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FED ERAL R E SERVE BANK O F N E W YO RK Fiscal Agent o f the United States r Circular No. 5 5 2 6 "I July 29, 1964 J L OFFERING OF TWO SERIES OF TREASURY BILLS $1,200,000,000 of 91-Day Bills, Additional Amount, Series Dated May 7, 1964, Due November 5, 1964 (T o Be Issued August 6, 1964) $900,000,000 of 182-Day Bills, Dated August 6, 1964, Due February 4, 1965 To All 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 Daylight Saving time: The tenders am ount change am ount T reasu ry D epartm en t, by this public notice, invites for tw o series of T reasu ry bills to the aggregate of $2,100,000,000, or thereabouts, for cash and in e x for T reasu ry bills m aturing A u g u st 6, 1964, in the of $2,100,702,000, as fo llo w s : 91-day bills (to m aturity date) to be issued A u g u st 6, 1964, in the am ount of $1,200,000,000, or thereabouts, representing an additional am ount of bills dated M a y 7, 1964, and to mature N ovem ber 5, 1964, origi nally issued in the am ount of $900,393,000 (an addi tional $100,086,000 will be issued July 29, 1964), the additional and original bills to be freely interchange able. 182-day bills, for $900,000,000, or thereabouts, to be dated A u g u st 6, 1964, and to mature February 4, 1965. T h e bills of both series w ill be issued on a discount basis under com petitive and noncom petitive bidding as hereinafter provided, and at m aturity their face am ount will be payable without interest. T h e y will be issued in bearer fo rm only, and in denom inations of $1,000, $5,000, $10,000, $50,000, $100,000, $500,000 and $1,000,000 (m aturity v a lu e). T en ders will be received at Federal R eserve B anks and Branches up to the closing hour, one-thirty p .m ., Eastern D ayligh t Saving tim e, M on d ay , A u g u st 3, 1964. T enders will not be received at the T reasury D epartm ent, W ash in g ton . E ach tender m ust be for an even m ultiple of $1,000, and in the case of com petitive tenders the price offered m ust be expressed on the basis of 100, with not m ore than three decimals, e.g., 99.925. Fractions m ay not be used. It is urged that tenders be m ade on the printed form s and forw arded in the special envelopes which will be supplied by Federal R eserve Banks or Branches on application therefor. B anking institutions generally m ay subm it tenders for account of custom ers, provided the nam es of the custom ers are set forth in such tenders. O thers than banking institu tions will not be perm itted to submit tenders except for their ow n account. T enders will be received without deposit from incorporated banks and trust com panies and from respon sible and recognized dealers in investm ent securities. T enders from others m ust be accom panied by paym ent of 2 percent of the face am ount of T reasury bills applied for, unless the tenders are accom panied by an express guaranty of paym ent by an incorporated bank or trust com pany. Im m ediately after the closin g hour, tenders w ill be opened at the Federal R eserve B anks and Branches, follow in g which public announcem ent will be m ade by the T reasu ry D e p art m ent of the am ount and price range of accepted bids. T h o se subm itting tenders will be advised of the acceptance or rejec tion thereof. T h e Secretary of the T reasu ry exp ressly re serves 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 M ay 7, 1964 (91 days rem aining until m aturity date on N ovem ber 5, 1964) and noncom petitive tenders for $100,000 or less for the 182-day bills w ithout stated price from any one bidder will be accepted in full at the average price (in three deci m als) of accepted com petitive bids for the respective issues. S ettlem ent for accepted tenders in accordance with the bids m ust be m ade or com pleted at the Federal R eserve B ank on A u g u st 6, 1964, in cash or other im m ediately available funds or in a like face am ount of T reasu ry bills m aturing A u g u st 6, 1964. Cash and exchange tenders will receive equal treat m ent. Cash adjustm ents will be m ade for differences be tween the par value of m aturing bills accepted in exchange and the issue price of the new bills. T h e incom e derived from T reasu ry bills, w hether interest or gain from the sale or other disposition of the bills, does not have any