Public Debt Opens Book-Entry Conversion Window For Stripped U.S. Treasury Bearer Securities


March 5, 1998

Treasury's Bureau of the Public Debt announced today that it is opening a 6-month window to allow holders of physically stripped U.S. Treasury bearer principal pieces to convert them to book-entry. The window will open April 6, 1998, and close October 9, 1998.

Called BECCS (BEarer Corpora ConversionS), the new program offers holders of the principal portions, or corpora, of U.S. Treasury bearer securities that were stripped of all non-callable coupons an opportunity to convert their stripped corpora to book-entry form. BECCS securities will be maintained in the commercial book-entry system.

BECCS benefits holders of physical corpora by eliminating the costs associated with the storage and safekeeping of physical securities. Book-entry also eliminates the risk of loss or destruction of these paper securities. Some 14,000 stripped corpora worth $6.2 billion are held by the public, approximately 75% of the $8.6 billion in unmatured bearer principal.

Bearer corpora that are not subject to call will be converted to zero coupon book-entry securities which are transferable within BECCS.

Callable bearer corpora (therefore redeemable on call by the Treasury before maturity) that are submitted with all associated callable coupons will also be converted to zero coupon book-entry securities which are transferable within BECCS. The associated callable coupons will be linked with the BECCS security and cannot be separately traded. If callable bearer corpora are not submitted with all of their associated coupons, the corpus will be converted to non-transferable zero coupon book-entry securities within BECCS. Each individual callable coupon submitted will be converted to a non-transferable coupon within the existing CUBES program.

Public Debt is also reopening the CUBES (Coupons Under Book-Entry Safekeeping) window for the same 6-month period. CUBES lets holders of stripped bearer coupons convert them to book-entry and makes them readily transferable. Participation in the BECCS program is not a prerequisite to convert coupons to CUBES. The first CUBES window was opened in 1987 and reopened several times to offer additional opportunities for holders of coupons previously stripped from bearer Treasury securities the opportunity to convert those coupons to book-entry form.

Depository institutions interested in participating in the BECCS or CUBES program should contact either Grace Jaiman or JoAnna Grever of the Federal Reserve Bank of New York at (212)720-8183 as soon as possible for more information on how to present the corpora and coupons. Entities other than depository institutions that hold stripped Treasury coupons and wish to convert those corpora and coupons to book-entry form under the BECCS and CUBES programs must arrange for the conversion through a depository institution.

Participating institutions will be charged a fee of $4.00 for each corpus or coupon converted and must bear the full cost and risk associated with the delivery of the securities to the Federal Reserve Bank of New York.

BECCS and CUBES are part of an ongoing effort to convert all outstanding paper securities to book-entry form. Holders of fully constituted bearer and registered paper securities can also convert their holdings to safe, convenient book-entry form and hold them in the commercial system or TreasuryDirect.