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f FEDERAL RESERVE BANK OF N EW YORK Fiscal Agent of the United States r Circular No. 5 5 1 4 T L July 8, 1964 J Advance Refunding Offer To A ll Banking Institutions, and Others Concerned, in the Second Federal R eserve D istrict: The following statement was made public today by the Treasury Department: The Treasury today announced that the further improvement of its cash position at the close of June makes unnecessary any substantial cash borrowing at this time. Instead, the Treasury is offering holders of the four note issues due in August and November of this year and five other selected note and bond issues maturing from May 1965 to February 1967 an opportunity to extend the maturity of their holdings at attractive yields. Three issues are being offered in exchange: an additional amount of the outstanding 4 percent bonds due October 1, 1969, a new 4% percent bond due November 15, 1973, and an additional amount of the outstanding 41/4 percent bonds due in August 1992. The securities eligible for exchange and those being newly offered are as follow s: Securities eligible fo r exchange and their maturity dates 5% 3% % 4% % 3% % 3% % 3% % 3% % 4% 3% % Notes Notes Notes Notes Notes Notes Bonds Notes Notes 8/15/64 8/15/64 11/15/64 11/15/64: 5/15/65 2/15/66 5/15/66 8/15/66 2/15/67 \ Securities offered in exchange and their m aturity dates 1 \ / I I 4% Bonds (Reopened issue) 4y8% Bonds (New issue) 4 14 % Bonds (Reopened issue) 10/1/69 11/15/73 8/15/87-92 ) Exchange subscription books will be open for four days, July 13-16. Because of differences in coupon and maturity among the various eligible issues, cash adjustments will be made to provide all subscribers with appropriately attractive opportunities, as shown in the tables below. The public holds $7.6 billion o f the four August and November 1964 maturities, and about $8.4 billion is held by official accounts. These issues are nearer to final maturity than any issues included in previous advance refunding offers. Consequently their holders are not being offered the nontaxable exchange privi lege that is, as has been customary, being made available to the other five issues eligible for this "advance exchange. The five eligible issues maturing from May 1965 to February 1967 involve $19.0 billion of public hold ings. This total is somewhat larger than that involved in the most recent advance refunding in January but is smaller than the total offered in September 1963. Official accounts hold about $6.8 billion of the 1965-1967 maturities. The Treasury is in a position to undertake this advance refunding operation because its immediate cash needs are much smaller than had been anticipated earlier. A t this time, cash borrowing is being con fined to increases in the weekly bill issue, beginningwith $100 million for the issue dated July 16. The Treasury’s cash needs over the balance o f the calendar quarter will require sufficient borrowing to permit timely additions to the supply of Treasury bills as necessary to counter any undue downward pressure on Treasury bill yields. Copies of a further Treasury statement, setting forth fuller details on the advance refunding offer, will be mailed to you tomorrow. 