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FEDERAL RESERVE BANK OF NEW YORK Fiscal Agent of the United States Circular N o . 9636 February 10, 1984 Offering of $8,250,000,000 of 364-Bay Treasury Bills Dated February 23,1984 Due February 21,1985 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: The Departm ent o f the Treasury, by this public n otice, invites tenders for approxim ately $8,250 m illion o f 364-day Treasury bills to be dated February 23, 1984, and to m ature February 21, 1985 (C U SIP N o . 912794 G H 1). This issue w ill provide ab ou t $475 m illion new cash for the Treasury, as the m aturing 52-week bill was originally issued in the am ount o f $7,768 m illion. The bills will be issued for cash and in exchange for Treasury bills maturing February 23, 1984. In addition to the m aturing 52-week bills, there are $12,466 m illion o f m aturing bills which were originally issued as 13-week and 26-week bills. The disp osition o f this latter am ount will be announced next week. Federal Reserve Banks as agents for foreign and international m onetary authorities currently hold $1,679 m illion, and Federal Reserve Banks for their ow n account hold $4,098 m illion o f the m aturing bills. These am ounts represent the com bined holdings o f such accounts for the three issues o f m aturing bills. Tenders from Federal Reserve Banks for them selves and as agents for foreign and international m onetary authorities will be accepted at the weighted average bank dis count rate o f accepted com petitive tenders. A dd ition al am ounts o f the bills m ay be issued to Federal Reserve Banks, as agents for foreign and in ternational m onetary authorities, to the extent that the aggregate am ount o f tenders for such accounts exceeds the aggregate am ount o f maturing bills held by them . For purposes o f determ ining such additional am ounts, foreign and international m onetary authorities are considered to hold $195 m illion o f the original 52-week issue. The bills w ill be issued on a discount basis under com petitive and n on com petitive bidding, and at m aturity their par am ount w ill be payable w ithout interest. This series o f bills w ill be issued entirely in book-entry form in a m inim um am ount o f $10,000 and in any higher $5,000 m ultiple, on the records either o f the Federal Reserve Banks and Branches, or o f the D epartm ent o f the Treasury. Tenders will be received at Federal Reserve Banks and Branches and at the Bureau o f the P ublic D ebt, W ashington, D .C . 20226, prior to 1:30 p .m ., Eastern Standard tim e, Thursday, February 16, 1984. Form P D 4632-1 should be used to subm it tenders for bills to be m aintained on the book-entry records o f the D epartm ent o f the Treasury. Each tender m ust state the par am ount o f bills bid for, w hich m ust be a m inim um o f $10,000. Tenders over $10,000 m ust be in m ultiples o f $5,000. C om petitive tenders m ust also show the yield desired, expressed on a bank discount rate basis with tw o decim als, e.g ., 7.1597o. Fractions m ay not be used. Banking institutions and dealers w ho m ake primary m arkets in G overnm ent securities and report daily to the Federal Reserve Bank o f N ew York their positions in and borrow ings on such securities m ay sub m it tenders for account o f custom ers, if the nam es o f the custom ers and the am ount for each custom er are furnished. Others are only perm itted to subm it tenders for their ow n account. Each tender must state the am ount o f any net long p osition in the bills being offered if such position is in excess o f $200 m illion. This in form ation should reflect p osition s held as o f 12:30 p .m ., Eastern tim e on the day o f the auction. Such positions w ould include bills acquired through “ w hen issu ed ” trading, and futures and forward transactions. Dealers w ho m ake prim ary m arkets in G overn m ent securities and report daily to the Federal Reserve Bank o f N ew York their positions in and borrowings on such securities, when subm itting tenders for custom ers, m ust subm it a separate tender for each custom er w hose net long p osition in the bills being offered exceeds $200 m illion. A noncom petitive bidder m ay not have entered into an agreem ent, or m ay not m ake an agreem ent with respect to the purchase or sale or other d isposition o f any noncom petitive awards o f this issue in this auction prior to the designated closing tim e for receipt o f tenders. Paym ent for the full par am ount o f the bills applied for m ust accom pany all tenders subm itted for bills to be m aintained on the book-entry records o f the Departm ent o f the Treasury. A cash adjustm ent will be m ade on all accepted tenders for the difference betw een the par paym ent subm itted and the actual issue price as determ ined in the auction. N o deposit need accom pany tenders from incorporated banks and trust com panies and from responsible and recognized dealers in invest m ent securities for bills to be m aintained on the book-entry records o f Federal Reserve Banks and Branches. A deposit o f 2 percent o f the par am ount o f the bills applied for m ust accom pany tenders for such bills from others, unless an express guaranty o f paym ent by an incorporated bank or trust com pany accom panies the tenders. Public announcem ent will be m ade by the D epartm ent o f the Treasury o f the am ount and yield range o f accepted bids. C om petitive bidders will be advised o f the acceptance or rejection o f their tenders. The Secretary o f the Treasury expressly reserves the right to accept or reject any or all tenders, in w hole or in part, and the Secretary’s action shall be final. Sub ject to these reservations, noncom petitive tenders for $1,000,000 or less w ithout stated yield from any one bidder w ill be accepted in full at the weighted average bank discount rate (in tw o decim als) o f accepted com petitive bids. The calculation o f purchase prices for accepted bids will be carried to three decim al places on the basis o f price per hundred, e .g ., 99.923, and the determ inations o f the Secretary o f the Treasury shall be final. Settlem ent for accepted tenders for bills to be m aintained on the bookentry records o f Federal Reserve Banks and Branches m ust be m ade or com pleted at the Federal Reserve Bank or Branch on February 23, 1984, in cash or other im m ediately available funds or in Treasury bills m aturing February 23, 1984. Cash adjustm ents w ill be m ade for differences between the par value o f the m aturing bills accepted in exchange and the issue price o f the new bills. U nder Section 454(b) o f the Internal Revenue C ode, the am ount o f discount at which these bills are sold is considered to accrue when the bills are sold, redeem ed, or otherw ise disposed o f. Section 1232(a)(4) provides that any gain on the sale or redem ption o f these bills that does n ot exceed the ratable share o f the acquisition discount m ust be included in the Federal incom e tax return o f the owner as ordinary incom e. The acquisition discount is the excess o f the stated redem ption price over the taxpayer’s basis (cost) for the bill. The ratable share o f this discount is determ ined by m ultiplying such discount by a fraction, the num erator o f which is the number o f days the taxpayer held the bill and the denom inator o f which is the number o f days from the day follow in g the taxpayer’s date o f purchase to the m aturity o f the bill. If the gain on the sale o f a bill exceeds the taxpayer’s ratable portion o f the acquisition discount, the excess gain is treated as short-term capital gain. D epartm ent o f the Treasury Circulars, P ub lic D ebt Series— N os. 26-76 and 27-76, and this n otice, prescribe the term s o f these Treasury bills and govern the conditions o f their issue. C opies o f the circulars and tender form s m ay be obtained from any Federal Reserve Bank or Branch, or from the Bureau o f the P ublic D ebt. Tenders will be received prior to 1:30 p.m ., Eastern Standard time, Thursday, February 16, 1984 at the Securities Departm ent of this Bank’s Head Office, at our Buffalo Branch, or at the Bureau of the Public Debt. A 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 m ent fo r the Treasury bills cannot be made by credit through the Treasury Tax and Loan Account. Settlement m ust be made in cash or other immediately available fu n d s or in Treasury securities maturing on or before the issue date. A n t h o n y M . So l o m o n , President.
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