London Loans

Press, Volume LXXX, Issue 24149, 7 January 1944, Page 4

London Loans

The Australian High Commissioner’s announcement in London, last month, that his Government intended to redeem a loan of £4,491,000 (stg.) falling due on January 1, was not a surprising one, in view of the Commonwealth’s greatly strengthened, holding of sterling resources and the comparatively small size of the issue to be redeemed. Whether this redemption policy will be continued, when the Commonwealth 3 per cent. Joan falls in on October 10 and the Queensland 3i per cent, loan a year hence, remains to be seen. They are not very heavy; and it may well be decided that repayment would be a wise step, preparing the way for the much more formidable operation of converting and cheapening a series of 5 per cent, loans, exceeding £100,000,000 (stg.), which become optionally repayable next year. Australia’s move raises also the question of New Zealand’s policy, which affects several earlymaturing loans. Of the 1940-45 3A per cent, loan, the final instalment of £3,500,000 will have to be repaid by January 1, 1945, under contract. The decisions which will disclose the Government's policy will have to be made with reference to, first, £7,340,000 of 4i per cent, stock, the final maturity date for which is March 31 of this year, and £7,780,000 of 5 per cent, and 4i per cent, stock, maturing a year later. Beyond these two maturities lie two others, of £12,886,000 (5 per cent.) and £9,657,000 (3 per cent.), finally due early in 1946. It may again be suggested that redemption of the loans falling due this year and next would usefully prepare the market for a favourable conversion of the later high-interest loan: that is, on the reasonable assumption that conversion rather than redemption will be the choice. Further, both the 1944 and the 1945 issues are dear ones, and it will be no small saving to clear them from the account. Finally, the effect of redeeming—or of repatriating—these issues would be a wholesome corrective to the inflationary tendencies at work.