Interest trend still downward in Sydney

Press, 3 July 1978, Page 16

Interest trend still downward in Sydney

Sydney i Two finance companies have confirmed that Austra- 1 lian interest rates are still! on a downward trend. The' Australian Guarantee Cor-1 Duration and General Credits nave announced cuts of 0.25 percentage points for most stocks in their latest prospectuses.

The move was significant because it came at a time when there was some concern over the continuing ♦ rend in interest rates. Fears that the Australian Budget deficit might restrain the Treasury from allowing fnterest rates to fall further have spread through market circles in the last few weeks.

The Government announced late last year that it would try to reduce inter-

est rates by 2 per cent. Since then the long-term bond rate has come down by 1.1 per cent to 9.1 per cent. Finance company debenture rates have come down, roughly in line with the Government bonds, about 1 per cent since last October. A-G.C.'s group general manager, Mr K. J. Lambeth, said the drop in interest rates was a reflection of market trends and the company was very pleased with the response to the prospectus, which was about to close.

The general manager of General Credits, Mr M. H. Ware, said: "Our interest rates structure is responsive to money market conditions. While interest rates have been held steady on what could be called popular len-

ding periods, minor reductions were appropriate in others.” Genera) Credits has held its two and four-year debenture stock at 10.75 per cent and reduced all the others by 0.25 per cent. Five-year stock will now receive 10.75 per cent: three-year, 10.5 per cent; and 12-inonth stock, 9.75 per cent. Two and four-year secondranking debentures are steady at 11 per cent, while three-year stock has dropped from 11.25 per cent to 11 per cent and 12-month issues are down the same amount to 10 per cent. A.G.C. has lowered all its rates by 0.25 per cent except for notes at call after three months. These remain at 8.5 per cent. A.G.C. plans to raise S2OOM. General Credits is looking for S7OM.