Interest rates on short-term Treasury bills fell in the government's auction with yields on three-month bills declining to the lowest level on record.

The Treasury auctioned $26 billion in three-month bills at a discount rate of 0.460 percent yesterday, down from 1.100 percent last week and the lowest level on record for an initial government offering although bills have traded at lower levels in the secondary market. An additional $27 billion in six-month bills was auctioned at a discount rate of 1.100 percent, down from 1.540 percent last week and lowest since these bills averaged 1.080 percent on April 19, 2004.

Separately, the Federal Reserve said the average yield for one-year Treasury bills, a popular index for making changes in adjustable rate mortgages, fell to 1.55 percent last week from 1.89 percent the previous week.

Associated Press

BofA profit slips

Bank of America Corp. reported third-quarter results earlier than planned, revealing a wider-than-expected profit drop and plans to boost capital by selling $10 billion in stock and halving its dividend. Profit fell 68 percent to $1.18 billion, or 15 cents per share, from $3.7 billion, or 82 cents per share, in the same period last year. That was much lower than analysts' estimates of 62 cents per share.

To raise capital, Bank of America said it plans to sell $10 billion of common stock. Executives said that amount takes into account the Merrill Lynch buyout, which is expected to close at the end of the year.

The bank is also slashing its quarterly dividend to 32 cents from 64 cents. Bank of America joins a slew of other companies, including Citigroup Inc., that have cut their dividend and sold additional stock.

Associated Press