Full text of Federal Reserve Bank of New York Circulars : 9491. Offering of $7,750,000,000 of 364-Day Treasury Bills

The full text on this page is automatically extracted from the file linked above and may contain errors and inconsistencies.

FEDERAL RESERVE BANK
OF NEW YORK
Fiscal Agent of the United States
Circular No. 9491
May 6, 1983

Offering of $7,750,000,000 o f 364-Day Treasury Bills
Dated May 19,1983

Dee May 17,1984

To All Incorporated Banks and Trust Companies, and Others
Concerned, in the Second Federal Reserve District:
F o ll o w i n g is t h e t e x t o f a n o t i c e is s u e d b y t h e T r e a s u r y D e p a r t m e n t :

The Department of the Treasury, by this public notice, invites tenders
for approximately $7,750 million of 364-day Treasury bills to be dated
May 19, 1983, and to mature May 17, 1984 (CUSIP No. 912794 EG5).
This issue will provide about $2,175 million new cash for the Treasury, as
the maturing 52-week bill was originally issued in the amount of $5,581
million.
The bills will be issued for cash and in exchange for Treasury bills
maturing May 19, 1983. In addition to the maturing 52-week bills, there
are $11,853 million of maturing bills which were originally issued as
13-week and 26-week bills. The disposition of this latter amount will be
announced next week. Federal Reserve Banks as agents for foreign and
international monetary authorities currently hold $1,530 million, and
Federal Reserve Banks for their own account hold $3,410 million of the
maturing bills. These amounts represent the combined holdings of such
accounts for the three issues of maturing bills. Tenders from Federal
Reserve Banks for themselves and as agents for foreign and international
monetary authorities will be accepted at the weighted average bank dis­
count rate of accepted competitive tenders. Additional amounts of the
bills may be issued to Federal Reserve Banks, as agents for foreign and in­
ternational monetary authorities, to the extent that the aggregate amount
of tenders for such accounts exceeds the aggregate amount of maturing
bills held by them. For purposes of determining such additional amounts,
foreign and international monetary authorities are considered to hold
$517 million of the original 52-week issue.
The bills will be issued on a discount basis under competitive and non­
competitive bidding, and at maturity their par amount will be payable
without interest. This series of bills will be issued entirely in book-entry
form in a minimum amount of $10,000 and in any higher $5,000 multiple,
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 1:30 p.m.,
Eastern Daylight Saving time, Thursday, May 12, 1983. Form PD 4632-1
should be used to submit tenders for bills to be maintained on the bookentry records of the Department of the Treasury.
Each tender must state the par amount of bills bid for, which must be
a minimum of $10,000. Tenders over $10,000 must be in multiples of
$5,000. Competitive tenders must also show the yield desired, expressed
on a bank discount rate basis with two decimals, e.g., 7.15%. 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 in and borrowings on such securities may sub­
mit tenders for account of customers, if the names of the customers and
the amount for each customer are furnished. Others are only permitted to
submit tenders for their own account. Each tender must state the amount
of any net long position in the bills being offered if such position is in
excess of $200 million. This information should reflect positions held as
of 12:30 p.m., Eastern time on the day of the auction. Such positions
would include bills acquired through “ when issued” trading, and futures
and forward transactions. Dealers who make primary markets in Govern­
ment securities and report daily to the Federal Reserve Bank of New York

their positions in and borrowings on such securities, when submitting
tenders for customers, must submit a separate tender for each customer
whose net long position in the bills being offered exceeds $200 million.
Payment for the full par amount of the bills applied for must accom­
pany 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 on all accepted tenders for the difference between the par payment
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 invest­
ment securities for bills to be maintained on the book-entry records of
Federal Reserve Banks and Branches. 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 yield range of accepted bids. Competitive bidders will
be advised of the acceptance or rejection of their tenders. The Secretary
of the Treasury expressly reserves the right to accept or reject any or all
tenders, in whole or in part, and the Secretary’s action shall be final. Sub­
ject to these reservations, noncompetitive tenders for $500,000 or less
without stated yield from any one bidder will be accepted in full at the
weighted average bank discount rate (in two decimals) of accepted com­
petitive bids. The calculation of purchase prices for accepted bids will be
carried to three„decimal places on the basis of price per hundred, e.g.,
99.923, and the determinations of the Secretary of the Treasury shall be
final.
Settlement for accepted tenders for bills to be maintained on the bookentry records of Federal Reserve Banks and Branches must be made or
completed at the Federal Reserve Bank or Branch on May 19, 1983, in
cash or other immediately available funds or in Treasury bills maturing
May 19, 1983. Cash adjustments will be made for differences between the
par value of the maturing bills accepted in exchange and the issue price of
the new bills.
Under Section 454(b) of the Internal Revenue Code, the amount of
discount at which these bills are sold is considered to accrue when the bills
are sold, redeemed, or otherwise disposed of. Section 1232(a)(4) provides
that any gain on the sale or redemption of these bills that does not exceed
the ratable share of the acquisition discount must be included in the
Federal income tax return of the owner as ordinary income. The
acquisition discount is the excess of the stated redemption price over the
taxpayer’s basis (cost) for the bill. The ratable share of this discount is
determined by multiplying such discount by a fraction, the numerator of
which is the number of days the taxpayer held the bill and the
denominator of which is the number of days from the day following the
taxpayer’s date of purchase to the maturity of the bill. If the gain on the
sale of a bill exceeds the taxpayer’s ratable portion of the acquisition
discount, the excess gain is treated as short-term capital gain.
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 Reserve Bank or Branch,
or from the Bureau of the Public Debt.

Tenders will be received up to 1:30 p.m., Eastern Daylight Saving time, Thursday, May 12, 1983 at the Securities
Department of this Bank’s Head Office, at our Buffalo Branch, or at the Bureau of the Public Debt. A revised tender form
is enclosed. Please be sure to use that form to submit the tender and return it in the enclosed envelope. 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 submitted by telegraph, subject to written confirmation; no tenders may be submitted by telephone. Pay­
ment 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.




An tho ny M. So l o m o n ,
President.