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FEDERAL RESERVE BANK OF NEW YORK Fiscal Agent of the United States Circular No. 9035 March 13, 1981 Offering of $4,500,000,000 of 364-Day Treasury Bills Due March 25,1982 Dated March 26,1981 To A ll Incorporated Banks and Trust Companies, and Others Concerned, in the Second Federal Reserve District: Following is the text of a notice issued today by the Treasury Department: T h e D ep artm en t o f the T reasury, b y this p u b lic n otice, invites tenders fo r a p p roxim a tely $ 4,5 00 m illion o f 3 64 -d a y T reasury bills to be dated M a rch 26, 1981, an d to m ature M a rch 25, 1982 (C U S IP N o . 912793 8 H 2 ], T his issue will p ro v id e a b o u t $500 m illion new cash fo r the T reasury as the m aturin g 5 2-w eek bill was orig in ally issued in the a m ou n t o f $4,016 m illion . T h e bills will be issued fo r cash and in exch a n ge fo r T reasury bills m aturing M a rch 26, 1981. In a d d ition to the m aturing 52-w eek bills, there are $7,868 m illion o f m aturing bills w h ich were origin ally issued as 13-w eek and 2 6-w eek bills. T h e d isp osition o f this latter a m ou n t will be a n n ou n ced next w eek. Federal R eserve Banks as agents fo r fo re ig n and international m on etary authorities currently h o ld $1,6 04 m illion , and Federal R eserve Banks fo r their o w n a cco u n t h o ld $3,1 12 m illion o f the m aturin g bills. T hese a m ou n ts represent the co m b in e d hold in gs o f such a ccou n ts fo r the three issues o f m aturing bills. Tenders fro m F ederal R eserve B anks fo r them selves and as agents fo r fo re ig n and international m on etary authorities w ill b e a ccep ted at the w eighted average p rice o f a c cep ted com p etitiv e tenders. A d d itio n a l am ou n ts o f the bills m ay be issued to Federal R eserve B anks, as agents fo r foreig n and international m on etary a u thorities, to the extent that the a ggregate a m ou n t o f tenders fo r such a m ou n ts exceed s the a ggregate a m ou n t o f m aturing bills held b y them . F or pu rp oses o f determ in in g such a d d ition a l a m ou n ts, fo re ig n and international m on etary authorities are con sid ered to h o ld $329 m illion o f the orig in al 52-w eek issue. T h e bills will be issued o n a d iscou n t basis under com p etitive and n o n co m p etitiv e b id d in g , an d at m aturity their par a m ou n t will be p ayable w ith ou t interest. T his series o f bills will be issued entirely in b o o k -e n try fo r m in a m in im u m a m ou n t o f $10 ,00 0 and in any higher $5,0 00 m ultiple, o n the record s either o f the F ederal R eserve Banks and B ranches, o r o f the D ep artm en t o f the T reasury. T enders will b e received at F ederal R eserve B anks and Branches and at the Bureau o f the P u b lic D eb t, W ash in g ton , D .C . 20226, up to 1:30 p .m ., Eastern S tandard tim e, T h u rsd a y , M a rch 19, 1981. F orm P D 4632-1 sh ou ld b e used to subm it tenders fo r bills to be m ain tained o n the b o o k entry record s o f the D ep artm en t o f the T reasury. E ach tender m ust b e fo r a m in im u m m ust b e in m ultiples o f $ 5,0 00 . In the p rice o ffe r e d m ust b e expressed o n the three decim als, e .g ., 9 9 .9 2 5 . F ra ction s o f $ 1 0 ,00 0 . T enders o v e r $ 10,000 case o f com p etitiv e tenders, the basis o f 100, with n o t m o re than m ay n o t be used. B an king institutions and dealers w h o m ak e prim ary m arkets in G o v ern m en t securities an d rep ort d aily to the Federal R eserve B ank o f N ew Y o r k their p osition s in and b o rro w in g s o n such securities m ay sub m it tenders fo r a cco u n t o f cu stom ers, i f the nam es o f the cu stom ers and the a m ou n t fo r ea ch cu stom er are fu rn ish ed . O thers are o n ly perm itted to subm it tenders fo r their ow n a cco u n t. E ach tender m ust state the a m ou n t o f any net lo n g p o sitio n in the bills b eing o ffe r e d i f such p ositio n is in ex cess o f $200 m illion . T h is in fo rm a tio n sh ou ld reflect p osition s held as o f 12:30 p .m ., E astern tim e o n the d ay o f the a u ctio n . S uch p o sitio n s w o u ld in