[Federal Register Volume 63, Number 167 (Friday, August 28, 1998)]
[Rules and Regulations]
[Pages 45945-45947]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-23145]
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DEPARTMENT OF THE TREASURY
Fiscal Service
31 CFR Part 359
Offering Regulations for United States Savings Bonds, Series I
AGENCY: Bureau of the Public Debt, Fiscal Service, Treasury.
ACTION: Final rule.
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SUMMARY: The Department of the Treasury (``Department'' or
``Treasury'') is publishing in final form an amendment to the offering
circular for United States Series I savings bonds. The amendment is a
technical change to accommodate the first Series I savings bond
offering, effective September 1, 1998.
EFFECTIVE DATE: September 1, 1998.
ADDRESSES: Copies of this final rule are available for downloading from
the Bureau of the Public Debt at the following World Wide Web address:
http://www.savingsbonds.gov> or may be obtained from the Bureau of the
Public Debt, Division of Staff Services, 200 3rd St., Parkersburg, WV
26106-1328.
FOR FURTHER INFORMATION CONTACT: Wallace L. Earnest, Director, Division
of Staff Services, at (304) 480-6319 or by e-mail at
wearnest@bpd.treas.gov>; Edward C. Gronseth, Deputy Chief Counsel, at
(304) 480-5192 or by e-mail at egronset@bpd.treas.gov>; or Dean A.
Adams, Assistant Chief Counsel, Office of the Chief Counsel, at (304)
480-5192 or by e-mail at dadams@bpd.treas.gov>.
[[Page 45946]]
SUPPLEMENTARY INFORMATION: 31 CFR Part 359, referred to as the offering
circular, sets out the terms and conditions for the sale and issuance
of United States savings bonds, Series I, by the Department of the
Treasury to the public. The Department is issuing in final form an
amendment to the offering circular as a technical change to accommodate
the first Series I savings bond offering, effective September 1, 1998.
The offering regulations currently provide that the Series I composite
rate will be set forth in rate announcements published each May and
November. The composite rate consists of the fixed rate of return and
the variable semiannual inflation rate for inflation-indexed savings
bonds. The initial rate announcement, effective September 1, 1998, will
reflect the Secretary's determination of the fixed rate of return for
bonds during the two-month period beginning September 1, 1998, through
October 31, 1998. The variable semiannual inflation rate will reflect
the rate of change in the CPI-U for the six-month period ending with
March 31, 1998.
Procedural Requirements
This final rule does not meet the criteria for a ``significant
regulatory action'' pursuant to Executive Order 12866. Therefore, the
regulatory review procedures contained therein do not apply.
This final rule relates to matters of public contract and
procedures for U.S. securities. The notice and public procedures
requirements of the Administrative Procedure Act are inapplicable,
pursuant to 5 U.S.C. 553 (a)(2).
Since no notice of proposed rulemaking is required, the provisions
of the Regulatory Flexibility Act (5 U.S.C. 601, et seq.) do not apply.
There is no new collection of information contained in this final
rule, and, therefore, the Paperwork Reduction Act (44 U.S.C. 3507) does
not apply.
List of Subjects in 31 CFR Part 359
Bonds, Federal Reserve System, Government securities, Securities.
Dated: August 24, 1998.
Donald V. Hammond,
Acting Fiscal Assistant Secretary.
For the reasons set forth in the preamble, 31 CFR Chapter II,
Subchapter B, is amended as follows:
PART 359--OFFERING OF UNITED STATES SAVINGS BONDS, SERIES I
1. The authority citation for part 359 continues to read as
follows:
Authority: 5 U.S.C. 301; 12 U.S.C. 391; 31 U.S.C. 3105.
2. In Sec. 359.2, paragraphs (e)(1)(i) through (e)(1)(v) are
revised to read as follows:
Sec. 359.2 Description of bonds.
* * * * *
(e) Composite rates and redemption values. (1) The following
definitions apply for determining the composite rates and redemption
values:
(i) Rate announcements. Rates applicable to Series I bonds will be
furnished in rate announcements published each May 1 and November 1, or
at any other date determined by the Secretary or the Secretary's
designee. If the regularly scheduled date for the announcement (for
example, May 1) is a day when the Treasury is not open for business,
then the announcement is made on the next business day; however, the
effective date of the rates remains the first day of the month of the
announcement.
(ii) Fixed rate of return. Each May and November, or at any other
date determined by the Secretary or the Secretary's designee, the
Secretary shall establish the fixed rate of return for Series I bonds
issue-dated during the six-month period, or any other period determined
by the Secretary or the Secretary's designee, beginning on such date.