exem ption, as such, and loss fro m the sale or other disposition of T reasury bills does not have any special treatm ent, as such, under the Internal Revenue Code of 1954. T h e bills are subject to estate, inheritance, gift or other excise taxes, w hether Federal or State, but are exem pt from all taxation now or hereafter im p osed on the principal or interest thereof by any State, or any of the possessions of the U nited States, or by any local taxing authority. F or purposes of taxation the am ount of discount at w hich T re a s ury bills are originally sold by the U nited States is con sidered to be interest. U nder Sections 4 5 4 (b ) and 1221(5) of the Internal R evenue Code of 1954 the am ount of discount at which bills issued hereunder are sold is not considered to accrue until such bills are sold, redeem ed or otherwise disposed of, and such bills are excluded from consideration as capital assets. A cco rd in gly , the ow ner of T reasury 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, w hether on original issue or on subsequent purchase, and the am ount actually received either upon sale or redem ption at m aturity during the taxable year for which the return is m ade, as ordinary gain or loss. T reasury D epartm ent Circular N o . 418 (current revision) and this notice prescribe the term s of the T reasu ry bills and govern the conditions of their issue. Copies of the circular m ay be obtained from any Federal R eserve B ank or Branch. This Bank will receive tenders for both series up to 1 :30 p.m., Eastern Daylight Saving time, Monday, August 3, 1964, at the Securities Department of its Head Office and at its Buffalo Branch. Tender form s’ 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. Settlement must be made in cash or other immediately available funds or in maturing Treasury bills. Results of the last offering of Treasury bills (91-day bills to be issued July 30, 1964, representing an additional amount of bills dated April 30, 1964, and maturing October 29, 1964; and 182-day bills dated July 30, 1964, maturing January 28, 1965) are shown on the reverse side of this circular. 19 A lfred H ayes, President. ( o ver) 14 FI FTI ETH A N N I V E R S A R Y 19 6 4 RESULTS OF LAST OFFERING OF TREASURY BILLS (TWO SERIES TO BE ISSUED JULY 30, 1964) Range of Accepted Competitive Bids 182-Day Treasury Bills Maturing January 28,1965 91-Day Treasury Bills Maturing October 29,1964 High .......................... .......... Low ............................ .......... Average ...................... .......... Price Approx. equiv. annual rate Price 99.124 99.119 99.122 3.465% 3.485% 3.475%! 98.188 98.182 98.184 Approx. equiv. annual rate 3.584% 3.596% 3.591%i 1 On a coupon issue of the same length and for the same amount invested, the return on these bills would provide yields of 3.55 percent for the 91-day bills, and 3.71 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 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 of days in the period, with semiannual compounding if more than one coupon period is involved. (38 percent of the amount of 91-day bills bid for at the low price was accepted.) (17 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) 182-Day Treasury Bills 91-Day Treasury Bills Maturing January 28,1965 Maturing October 29,1964 District Boston .......... New York . . . Philadelphia . Cleveland . . . . Richmond . . . A tlanta.......... Chicago ........ St. Louis . . . . Minneapolis Kansas City . Dallas ............. San Francisco Total Applied for $ 34,249,000 1,672,564,000 36,101,000 19,147,000 9,175,000 26,331,000 185,400,000 29,654,000 20,680,000 29,627,000 18,543,000 121,919,000 $2,203,390,000 Applied for Accepted $ 13,849,000 881,264,000 16,051,000 19,147,000 9,175,000 21,711,000 118,160,000 22,710,000 13,150,000 27,507,000 9,923,000 47,739,000 $ 1,200,386,000a $ 3,246,000 1,461,460,000 8,299,000 81,804,000 2,643,000 9,589,000 102,376,000 18,065,000 5,364,000 17,256,000 9,314,000 169,611,000 $1,889,027,000 a Includes $213,354,000 noncompetitive tenders accepted at the average price of 99.122. b Includes $57,315,000 noncompetitive tenders accepted at the average price of 98.184. Accepted $ 1,246,000 740,700,000 2,099,000 42,687,000 2,643,000 5,639,000 37,366,000 5,484,000 3,281,000 16,156,000 4,276,000 40,186,000 $901,763,000b