O F F E R IN G O F T W O SE R IE S O F T R E A S U R Y B IL L S

FE D E R A L R ESER VE B A N K O F N E W YORKFiscal Agent of the United States

[Circular No. 8 6 0 5 1

July 18, 1979 J

$ 3 ,0 0 0 ,0 0 0 ,0 0 0 o f 91-D ay B ills , A d d itio n a l A m o u n t, S eries D ated A p ril 2 6 , 1 9 7 9 , D u e O ctob er 2 5 , 1979(T o B e Issued J u ly 2 6 , 1 9 7 9 )

$ 3 ,0 0 0 ,0 0 0 ,0 0 0 o f 182-D ay B ills , D ated J u ly 2 6 , 1 9 7 9 , D u e Jan u ary 2 4 , 1 9 8 0To All Incorporated Banks and Trust Companies, and Others

Concerned, in the Second Federal Reserve District:F o llo w in g is the tex t o f a notice issu ed by the T reasu ry D ep artm ent:

The Department of the Treasury, by this public notice, invites tenders for two series of Treasury bills totaling approximately $6,000 million, to be issued July 26, 1979. This offering will not provide new cash for the Treasury as the maturing bills are out­standing in the amount of $6,020 million. The two series offered are as follows:

91-day bills (to maturity date) for approximately $3,000 million, representing an additional amount of bills dated April 26, 1979, and to mature October 25, 1979 (CUSIP No. 912793 2S4), originally issued in the amount of $3,009 million, the additional and original bills to be freely interchangeable.

182-day bills for approximately $3,000 million to be dated July 26, 1979, and to mature January 24, 1980 (CUSIP No. 912793 3N4).

Both series of bills will be issued for cash and in exchange for Treasury bills maturing July 26, 1979. Federal Reserve Banks, for themselves and as agents of foreign and international monetary authorities, presently hold $2,564 million of the maturing bills. These accounts may exchange bills they hold for the bills now being offered at the weighted average prices of accepted competi­tive tenders.

The bills will be issued on a discount basis under competitive and noncompetitive bidding, and at maturity their par amount will be payable without interest. Both 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, Monday, July 23, 1979. Form PD 4632-2 (for 26-week series) or Form PD 4632-3 (for 13-week series) 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 be for a minimum of $10,000. Tenders over $10,000 must be in multiples of $5,000. In the case of competitive tenders the price offered must be expressed on the basis of 100, with not more than three decimals, e.g., 99.925. 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 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 at the close of business on the day prior to the auction. Such positions would in­clude bills acquired through “when issued” trading, and futures and forward transactions 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 Government 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.

Payment for the full par amount of the bills applied for must accompany 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 investment securities for bills to be maintained on the book-entry records of Federal Reserve Banks and Branches. A deposit of 1 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 price 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. Subject to these reservations, noncompetitive tenders for each issue for $500,000 or less without stated price from any one bidder will be accepted in full at the weighted average price (in three decimals) of accepted competitive bids for the respective issues.

Settlement for accepted tenders for bills to be maintained on the book-entry records of Federal Reserve Banks and Branches must be made or completed at the Federal Reserve Bank or Branch on July 26, 1979, in cash or other immediately available funds or in Treasury bills maturing July 26, 1979. 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 Sections 454(b) and 1221(5) of the Internal Revenue Code of 1954 the amount of discount at which these bills are sold is considered to accrue when the bills are sold, redeemed Of other­wise disposed of, and the bills are excluded from considera(iorh aj capital assets. Accordingly, the owner of these bills (other ^an life insurance companies) must include in his or her Federa^ in­come tax return, as ordinary gain or loss, the difference between the price paid for the bills, whether on original issue or on sub­sequent purchase, and the amount actually received either upon sale or redemption at maturity during the taxable year for which the return is made.

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.