clu d e bills a cq u ired th rou gh “ w h en issued” trad in g, and futures and fo rw a r d transactions. D ealers w h o m ake p rim ary m arkets in G o v e rn m e n t securities and rep ort d aily to the Federal R eserve B ank o f N ew Y o r k their p o sitio n s in and b o rro w in g s o n such securities, w h en subm ittin g tenders fo r cu stom ers, m ust subm it a separate tender fo r each cu sto m e r w h o se net lo n g p o sitio n in the bills being o ffe r e d exceeds $200 m illion . P a ym en t fo r the full par a m ou n t o f the bills a p p lied fo r m ust a c c o m pa n y all tenders subm itted fo r bills to be m ain tained o n the b o o k -e n tr y record s o f the D epartm ent o f the T reasury. A cash a d ju stm en t will be m ad e o n all accep ted tenders fo r the d iffe re n ce betw een the par p a ym en t su b m itted and the actual issue price as determ in ed in the a u ctio n . N o d e p o sit need a cco m p a n y tenders fr o m in co r p o ra te d b an ks and trust co m p a n ie s an d fro m resp on sib le an d re co g n iz e d dealers in invest m ent securities fo r bills to b e m ain tained o n the b o o k -e n tr y re co rd s o f F ederal R eserve Banks an d B ranches. P u b lic a n n ou n cem en t will b e m ad e b y the D ep a rtm en t o f the T rea su ry o f the a m o u n t and p rice range o f a ccep ted b ids. C o m p e titiv e b id d ers will b e ad vised o f the a ccep ta n ce o r re je ctio n o f their tenders. T h e S ecretary o f the T reasury expressly reserves the right to a cce p t o r reject a n y o r all tenders, in w h o le o r in part, and the S ecreta ry’ s a ctio n shall b e fin a l. S u b je ct to these reservations, n o n co m p e titiv e tenders fo r $ 5 0 0 ,0 0 0 o r less w ith ou t stated price fro m any o n e b id d er will be a ccep ted in full at the w eighted average price (in three d ecim als) o f a cce p te d co m p e titiv e b ids. Settlem ent fo r a ccep ted tenders fo r bills to be m ain tained o n the b o o k entry record s o f Federal R eserve B anks an d B ranches m ust be m a d e o r co m p le te d at the Federal R eserve B ank o r B ranch o n M a rch 2 6 , 1981, in cash o r o th er im m ed iately available fu n ds o r in T rea su ry bills m aturin g M a rch 26, 1981. C ash adjustm en ts will b e m ad e f o r d iffe re n ce s b etw een the par value o f m aturin g bills a ccep ted in exch a n g e a n d the issue p rice o f the new bills. U n d er S ection s 4 5 4 (b ) and 1221(5) o f the Internal R even u e C o d e o f 1954 the a m o u n t o f d isco u n t at w h ich these bills are s o ld is co n sid e re d to a ccru e w hen the bills are so ld , red eem ed o r oth erw ise d isp o s e d o f , a n d the bills are e x clu d ed fr o m co n sid e ra tio n as ca p ita l assets. A c c o r d in g ly , the o w n e r o f these bills (o th e r than life insurance co m p a n ie s) m ust in clu d e in his o r her F ederal in co m e tax return, as o rd in a ry ga in o r loss, the d if feren ce b etw een the p rice p a id fo r the bills, w h eth er o n o rig in a l issue o r o n subsequent p urchase, and the a m o u n t a ctually received either u p o n sale o r re d em p tion at m aturity d u rin g the tax a ble year fo r w h ich the return is m ad e. D ep artm en t o f the T reasury C ircu la rs, P u b lic D e b t Series__ N o s . 26-76 and 27-7 6 , an d this n o tice , p rescrib e the term s o f these T rea su ry bills an d g o v e rn the c o n d itio n s o f their issue. C o p ie s o f the circu lars an d tender fo rm s m ay b e o b ta in e d fr o m a n y F ederal R eserve B ank o r B ra n ch , o r fr o m the B ureau o f the P u b lic D eb t. Tenders will be received up to 1:30 p.m., Eastern Standard time, Thursday, March 19, 1981, 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 from the Government Bond Division of this Bank. Tenders not requiring a deposit may be submit ted by telegraph, subject to written confirmation; no tenders may be submitted by telephone. Payment fo r 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 Treasury securities maturing on or before the issue date. A nth ony M . So lo m o n , President.
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