Annual report of the Secretary of the Treasury on the state of the finances for the year .. . 36 percent in March. Since savings type institutions were much more heavily invested inthe obligations involved in the senior refundings, they likewise weremuch more interested in extending the maturities of their medium-term holdings than they had been in exchanging their short-termsecurities for medium-term. In October 1960, insurance companiesand mutual savings banks exchanged 49 percent of their medium-termsecurities for the new long-term offerings, and in September 1961 theyexchanged 62 percent.
Annual report of the Secretary of the Treasury on the state of the finances for the year .. . 36 percent in March. Since savings type institutions were much more heavily invested inthe obligations involved in the senior refundings, they likewise weremuch more interested in extending the maturities of their medium-term holdings than they had been in exchanging their short-termsecurities for medium-term. In October 1960, insurance companiesand mutual savings banks exchanged 49 percent of their medium-termsecurities for the new long-term offerings, and in September 1961 theyexchanged 62 percent. Commercial banks held only smaU amountsof the issues involved in these two exchange offers. In addition to advance refunding in the long-term area and theissuance of strip bills in place of a succession of increases in weeklybill offerings, the Treasury made another change in debt management 88 1961 REPORT OF THE SECRETARY OF THE TREASURY Chart 8 MARKET YIELD TRENDS OF SHORT AND LONG-TERM SECURITIES Monthly Averages lllll Iiiliil Iiil,,liil Long-TermTreasury BondSK^^^. |||| 1953 54 55 56 57 58 59 •60 •61 practice during fiscal 1961. This was the refunding of maturingobligations by means of a cash offering of new securities used in wholeor in part to pay ofT the maturities, a technique which had not beenused since the World War II financing period. On three occasionsduring the fiscal year, in August 1960, in February 1961, and in May1961, this method was used in place of an exchange offering whichwould have given holders at the time of the offering preemptive rightsto subscribe to new issues. One of the important considerations in setting the terms of a newoffering is the pattern of market yields existing at the time. For afinancing operation to be successful, the interest rate on a newTreasiuy issue must be in line \vith the return which investors areable to get on existing issues of comparable maturity. Chart 8, whichshows the trend in the market 3ield
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