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FED ER A L RESER VE BANK OF NEW YORK Fiscal A gent of the United States rCircular No. 7398 * 1 L May 23, 1974 -* Treasury Offers $800 Million Strip of W eekly Bills To All Incorporated Banks and Trust Companies, and Others Concerned, in the Second Federal Reserve District: The following statement was made public yesterday by the Treasury Department: T h e Treasury a n n ou n ced tod a y that it w ill raise $800 m illion b y a u ction ing a “ strip” o f T reasury bills consisting o f additions to eigh t outstanding w eek ly series o f bills. A dd ition s o f $100 m illion w ill b e m ade to bills m aturing each w eek from S eptem ber 19 through N o v e m b e r 7, 1974. T h e auction w ill b e on T hursday, M ay 30, w ith paym en t on W ed n esd a y , June 5. the bills m ay not b e m ade b y cred it to Treasury Tax and L oa n A ccou n ts. Paym ent fo r T he “ strip” o f bills n o w b ein g offered is ex p ected to m eet the T reasury’s cash needs p rior to the p e rio d o f h eavy June tax paym ents. Following is the text of the public notice offering the strip of Treasury bills referred to in the above statement: T h e T reasury D epartm ent, b y this p u b lic n otice, invites tenders fo r addition al am ounts o f eight series o f T reasury bills to the aggregate am ount o f $800,000,000, or thereabouts, fo r cash. T h e a d d i tional bills w ill b e issued June 5, 1974, w ill b e in the am ounts, and w ill b e in ad d ition to the bills originally issued and m aturing, as fo llo w s: Am ount of additional issue $100,000,000 100,000,000 100,000,000 100,000,000 100,000,000 100,000,000 100,000,000 100,000,000 Original issue dates 197 4 Maturity Dates 1 97 4 C U SIP Nos. D ays from June 5, 197 4 to maturity Am ount currently outstanding ( in millions) M arch 21 M arch 28 Septem ber 19 912793 U Q 7 106 $1,801 Septem ber 26 113 1,801 A pril 4 O cto b e r 3 912793 U R 5 912793 US3 120 1,810 April 11 O cto b e r 10 912793 U T 1 127 1,802 A pril A pril 18 25 O cto b e r 17 912793 U U 8 1,804 O cto b e r 24 912793 U V 6 134 141 M ay 2 O cto b e r 912793 U W 4 148 1,802 M ay 9 912793 U X 2 155 1,801 31 N ov em b er 7 $800,000,000 1,801 (A v e r a g e ) 130.5 T h e additional and original bills w ill b e freely interchangeable. Each tender submitted must be in the minimum amount of $80,000. Tenders over $80,000 must be in multiples of $40,000. One-eighth of the amount tendered will be applied to each of the above series of bills. T h e bills offered hereun der w ill b e issued on a discou n t basis under com p etitiv e and n o n com p eti tive b id d in g as hereinafter p ro v id ed , and at maturity their fa c e am ount w ill b e p a y a b le w ith ou t in ter est. T h e y w ill b e issued in bearer form only, and in denom inations o f $10,000, $15,000 $50 000 $100,000, $500,000 and $1,000,000 (m atu rity v a lu e ). T enders w ill b e receiv ed at F ederal R eserve Banks and Branches up to the closin g hour, one-thirty p.m ., Eastern D ayligh t Saving time, T hursday, M a y 30, 1974. T enders w ill n ot b e receiv ed at the T reasury D epartm ent, W ashington. In the case o f com p etitive tenders the p rice o ffered m ust b e ( over) expressed o n the basis o f 100, w ith n ot m ore than three decim als, e.g., 99.925. Fractions m ay n ot b e used. A single p rice must b e subm itted fo r each tender. It is u rg ed that tenders b e m ad e on the printed form s and fo rw a rd e d in the sp ecial en velop es w h ich w ill b e su p p lied b y F ederal R eserve Banks or B ranches o n ap p lica tion therefor. B anking institutions and dealers w h o m ake prim ary markets in G overn m en t securities and report d aily to the F ed era l R eserve Bank o f N e w York their positions w ith resp ect to G overn m en t securities and borrow in g s th ereon m ay subm it tenders fo r a ccou n t o f custom ers