274 194 845 — — — — — — — — 135 213 250 323 Total Public H oldings. . . . Total Fed. Res. Banks and Govt. A ccounts ............. $20,304 $4,268 $1,485 8,741 20 G r a n d T o t a l s ............... $29,045 $4,288 — $ 663 532 94 196 — — — SU BSCRIPTION S B Y F E D E R A L R E SE R V E D ISTR IC TS (M illions) Federal Reserve District 3 % % Notes Series B-1967 <> £ $4,288 C O T o t a l s ................................ ■m Boston ........................................... $ 109 New Y o r k ....................................... 2,336 Philadelphia ................................ 100 Cleveland ....................................... 145 R ic h m o n d ....................................... 113 A t la n t a ........................................... 139 Chicago ......................................... 516 St. L o n i s ......................................... 118 Minneapolis .......................................................... 73 Kansas C i t y .......................................................... 99 Dallas .............................................. 106 San F r a n c is c o .............................. 421 Treasury .................... ............... ........................13 3Vs% Bonds o f 1971 992 49 38 19 28 193 23 36 33 19 48 1 $1,515 Bonds o f 1974 $ 20 585 42 33 • 16 21 146 27 36 20 31 92 4 $1,073 4% Bonds of 1980 $ Total 20 799 14 10 12 12 53 15 6 25 11 67 87 $ 185 4,712 205 226 160 200 908 183 151 177 167 628 105 $1,131 $8,007 SU M M ARY OF AM OU N T AND N U M BER OF SUBSCRIPTION S RE CE IV E D IN M ARCH 1963 A D V A N C E REFU N DIN G (D ollar Amounts in M illions) 3 % % Notes, Series B-1967 37 /s% Bonds o f 1971 Amount No. Sub. Individuals1 ...................... Commercial banks ......... (Own account) A ll Others2 ........................ T o t a ls ........................ Amount $ $ G r a n d T o t a l s ............ 32 929 1,394 1,835 1,966 524 9,954 $1,485 4,166 Amount 937 44 2,708 2,531 5,457 1,516 $4,268 Federal Reserve Banks & Government A ccou n ts. No. Sub. 3 % % Bonds o f 1974 No. Sub. $ Amount No. Sub. TOTAL Amount No. Sub. 30 278 1,221 856 $ 130 4,405 6,725 10,363 1,476 700 1,047 3,147 5,426 5,270 $1,008 3,124 $7,682 22,514 24 490 1,579 2,215 407 $ 4% Bonds of 1980 921 $ 20 30 152 123 325 $4,288 $1,515 $1 ,073 $1,131 $8,007 1 Includes partnerships and personal trust accounts. 2 Includes insurance companies, mutual savings banks, corporations exclusive of commercial banks, private pension and retirement funds, pension, retirement and other funds o f State and local governments, and dealers and brokers. CHANGES IN TH E M A T U R IT Y D IS TR IB U T IO N OF TH E M A R K E T A B L E D E B T JA N U A R Y 1961 TO M A R C H 1963 (Dollars in billions) End o f Month Totals Maturity January 1961 March 1962 December 1962 March 1963 p — Change March 1963 p Dec. 1962 (Sm os.) From Mar. 1962 (12m os.) Jan. 1961 (26 mos.) U nder O n e Y ear W eekly and one-year bills... $ 32.7 Tax bills 7.0 Other 35.9 $ 38.7 4.3 44.2 $ 45.2 3.0 39.0 $ 45.9 2.5 33.1 $+0.7 — 0.5 — 5.9 $+7.2 — 1.8 — 11.1 $+13.2 — 4.5 — 2.8 T otal: Under one y e a r 75.6 70.8 87.2 59.7 87.3 61.6 81.5 61.2 — 5.7 — 0.5 — 5.7 +1.5 +5.9 — 9.7 5 to 10 Years 10 to 20 Years 20 Years and O v er 18.7 13.2 11.0 23.7 10.7 15.2 34.0 4.6 15.5 38.0 6.8 15.8 +4.0 +2.2 +0.2 +14.2 — 3.9 +0.5 +19.3 — 6.4 +4.8 T otal: 5 Years and O v e r . . . . 42.9 49.6 54.1 60.5 +6.4 +10.9 +17.6 $189.3 $196.5 $203.0 $203.2 $+0.2 $+6.7 $+13.9 +2.4 +2.6 (+4.4 % ) +7.1 (+13.1%) . 1 to 5 Years 5 Y ears a n d O ver T otal: Marketable D e b t A verage L e n g t h : Years and M onths ........ 4-6 4-11 4-11 5-1 Months ................. 54.0 58.5 58.7 61.1 (Percentage change) ......................................... Note: Figures may not add to totals because of rounding, p Preliminary. E STIM A TE D O W N ER SH IP OF U. S. G O V E R N M E N T SECURITIES (In billions o f dollars) January 31, 1962 Government investment a c c o u n ts ............................ Federal Reserve B a n k s ............................................... Commercial banks ........................................................ Private nonbank ............................................................ Mutual savings b a n k s ............................................... Insurance companies ............................................... Savings and loan association s................................ State and local funds ............................................. Corporations .............................................................. Individuals and corporate pension f u n d s ........... Foreign and in te rn a tio n a l....................................... A ll other ..................................................................... Total ........................................... Note: . .............................. Figures may not add to totals because o f rounding. 53.8 28.5 67.8 146.8 6.2 11.6 5.4 19.0 20.4 68.0 12.9 January 31, 1963 54.5 30.3 66.0 153.1 6.1 11.5 5.7 19.9 21.1 69.0 15.3 4.4 303.9 12 month change + -8 + 1 .8 — 1.8 + 6 .3 — .1 — .1 + • 3 + .9 + + 1 .0 + 2.4 + 1 .2 + 7 .1
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