19 14 A lfred H ayes, President. F I F T I E T H ANNIVERSARY 19 6 4 J u l y 1964 (In dollars per $100 face value) P a y m e n t s t o a n d b y t h e S u b s c r ib e r in t h e A d v a n c e R e fu n d in g Am ounts to be paid to or by subscribers A ccru ed interest to 7/22/64: to be paid P rice adjustm ent Payment^ to subscriber Securities to be exchanged 1964 M a t u r i t i e s : 5% Note 8 /1 5 /6 4 .................450000 3 % % Note 8 /1 5 /6 4 .................300000 4 % % Note 1 1 /1 5 /6 4 .................800000 3 % % Note 1 1 /1 5 /6 4 .................450000 P a ym en tl b y subscriber F or th e 1965-67 M a t u r i t i e s : 3% % Note 5 /1 5 /6 5 .................500000 3 % % Note 2 /1 5 /6 6 .................100000 3 % % Bond 5 /1 5 /6 6 .................250000 4% Note 8 /1 5 /6 6 .................650000 3 % % Note 2 /1 5 /6 7 ........ 1964 M a tu r itie s : 4% To subscriber2 4y 8 % To subscriber B y subscriber B ond .716033 1.573489 .692935 1.736264 1.573489 .300000 For th e B y subscriber 3 10/1/69 2.170330 1.627747 .900815 .692935 N et amount to be paid Bond 1.224044 1.224044 1.224044 1.224044 1.396286 .703703 .476771 .081109 1.224044 1.224044 1.224044 1.224044 1.224044 .008011 .449445 .281109 1.162220 .049445 11/15/73 Note 8 /1 5 /6 4 .................900000 Note 8 /1 5 /6 4 .................750000 Note 11/15/6 4........ 1.250000 Note 11 /1 5 /6 4.................900000 2.170330 1.627747 .900815 .692935 3.070330 2.377747 2.150815 1.592935 1965-67 M a t u r i t i e s : 3 % % Note 5 /1 5 /6 5 .................950000 3% % Note 2 /1 5 /6 6 .................550000 3% % Bond 5 /1 5 /6 6 .................700000 4% Note 8 /1 5 /6 6 ........ 1.100000 3 % % Note 2 /1 5 /6 7 .................150000 .716033 1.573489 .692935 1.736264 1.573489 1.666033 2.123489 1.392935 2.836264 1.723489 5% 3% % 4% % 3% % 1964 5% 3% % 4% % 3% % .100000 8/15/87-92 1.844780 2.170330 1.844780 1.627747 .900815 1.844780 1.844780 .692935 .300000 .150000 .716033 1.573489 .692935 1.736264 1.573489 For th e M a tu r itie s : Note 8/15/64. Note 8/15/64. Note 11/15/64. Note 11/15/64. 41,4% B ond .050000 .400000 .050000 1965-67 M a t u r i t i e s 3V8% Note 5/15/65 3 % % Note 2/15/66. 3 % % Bond 5/15/66. Note 8/15/66. 4% 3 % % Note 2/15/67. .100000 .250000 .700000 .375550 .317033 .543965 1.101845 1.844780 1.844780 1.844780 1.844780 1.844780 1.028747 .571291 1.301845 .141484 .971291 1 Payment on account of purchase price of offered securities. 2 On securities to be exchanged. 3 On securities offered. I n v e s t m e n t R e t u r n s in t h e J u l y A pproxim ate investm ent yield from 7/22/64 to m aturity1 Securities eligible fo r exchange 4^0 Bond 10/1/693 4 % % Bond 11/15/73 4V±°/c Bond 8/15/87-923 to first call or m aturity 1964 A d v a n c e R e fu n d in g A pproxim ate reinvestm ent rate fo r extension period2 4 % Bond 10/1/693 4 % % Bond 11/15/73 4V4 % Bond 8/15/87-923 To first call To maturit 1964 M a t u r i t i e s : 5% Note 8/15/64. 3 % % Note 8/15/64 . 4 % % Note 11/15/64. 3 % % Note 11/15/64. 4.06% 4.06 4.06 4.06 4.22% 4.22 4.22 4.22 4.24% 4.24 4.24 4.24 4.08% 4.07 4.12 4.12 4.24% 4.23 4.27 4.27 4.25 % 4.25 4.26 4.26 4.25% 4.25 4.26 4.26 1965-67 M a t u r i t i e s 3 % % Note 5/1 5 /6 5 . 3 % % Note 2/15/66 . 3 % % Bond 5/1 5 /6 6 . 4% Note 8/1 5/6 6 . 3 % % Note 2/15/67. 4.08 4.09 4.08 4.08 4.08 4.23 4.24 4.23 4.23 4.23 4.25 4.25 4.25 4.25 4.25 4.15 4.22 4.23 4.24 4.28 4.29 4.34 4.36 4.36 4.39 4.28 4.30 4.30 4.31 4.32 4.27 4.29 4.30 4.30 4.31 1 Yields to nontaxable holders (or before tax) on issues offered in exchange based on prices of eligible issues (adjusted for payments on account of issue price). Prices are the mean of bid and ask quotations at noon on July 7, 1964. 2 Rate for nontaxable holders (or before tax). 3 Reopening of an existing security.
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