Such fixed rate of return will be applicable for the life of the bond.
(iii) Semiannual inflation rate. Each May and November, or at any
other date determined by the Secretary or the Secretary's designee,
Treasury will announce a variable semiannual inflation rate for Series
I bonds. The index used to determine this rate will be the non-
seasonally adjusted U.S. City Average All Items Consumer Price Index
for All Urban Consumers (``CPI-U'') published by the Bureau of Labor
Statistics (``BLS'') of the U.S. Department of Labor. The semiannual
inflation rate to be effective with the May announcement, and the rate
that is effective for Series I bonds offered from September 1, 1998,
through October 31, 1998, will reflect the rate of change in the CPI-U
for the six-month period ending with the immediately preceding March
31. The rate of change over the six-month period will be expressed as a
percentage, rounded to the nearest one-hundredth of one percent. More
specifically, the semiannual inflation rate will reflect the CPI-U
value for the most recent March less the value for the preceding
September, that difference will then be divided by the CPI-U value for
the preceding September, and the result will be multiplied by 100 to
convert the rate to a percentage. The resulting rate will be rounded to
the nearest one-hundredth of one percent. The semiannual inflation rate
to be effective with the November announcement, reflecting the change
in the CPI-U for the six-month period ending with the immediately
preceding September, will be similarly determined. In certain
deflationary conditions, the semiannual inflation rate may be negative
to such an extent that it will offset the fixed rate of return.
However, the redemption value of a Series I bond for any particular
month will not be less than the value for the preceding month. (See
Sec. 359.3(b) for a discussion of the lag between when inflation is
measured and when it is reflected in the value of a bond.)
(iv) Index contingencies. If a previously reported CPI-U is
revised, Treasury will continue to use the previously reported CPI-U in
calculating redemption values. If the CPI-U is rebased to a different
year, Treasury will continue to use the CPI-U based on the base
reference period in effect when the security was first issued, as long
as that CPI continues to be published. If, while an inflation-indexed
savings bond is outstanding, the applicable CPI-U is: discontinued, in
the judgment of the Secretary, fundamentally altered in a manner
materially adverse to the interests of an investor in the security, or
in the judgment of the Secretary, altered by legislation or Executive
Order in a manner materially adverse to the interests of an investor in
the security, Treasury, after consulting with the Bureau of Labor
Statistics (``BLS''), or any successor agency, will substitute an
appropriate alternative index. Treasury will then notify the public of
the substitute index and how it will be applied. Determinations of the
Secretary in this regard will be final.
(v) Composite rate. (A) The fixed rate of return, FR, and the
semiannual inflation rate, SIR, as determined in paragraphs (e)(1)(ii)
and (iii) of this section are divided by 100 to remove the percentage
format (i.e., to convert to decimal form) and are then combined into a
composite annual rate, CR, in accordance with the following formula:
CR = {SIR + (FR 2) + [SIR x (FR 2)]} x 2
(B) The resulting annual rate is converted to a percentage and is
rounded to the nearest one-hundredth of one percent. The composite
rates will be announced by Treasury each May and November, or at any
other date determined by the Secretary or the Secretary's designee, and
will be derived from the semiannual inflation
[[Page 45947]]
rate announced on the same date and the fixed rates of return
applicable to Series I savings bonds.
* * * * *
3. In Sec. 359.3, paragraph (b)(1) is revised to read as follows:
Sec. 359.3 Investment considerations.
* * * * *
(b) Inflation lag. (1) The inflation rate component of investor
earnings will be determined twice each year. This rate will be the
percentage change in the CPI-U for the six months ending each March and
September. The rate will be included in the composite rate that is
announced each May and November. For Series I bonds offered from
September 1, 1998, through October 31, 1998, the inflation rate
component of investor earnings will be the percentage change in the
CPI-U for the six months ending March 31, 1998. This rate will be
included in the composite rate that is announced for Series I bonds
offered effective from September 1, 1998, through October 31, 1998. In
the event the Secretary, or the Secretary's designee, announces a
composite rate at an effective date other than May 1 or November 1, the
announcement will specify the period to be used to calculate the
semiannual inflation rate. Each composite rate will be effective for
the entirety of the applicable rate period that begins while the rate
is in effect. Thus, an inflation rate may affect interest accruals from
3 to 13 months from the date that the CPI-U is measured.
* * * * *
[FR Doc. 98-23145 Filed 8-25-98; 4:00 pm]
BILLING CODE 4810-39-P
