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FE D E RA L RESER V E BANK O F NEW YO RK Fiscal Agent o f the United States /"Circular No. 53891 L September 18, 1963 J OFFERING OF TWO SERIES OF TREASURY BILLS $1,300,000,000 of 91-Day Bills, Additional Amount, Series Dated June 27, 1963, Due December 26, 1963 (To Be Issued September 26, 1963) $800,000,000 of 182-Day Bills, Dated September 26, 1963, Due March 26, 1964 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 Daylight Saving tim e: T he Treasury Department, by this public notice, invites tenders for tw o series of Treasury bills to the aggregate amount o f $2,100,000,000, or thereabouts, for cash and in ex change for Treasury bills maturing September 26, 1963, in the amount of $2,101,881,000, as follow s: 91-day bills (to maturity date) to be issued September 26, 1963, in the amount of $1,300,000,000, or thereabouts, representing an additional amount of bills dated June 27, 1963, and to mature Decem ber 26, 1963, origi nally issued in the amount of $798,837,000, the addi tional and original bills to be freely interchangeable. 182-day bills, for $800,000,000, or thereabouts, to be dated September 26, 1963, and to mature March 26, 1964. T h e 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 w ill be received at Federal Reserve Banks and Branches up to the closing hour, one-thirty p.m., Eastern D aylight Saving time, M onday, September 23, 1963. Tenders will not be received at the Treasury Department, W ashing ton. 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 of 100, with not m ore than three deci mals, 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 accompanied by payment o f 2 percent of the face amount o f 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 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 June 27, 1963 (91 days re maining until maturity date on Decem ber 26, 1963) and non competitive 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 com petitive 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 September 26, 1963, in cash or other immediately available funds or in a like face amount of Treasury bills maturing September 26, 1963. 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 incom e 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 o f the possessions of 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. U nder Sections 454(b) and 1221(5) of 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. A ccordingly, the owner o f 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 o f 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 Daylight Saving time, Monday, Sep tember 23, 1963, 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 fo r the Treasury bills cannot be made by credit through the Treasury T ax 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 September 19, 1963, representing an additional amount o f bills dated June 20, 1963, and maturing December 19, 1963; and 182-day bills dated Septem ber 19, 1963, maturing March 19, 1964) are shown on the reverse side o f this circular. A lfred H ayes, President. ( ovee ) RESULTS OF LAST OFFERING OF TREASURY BILLS (TWO SERIES TO BE ISSUED SEPTEMBER 19, 1963) Range o f A ccepted Com petitive Bids 91-Day Treasury Bills Maturing Decem ber 19, 1963 Price 182-Day Treasury Bills Maturing March 19, 1964 Approx. equiv. annual rate Price Approx. equiv. annual rate H igh ............................ .......... 99.146s 3.378% 98.230 3.501% L ow ............................ .......... 99.136 3.418% 98.216 3.529% 99.138 3.409% 1 98.220 3.521% ! Average ..................... .......... a Excepting tw o tenders totaling $500,000. 1 On a coupon issue o f the same length and for the same amount invested, the return on these bills would provide yields o f 3.50 percent for the 91-day bills, and 3.64 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 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 o f days in the period, with semiannual com pounding if m ore than one coupon period is involved. (39 percent o f the amount o f 91-day bills bid for at the low price was accepted.) (85 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 A ccepted (B y Federal Reserve Districts) 91-Day Treasury Bills Maturing Decem ber 19, 1963 Accepted Applied for District Boston ............................ $ 48,944,000 182-Day Treasury Bills Maturing March 19, 1964 $ 35,894,000 Applied for $ 11,259,000 Accepted $ 6,959,000 New Y ork ..................... 1,487,272,000 824,720,000 934,451,000 575,201,000 Philadelphia ................... 30,028,000 15,028,000 8,334,000 5,034,000 Cleveland ....................... 31,757,000 31,757,000 23,372,000 23,372,000 Richmond ..................... 20,264,000 19,264,000 4,083,000 4,083,000 ............................ 31.550,000 28,940,000 5,378,000 5,378,000 Chicago ............................ 223,405,000 146,973,000 133,788,000 72,413,000 39,202,000 31,880,000 9,509,000 7,509,000 ................... 26,749,000 20,029,000 6,841,000 4,766,000 Kansas City ................... 32,411,000 28,971,000 11,777,000 8,677,000 Dallas .............................. 29,837,000 20,227,000 11,831,000 6,831,000 San Francisco ............... 116,655,000 96,555,000 96,807,000 80,407,000 Total ............... $2,118,074,000 Atlanta St. Louis ....................... Minneapolis $ 1,300,238,000b $1,257,430,000 b Includes $282,446,000 noncompetitive tenders accepted at the average price of 99.138. c Includes $63,814,000 noncom petitive tenders accepted at the average price o f 98.220. $800,630,000°