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FEDERAL RESERVE BANK OF NEW YORK Fiscal Agent of the United States Circular No. 9678 May 4, 1984 Offering of $8,000,000,000 of 364-Day Treasury Bills Dated May 1 7 ,1 9 8 4 D ue May 16, 1985 To A lt Banking Institutions, and Others Concerned, in the Second Federal Reserve District: Following is the text of a notice issued by the Treasury Department: The Department of the Treasury, by this public notice, invites tenders for approximately $8,000 million of 364-day Treasury bills to be dated May 17, 1984, and to mature May 16, 1985 (CUS1P No. 912794 GL2). This issue will provide about $200 million new cash for the Treasury, as the maturing 52-week bill was originally issued in the amount of $7,795 million. The bills will be issued for cash and in exchange for Treasury bills maturing May 17, 1984. In addition to the maturing 52-week bills, there are $12,652 million o f 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 $1,534 million, and Federal Reserve Banks for their own account hold $4,651 million of the maturing bills. These amounts represent the combined holdings o f 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 o f 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 o f tenders for such accounts exceeds the aggregate amount o f maturing bills held by them. For purposes of determining such additional amounts, foreign and international monetary authorities are considered to hold $130 million o f 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 o f bills will be issued entirely in book-entry form in a minimum amount o f $10,000 and in any higher $5,000 multiple, on the records either o f the Federal Reserve Banks and Branches, or of the Department o f the Treasury. Tenders will be received at Federal Reserve Banks and Branches and at the Bureau o f the Public Debt, Washington, D.C. 20239, prior to 1:00 p.m., Eastern Daylight Saving time, Tuesday, May 15, 1984. 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 state the par amount o f bills bid for, which must be a minimum o f $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 o f 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 o f 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 o f 12:30 p.m ., Eastern time on the day o f 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. A noncompetitive bidder may not have entered into an agreement, or may not make an agreement with respect to the purchase or sale or other disposition of any noncompetitive awards of this issue in this auction prior to the designated closing time for receipt of tenders. 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 o f 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 o f accepted bids. Competitive bidders will be advised o f 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 $1,000,000 or less without stated yield from any one bidder will be accepted in full at the weighted average bank discount rate (in two decimals) o f accepted com petitive bids. The calculation o f 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 o f Federal Reserve Banks and Branches must be made or completed at the Federal Reserve Bank or Branch on May 17, 1984, in cash or other immediately-available funds or in Treasury bills maturing May 17, 1984. 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. In addition, Treasury Tax and Loan Note Option Depositaries may make payment for allotments of bills for their own accounts and for account of customers by credit to their Treasury Tax and Loan Note Accounts on the settlement date. Under Section 454(b) o f 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 o f this discount is determined by multiplying such discount by a fraction, the numerator of which is the number o f days the taxpayer held the bill and the denominator o f which is the number o f days from the day following the taxpayer’s date of purchase to the maturity of 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. Department o f the Treasury Circulars, Public Debt Series— Nos. 26-76 and 27-76, and this notice, prescribe the terms o f these Treasury bills and govern the conditions o f their issue. Copies of the circulars and tender forms may be obtained from any Federal Reserve Bank or Branch, or from the Bureau o f the Public Debt. Tenders will be received prior to 1:00 p.m., Eastern Daylight Saving time, Tuesday, May 15, 1984 at the Securities Department 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. Settle ment must be made in cash or other immediately available funds or in Treasury securities maturing on or before the issue date. Treasury Tax and Loan Note Option Depositaries may make payment fo r Treasury bills by credit to their Treasury Tax and Loan Note Accounts. ANTHONY M. So l o m o n , P r e s id e n t. Please note: The auction will be held Tuesday, May 15, 1984.
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