T h is Bank w ill receive tenders for both series up to 1 :30 p .m ., E astern D ay ligh t S a v in g tim e, M onday, Ju ly 23, 1979, at the Secu rities D epartm ent of its H ead O ffice and its B uffalo Branch. T end er form s for the respective series are enclosed. P lease use the appropriate form s to subm it tenders and return them in the enclosed en velope m arked “ T en ­der for T reasu ry B ills .” F orm s for subm itting tenders d irectly to the T reasu ry are available from the T reasu ry and A gen cy Issu es D iv isio n of this Bank. T en d ers not requ iring a deposit m ay be subm itted by telegraph, subject to w rit­ten co n form ation ; no tenders m ay be subm itted by telephone. Payment for 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 maturing Treasury bills.

R esu lts o f the last w eek ly offering of T reasu ry b ills are show n on the reverse side of this circular.

P a u l A . V o l c k e r ,

President.(OVER)

Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

RESULTS OF LAST WEEKLY OFFERING OF TREASURY BILLS (TWO SERIES TO BE ISSUED JULY 19, 1979)

Range of Accepted Competitive Bids

gi-Day Treasury Bills 18 2-Day Treasury BillsMaturing October 18 ,19 7 9 Maturing January 17 , 1980

DiscountPrice Rate

H i g h ........................................................... 97 .647 a 9.309%L o w ............................................................. 9 7 .6 3 6 9 .352%A v e r a g e .................................................... 9 7 .6 4 0 9 .336%

Investment Rate 1 Price

DiscountRate

Investment Rate 1

9.69% 95.349 9.200% 9.81%9.74% 95 .304 9 .289% 9.91 %9.72% 95.321 9.255% 9.87%

1 Equivalent coupon-issue yield. a Excepting one tender of $10,000.

(1 9 percent of the am ount of 9 1 -day b ills bid for at the low price w as accep ted .)

(2 3 percent of the am ount of 182-day b ills bid for at the low price w as accep ted .)

Total Tenders Received and Accepted

g i-Day Treasury Bills 18 2-Day Treasury BillsMaturing October 18 ,19 7 9 Maturing January 17 ,19 8 0

By F. R. District (and U.S. Treasury) Received Accepted Received AcceptedB oston......................................... $ 57,140,000 $ 37,140,000 $ 47,055,000 $ 27,055.000New Y o rk .................................. 3,838,865,000 2,365,145,000 3,335,335,000 2,460,585,000Philadelphia............................... 26,885,000 26,885,000 17,675,000 17,675,000Cleveland..................................... 35,360,000 35,360,000 24,500,000 24,500,000Richm ond.................................... 33,890,000 32,040,000 22,635,000 22,635,000A tlan ta ......................................... 44,860,000 44,860,000 29,130,000 29,130,000Chicago........................................ 214,135,000 85,035,000 258,755,000 143,755,000St. L ou is...................................... 29,070,000 19,070,000 27,910,000 21,910,000Minneapolis................................ 20,895,000 20,895,000 20,995,000 20,995,000Kansas C ity ................................ 32,130,000 29,900,000 31,775,000 31,775,000D allas........................................... 16,860,000 16,860,000 13,920,000 13,920,000San Francisco............................ 338,110,000 148,110,000 247,720.000 142,720,000

U.S. T reasu ry ............................ 39,075,000 39,075,000 43,985,000 43,985,000

T otals................................ $4,727,275,000 $2,900,375,000 $4,121,390,000 $3,000,640,000

By class of bidder Public

Competitive ........................... $2,745,290,000 $ 918,390,000 $2,635,765,000 $1,515,015,000Noncompetitive ..................... 547,945,000 547,945,000 432,870,000 432,870,000

Subtotals ......................... $3,293,235,000 $1,466,335,000 $3,068,635,000 $1,947,885,000Federal Reserve, and Foreign

Official Institutions .............. 1,434,040,000 1,434,040,000 1,052,755,000 1,052,755,000

T otals ................................. $4,727,275,000 $2,900,375,000 $4,121,390,000 $3,000,640,000

Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis