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FEDERAL RESERVE BANK OF NEW YORK Fiscal Agent of the United States Circular No. 9985 January 10, 1986 O ffering o f $ 9 ,0 0 0 ,0 0 0 ,0 0 0 o f 3<54~Bay T reasu ry Ellis D ated Ja n u ary 23,1986 D ue Ja n u ary 2 2,1987 To A ll 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 $9,000 million of 364-day Treasury bills to be dated January 23, 1986, and to mature January 22, 1987 (CUSIP No. 912794 LT9). This issue will provide about $450 million of new cash for the Treasury, as the maturing 52-week bill is outstanding in the amount of $8,556 million. Tenders will be received at the Federal Reserve Banks and Branches and at the Bureau of the Public Debt, Washington, D.C. 20239, prior to 1:00 p.m ., Eastern Standard time, Thursday, January 16, 1986. 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. The bills will be issued for cash and in exchange for Treasury bills maturing January 23, 1986. In addition to the maturing 52-week bills, there are $14,230 million of maturing 13-week and 26-week bills and $4,010 million of maturing 69-day cash management bills. The disposi tion of these two latter amounts will be announced next week. Federal Reserve Banks currently hold $2,129 million as agents for foreign and in ternational monetary authorities, and $4,516 million for their own ac count. These amounts represent the combined holdings of such accounts for the four issues of maturing bills. Tenders from Federal Reserve Banks for their own account 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 $50 million of the original 52-week issue. Tenders for bills to be maintained on the book-entry records of the Department of the Treasury should be submitted on Form PD 4632-1. 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. A single bidder, as defined in Treasury’s single bidder guidelines, shall not submit noncompetitive tenders totaling more than $1,000,(XX). Banking institutions and 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 may submit 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 transac tions as well as holdings of outstanding bills with the same maturity date as the new offering, e.g., bills with three months to maturity previously offered as six-month bills. 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 bill being offered exceeds $200 million. A noncompetitive bidder may not have entered into an agreement, nor make an agreement to purchase or sell or otherwise dispose of any non competitive awards of this issue being auctioned 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 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 each issue for $1,000,000 or less without stated yield from any one bidder will be ac cepted in full at the weighted average bank discount rate (in two decimals) of accepted competitive bids for the respective issues. 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 the issue date, in cash or other immediately-available funds or in Treasury bills maturing on that date. 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. In general, if a bill is purchased at issue after July 18, 1984, and held to maturity, the amount of discount is reportable as ordinary income in the Federal income tax return of the owner at the time of redemption. Accrual-basis taxpayers, banks, and other persons designated in section 1281 of the Internal Revenue Code must include in income the portion of the discount for the period during the taxable year such holder held the bill. If the bill is sold or otherwise disposed of before maturity, the por tion of the gain equal to the accrued discount will be treated as ordinary income. Any excess may be treated as capital gain. Department of the Treasury Circulars, Public Debt Series—Nos. 26-76 and 27-76, Treasury’s single bidder guidelines, and this notice prescribe the terms of these Treasury bills and govern the conditions of their issue. Copies of the circulars, guidelines, 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 prior to 1:00 p .m ., Eastern Standard time, Thursday, January 16, 1986 at the Securities Department o f this B an k ’s Head O ffice, at our B u ffalo Branch, or at the Bureau o f the Public D ebt. A tender form is enclosed. Please be sure to use that form to submit the tender and return it in the enclosed envelope. Form s for submitting tenders directly to the Treasury are available from the Government Bond Division o f this Bank. Tenders not requiring a deposit may be submitted by telegraph, subject to written confirm ation; 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 for Treasury bills by credit to their Treasury Tax and Loan Note Accounts. Results o f the previous 52-week bill offering are shown on the reverse side o f this circular. E . G e r a l d C o r r ig a n , President. (OVER) RESULTS OF PREVIOUS 52-WEEK OFFERING OF TREASURY BILLS (ISSUED DECEMBER 26, 1985) SANCE OF ACCEPTED COMPETITIVE BIDSt Biieeunt Investment Rate Rate (Equivalent Coupon“Issue Yield) Fries 7o131 tiOW “ II 92.872 !»§>1$ High 7.10% 12,801 Average ** 7«0Si 7i57% S30842 Tenders at the high discount rate were allotted 6%, Loe#tl©n Boston TENDERS DECEIVED AMD ACCEPTED Sin Thousand®) Accepted Received Philadelphia Cleveland iiehmoni Atlanta Chicago 'ito Loui® Minneapolis K©fa®a§ City ©alias ian Francisco Treaiury TOTALS area Cafnpititivd Subtotal* Public feattal R®6s®w® Foreign ©ffieial lnsfeitytl>@n© totals $ S,74§ 16,769,135 4#fi?§ 17,215 24,010 Sff4X0 1,428,910 8,915 9,070 21,400 4,840 2,970,350 ll^OSI *19,434,130 $ $17,401,221 3.31*111 $1^,639,536 1,600,000 $6,987,311 __ 238,301 $77225,630 1,600,000 _ 181,000 ¥19,424,530 185.000 $9,010,030 S,745 7 ,294,6*8 4,®?5 17,215 24,010 8,410 618,790 S,93S ' 1,070 21p400 4,14® 871#850 §i,ess $9,010,630 An additional$2§Sf000 ihout&na of the bills will be issued foreign official institutions for new cash*
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