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F E D E R A L R E S E R V E BA N K O F N EW Y O R K Fiscal Agent of the United States r Circular No. 5 4 4 2 ' ! L January 8, 1964 J Advance Refunding Offer To All Banking Institutions, and Others Concerned, in the Second Federal Beserve District: The following statement was made public today by the Treasury Departm ent: Tlie Treasury today announced an advance refunding offer. Recent improvement in the cash position makes unnecessary any additional cash borrowing at this time. Instead, the Treasury will take advantage of the customarily favorable market conditions in January to further improve its debt structure by offering holders o f six issues of outstanding Treasury securities an opportunity to extend their holdings at attractive yields. Issues maturing from August 1964 to May 1965 may be exchanged for additional amounts of 4 percent bonds maturing in 1970 or 41/4 percent bonds due in 1975-85. The public holds $15.3 billion of the securities eligible for exchange; about $9.4 billion are also held by official accounts. The outstanding total is $24.7 billion. Books will be open for the exchange all of next week, January 13-17. Because of differences in coupon and maturity among the various eligible issues, cash adjustments will be made to provide all subscribers with comparably attractive opportunities. The securities eligible for exchange and those being newly offered are as follow s: Securities eligible for exchange and their maturity dates 3% % Notes 8/15/64 o‘5 o / T , ™ 3 % % Notes 4% % Notes ll/lo /6 4 11/15/64 2% % Bonds 4 % % Notes 2/15/65 5/15/65 \ V > ( Securities offered in exchange and their maturity dates 4% Bonds (Additional Issue) ' v 1T \ 4 ^ % Bonds (Additional Issue) 8/15/70 r 5/15/75-85 The total public holding o f the eligible issues is appreciably less than that of other recent advance refundings. To assure ready accommodation of this offering within the current market, and preclude the possibility o f excessive subscriptions of a speculative character, the Treasury is limiting the total of sub scriptions it will accept for the 4 percent bonds to $4 billion. Allotments for the 4 ^ percent bonds will be limited to $750 million. Present prospects suggest that the Treasury will not, apart from regular monthly issues of one-year bills, need to borrow for cash until April at the earliest. No substantial cash needs are expected until the approach o f the next fiscal year. However, the cash position will remain sufficiently flexible to allow scope for issuance o f additional amounts of Treasury bills, as needed, if further influence should be required upon short-term interest rates for balance-of-payments reasons. The Treasury’s objectives, now as in the past, are to conduct debt operations so as to help promote economic growth and stability while at the same time meeting the Government’s cash needs, maintaining a balanced debt structure, helping to protect the balance of payments, and avoiding excessive liquidity which could create potential inflationary pressures. The current offering, in furthering those objectives, is a natural accompaniment to President Johnson’s efforts, indicated today in his State of the Union message, to reduce sharply the size of the Government’s deficit financing requirements, and to shorten the period over which further deficits will be incurred. Copies of a further Treasury statement, setting forth fuller details on the advance refunding offer, will be mailed to you tomorrow. A lfred II ayes, President. 19 14 F I F T I E T H A N N I V E R S A R Y 19 6 4
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