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F E D E R A L R E S E R V E BANK O F NEW Y OR K Fiscal Agent of the United States r Circular N o. 5 4 3 2 1 L December 23, 1963 J OFFERING OF TWO SERIES OF TREASURY BILLS $1,300,000,000 of 91-Day Bills, Additional Amount, Series Dated October 3, 1963, Due April 2, 1964 (To Be Issued January 2, 1964) $800,000,000 of 182-Day Bills, Dated January 2, 1964, Due July 2, 1964 To A ll Incorporated Banks and Trust Companies, and Others Concerned, in the Second Federal Reserve District: Following is the text of a notice issued by the Treasury Department, released for publication today at 4 p.m., Eastern Standard time: The tenders amount change amount Treasury Department, by this public notice, invites for tw o series o f Treasury bills to the aggregate o f $2,100,000,000, or thereabouts, for cash and in ex for Treasury bills maturing January 2, 1964, in the o f $2,100,885,000, as follow s: 91-day bills (to maturity date) to be issued January 2, 1964, in the amount of $1,300,000,000, or thereabouts, representing an additional amount of bills dated O cto ber 3, 1963, and to mature April 2, 1964, originally issued in the amount of $798,154,000 (an additional $100,092,000 was issued O ctober 28, 1963), the addi tional and original bills to be freely interchangeable. 182-day bills, for $800,000,000, or thereabouts, to be dated January 2, 1964, and to mature July 2, 1964. T h e bills o f both series w ill 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. T h ey 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 w ill be received at Federal Reserve Banks and Branches up to the closing hour, one-thirty p.m., Eastern Standard time, Friday, Decem ber 27, 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 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 o f 2 percent o f 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 in g which public announcement will be made by the Treasury Depart ment o f the amount and price range of accepted bids. Those submitting tenders will be advised o f the acceptance or rejec tion thereof. T he Secretary o f the Treasury expressly reserves the right to accept or reject any or all tenders, in w hole 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 3, 1963 (91 days remaining until maturity date on April 2, 1964) 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) o f 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 2, 1964, in cash or other immediately available funds or in a like face amount of Treasury bills maturing January 2, 1964. 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 o f the new bills. T he 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 o f 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 o f the possessions o f the United States, or by any local taxing authority. For purposes o f taxa tion the amount of 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) o f 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 ccordin gly, 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 o r 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 o f 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, Friday, December 27, 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 for the Treasury bills cannot be made by credit through the Treasury Tax and Loan Account. Treasury bills. Settlement must be made in cash or other immediately available funds or in maturing Results of the last offering of Treasury bills (91-day bills to be issued December 26, 1963, representing an additional amount of bills dated September 26, 1963, and maturing March 26, 1964; and 182-day bills dated December 26, 1963, maturing June 25, 1964) are shown on the reverse side of this circular. A lfred H ayes, President. Closing date for receipt of tenders isFriday, December 27. ( over) RESULTS OF LAST OFFERING OF TREASURY BILLS (TWO SERIES TO BE ISSUED DECEMBER 26, 1963) Range of Accepted Competitive Bids 91-Day Treasury Bills Maturing March 26,1964 Price High......... ... Low ......... .... Average ....... ... 182-Day Treasury Bills Maturing June 25,1964 A pprox. equiv. annual rate 99.115a 99.108 99.110 Price 3.501% 3.529% 3.522%! 98.154 98.150 98.151 Approx. equiv. annual rate 3.651% 3.659% 3.657%* a E xceptin g one tender o f $1,400,000. 1 O n a coupon issue of the same length and for the same amount invested, the return on these bills would provide yields of 3.61 percent for the 91-day bills, and 3.79 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 o f the bills payable at maturity rather than the am ount 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 o f days in the period, with semiannual com pounding if m ore than one coupon period is involved. (89 percent of the amount of 91-day bills bid for at the low price was accepted.) (69 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 March 26,1964 District Boston ......... New York....... Philadelphia...... Cleveland ........ Richmond........ Atlanta ......... Chicago ........ St. Louis ........ Minneapolis...... Kansas City...... Dallas .......... San Francisco..... Total..... Applied fo r $ 37,577,000 1,418,261,000 30,210,000 27,369,000 12,490,000 26,466,000 196,174,000 39,997,000 18,949,000 21,844,000 101,712,000 109,371,000 $2,040,420,000 182-Day Treasury Bills Maturing June 25,1964 Accepted Applied fo r $ 36,177,000 844,639,000 15,210,000 26,720,000 12,435,000 21,889,000 154,424,000 33,775,000 13,729,000 21,844,000 33,502,000 87,051,000 $1,301,395,000b $ 14,621,000 1,276,340,000 8,163,000 92,856,000 1,992,000 7,566,000 192,362,000 17,194,000 5,476,000 10,707,000 39,977,000 54,526,000 $1,721,780,000 b Includes $212,197,000 noncom petitive tenders accepted at the average price of 99.110. c Includes $57,649,000 noncom petitive tenders accepted at the average price o f 98.151. Accepted $ 3,954,000 581,505,000 3,057,000 71,623,000 1,992,000 6,626,000 86,591,000 7,924,000 3,176,000 9,233,000 4,354,000 21,603,000 $801,638,000°