FISCAL: Humphrey Solves a Problem

In trying to refund $8 billion of ten-year, 2% World War II bonds, Treasury's George Humphrey faced a problem. Many experts predicted that anywhere from $1.5 to $2 billion of the maturing bonds would be cashed, forcing him to raise that much new money. Instead, Humphrey offered bondholders a choice of new one-year certificates paying 2⅝% interest, or 3½-year notes paying 2⅞%. Last week he announced that 59% of the bonds had been turned in for one-year certificates. Moreover, 38% were exchanged for the 3½-year notes, and only $263 million actually had to be paid in cash.


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