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FE D E R A L R ESE R V E BANK O F NEW YORK Fiscal Agent of the United States r Circular No. 5 3 9 3 "I L September 25, 1963 J OFFERING OF TWO SERIES OF TREASURY BILLS $1,300,000,000 of 91-Day Bills, Additional Amount, Series Dated July 5, 1963, Due January 2, 1964 (To Be Issued October 3, 1963) $800,000,000 of 182-Day Bills, Dated October 3, 1963, Due April 2, 1964 To A ll 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: 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 O ctober 3, 1963, in the amount of $2,100,584,000, as follow s: 91-day bills (to maturity date) to be issued O ctober 3, 1963, in the amount of $1,300,000,000, or thereabouts, representing an additional amount of bills dated July 5, 1963, and to mature January 2, 1964, origi nally issued in the amount of $800,050,000, the addi tional and original bills to be freely interchangeable. 182-day bills, for $800,000,000, or thereabouts, to be dated O ctober 3, 1963, and to mature April 2, 1964. The bills of 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. 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 Daylight Saving time, M onday, September 30, 1963. Tenders will not be received at the Treasury Department, W ashing ton. 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 deci mals, e.g., 99.925. Fractions may not be used. It is urged that tenders be made on the printed form s 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 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 July 5, 1963 (91 days re maining until maturity date on January 2, 1964) 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 O ctober 3, 1963, in cash or other immediately available funds or in a like face amount of Treasury bills maturing O ctober 3, 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 o f 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 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 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 o f 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 Daylight Saving time, Monday, Sep tember 30, 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 of the last offering o f Treasury bills (9i-d ay bills to be issued September 26, 1963, representing an additional amount o f bills dated June 27, 1963, and maturing December 26, 1963; and 182-day bills dated Septem ber 26, 1963, maturing March 26, 1964) are shown on the reverse side of this circular. A lfred Hayes, President. RESULTS OF LAST OFFERING OF TREASURY BILLS (TWO SERIES TO BE ISSUED SEPTEMBER 26, 1963) Range of Accepted Competitive Bids 91-Day Treasury Bills Maturing December 26, 1963 Price High ......... ... Low ......... ... Average ....... ... 182-Day Treasury Bills Maturing March 26, 1964 Approx. equiv. annual rate 99.150 99.144 99.146 Price 3.363% 3.386% 3.379%1 98.234s 98.222 98.227 A pprox. equiv. annual rate 3.493% 3.517% 3.507%J a Excepting one tender o f $50,000. 1 On a coupon issue of the same length and for the same amount invested, the return on these bills would provide yields of 3.46 percent for the 91-day bills, and 3.63 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 o f days in the period, with semiannual com pounding if more than one coupon period is involved. (12 percent of the amount of 91-day bills bid for at the low price was accepted.) (37 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 December 26, 1963 District Boston ........ New Y o r k ........................ Philadelphia ...... Cleveland ........ Richmond ....... Atlanta ......... Chicago ......... St. Louis ........ Minneapolis ...... Kansas City ...... Dallas .......... San Francisco ..... Total ..... A p plied for $ 38,773,000 1,635,739,000 29,214,000 40,685,000 19,195,000 42,009,000 214,209,000 34,890,000 25,587,000 34,339,000 29,454,000 135,968,000 $2,280,062,000 182-Day Treasury Bills Maturing March 26, 1964 Accepted Applied for $ 27,802,000 890,347,000 13,509,000 36,683,000 17,195,000 31,743,000 112,894,000 25,830,000 16,857,000 27,959,000 19,104,000 80,760,000 $1,300,683,000b $ 9,934,000 1,019,246,000 7,351,000 8,417,000 3,497,000 9,183,000 92,504,000 28,662,000 6,824,000 14,806,000 8,530,000 64,086,000 $1,273,040,000 b Includes $271,763,000 noncompetitive tenders accepted at the average price of 99.146. c Includes $53,939,000 noncom petitive tenders accepted at the average price of 98.227. Accepted $ 3,934,000 632,826,000 2,351,000 8,417,000 3,497,000 9,183,000 42,204,000 25,462,000 5,824,000 11,806,000 4,900,000 49,625,000 $800,029,000°