p ro v id e d the names o f the custom ers are set forth in su ch tenders. Others w ill n o t b e perm itted to subm it tenders excep t for their o w n account. T enders w ill b e re ce iv e d w ith ou t d ep osit fro m in corp ora ted banks and trust co m panies and from respon sible and re co g n iz e d dealers in investm ent securities. T enders from others must b e a ccom p a n ied b y p a ym en t o f 2 p ercen t o f the fa ce am ount o f Treasury bills ap p lied for, unless the tenders are a cco m p a n ie d b y an express guaranty o f paym en t b y an in corp ora ted bank o r trust com pan y. Im m ed ia tely after the closin g hour, tenders w ill b e op e n e d at the F ed era l R eserve Banks and B ranches, fo llo w in g w h ich p u b lic a n nou n cem en t w ill b e m ade b y the T reasury D epartm en t o f the am ou n t and p rice range o f a cce p te d bids. O n ly those subm itting com p etitive tenders w ill b e advised o f the a ccep ta n ce or rejection th ereof. T h e Secretary o f the T reasury expressly reserves the right to a cce p t or reject any o r all tenders, in w h o le or in part, and his action in any such respect shall b e final. S u b ject to these reservations, n on com p etitiv e tenders fo r $160,000 or less (in amounts as set forth in the seco n d p a ra g ra p h ) w ith ou t stated p rice from any on e b id d e r w ill b e a cce p te d in fu ll at the average p rice (in three d e cim a ls) o f a cce p te d com p etitiv e b ids. Settlem ent fo r a cce p te d tenders in a ccord a n ce w ith the b id s m ust b e m a d e o r co m p le te d at the F ed eral R eserve Bank in cash o r other im m ediately available funds on June 5, 1974. U n d er Sections 4 5 4 ( b ) and 1 2 2 1 (5 ) o f the Internal R even u e C o d e o f 1954, the am ount o f discou n t at w h ich bills issued h ereun der are sold is con sid ered to accru e w h en the bills are sold, red eem ed or oth erw ise d isp osed o f, and the bills are ex clu d e d from consideration as capital assets. A ccord in g ly, the ow n er o f T reasury bills (o th e r than life insurance co m p a n ie s) issued hereun der m ust in clu d e in his in com e tax return, as ord in ary gain or loss, the differen ce b etw een the p rice p a id fo r the bills, w hether on original issue o r o n su bsequ en t purchase, and the am ount actually receiv ed either u p on sale or red em p tion at m aturity du rin g the taxable year fo r w h ich the return is m ade. Purchasers o f a strip o f the b ills offered h ereun d er should, fo r tax purposes, take such bills on to their b ook s on the basis o f their pu rchase p rice p rora ted to ea ch o f the eigh t outstanding issues using as a basis fo r proration the closin g m arket prices fo r each o f the issues on June 5, 1974. (F e d e ra l R eserve Banks w ill have available a list o f these m arket prices, b a se d on the m ean b e tw e e n the b id and asked quotations furnished b y the F ed era l R eserve Bank o f N e w Y o rk .) T reasury D ep a rtm en t C ircu lar N o. 418 (cu rren t rev ision ) and this n otice p rescribe the terms o f the Treasury bills and g overn the con ditions o f their issue. C op ies o f the circular m ay b e obtained from any F ed era l R eserve Bank o r Branch. This Bank will receive tenders up to 1:30 p.m., Eastern Daylight Saving time, Thursday, May 30, 1974, at the Securities Department of its Head Office and at its Buffalo Branch. Please use the enclosed tender form to submit a tender, and return it in the enclosed envelope marked “Tender for Treasury Bills.” Tenders not requiring a deposit may be submitted by telegraph, subject to written confirmation; no tenders may be submitted by telephone. Payment for the strip of bills cannot be made by credit through the Treasury Tax and Loan Account. Settlement must be made in cash or other immediately available funds. A lfred H a y e s , President.