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FED ER AL RESERVE BANK O F NEW YORK Fiscal Agent of the United States [ Circular No. 8 2 6 4 1 January 26, 1978 J Offering of $3,105,000,000 of 364-Day Treasury Bills Dated February 7,1978 Due February 6,1979 To All Incorporated Banks and Trust Companies, and Others Concerned, in the Second Federal Reserve District: Following is the text of a notice issued yesterday by the Treasury Department: The Department of the Treasury, by this public notice, invites tenders for $3,105 million, or thereabouts, of 364-day Treasury bills to be dated February 7, 1978, and to mature February 6, 1979 (C U SIP No. 912793 V45). The bills, with a limited exception, will be available in book-entry form only, and will be issued for cash and in exchange for Treasury bills maturing February 7, 1978. This issue will not provide new money for the Treasury as the maturing issue is outstanding in the amount of $3,105 million, of which $1,914 million is held by the public and $1,191 million is held by Government accounts and the Federal Reserve Banks for them selves and as agents of foreign and international monetary authori ties. Additional amounts of the bills may be issued to Federal Re serve Banks as agents of foreign and international monetary authori ties. Tenders from Government accounts and the Federal Reserve Banks for themselves and as agents of foreign and international monetary authorities will be accepted at the average price of ac cepted tenders. The bills will be issued on a discount basis under competitive and noncompetitive bidding, and at maturity their par amount will be payable without interest. Except for definitive bills in the $100,000 denomination, which will be available only to investors who are able to show that they are required by law or regulation to hold securities in physical form, this series of bills will be issued entirely in book-entry form on the records either of the Federal Reserve Banks and Branches, or of the Department of the Treasury. Tenders will be received at Federal Reserve Banks and Branches and at the Bureau of the Public Debt, Washington, D.C. 20226, up to 12:30 p.m., Eastern Standard time, Wednesday, February 1, 1978. Form PD 4632-1 should be used to submit tenders for bills to be maintained on the book-entry records of the Department of the Treasury. Each tender must be for a minimum of $10,000. Tenders over $10,000 must be in multiples of $5,000. In the case of competitive tenders, the price offered must be expressed on the basis of 100, with not more than three decimals, e.g., 99.925. Fractions may not be used. Banking institutions and dealers who make primary markets in Government securities and report daily to the Federal Reserve Bank of New York their positions with respect to Government securities and borrowings thereon may submit tenders for account of customers, provided the names of the customers are set forth in such tenders. Others will not be permitted to submit tenders except for their own account. Payment for the full par amount of the bills applied for must accompany all tenders submitted for bills to be maintained on the book-entry records of the Department of the Treasury. A cash adjustment will be made for the difference between the par pay ment submitted and the actual issue price as determined in the auction. No deposit need accompany tenders from incorporated banks and trust companies and from responsible and recognized dealers in investment securities, for bills to be maintained on the book-entry records of Federal Reserve Banks and Branches, or for definitive bills, where authorized. A deposit of 2 percent of the par amount of the bills applied for must accompany tenders for such bills from others, unless an express guaranty of payment by an incorporated bank or trust company accompanies the tenders. Public announcement will be made by the Department of the Treasury of the amount and price range of accepted bids. Those submitting competitive tenders will be advised of the acceptance or rejection thereof. The Secretary of the Treasury expressly reserves the right to accept or reject any or all tenders, in whole or in part, and his action in any such respect shall be final. Subject to these reservations, noncompetitive tenders for $500,000 or less without stated price from any one bidder will be accepted in full at the average price (in three decimals) of accepted competitive bids. Settlement for accepted tenders for bills to be maintained on the records of Federal Reserve Banks and Branches must be made or completed at the Federal Reserve Bank or Branch on February 7, 1978, in cash or other immediately available funds or in Treasury bills maturing February 7, 1978; provided, however, that settlement for tenders submitted to the New Orleans Federal Reserve Branch must be completed at that branch by February 8, 1978. If settlement is made on February 8, 1978, with other than Treasury bills matur ing February 7, 1978, payment must include one day’s accrued interest. If settlement is completed on or before February 6, 1978, there will not be a charge for accrued interest. Cash adjustments will be made for differences between the par value of maturing bills accepted in exchange and the issue price of the new bills. Under Sections 454(b) and 1221(5) of the Internal Revenue Code of 1954 the amount of discount at which bills issued hereunder are sold is considered to accrue when the bills are sold, redeemed or otherwise disposed of, and the bills are excluded from considera tion as capital assets. Accordingly, the owner of bills (other than life insurance companies) issued hereunder must include in his Federal income tax return, as ordinary gain or loss, the difference between the price paid for the bills, whether on original issue or on a subsequent purchase, and the amount actually received either upon sale or redemption at maturity during the taxable year for which the return is made. Department of the Treasury Circulars, Public Debt Series—Nos. 26-76 and 27-76, and this notice, prescribe the terms of these Treasury bills and govern the conditions of their issue. Copies of the circulars and tender forms may be obtained from any Federal Re serve Bank or Branch, or from the Bureau of the Public Debt. Tenders will be received up to 12:30 p.m., Eastern Standard time, Wednesday, February 1, 1978 at the Securities Department of this Bank’s Head Office, at our Buffalo Branch, or at the Bureau of the Public Debt. The enclosed form should be used for submitting tenders through a financial institution. Forms for submitting tenders directly to the Treasury are available in the Government Bond Division of this Bank. Tenders not requiring a deposit may be sub mitted by telegraph, subject to written confirmation; no tenders may be submitted by telephone. Payment for the Treas ury 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. P aul A. V olcker, President.
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