New form of borrowing

Press, 17 December 1980, Page 1

New form of borrowing

PA Wellington The Government has moved into an innovatory type of funding, called a syndicated Euronote insurance facility, as a way of raising overseas money cheaply and being able to use it flexibly, according to a reliable source in Wellington yesterday. The facility will allow 'New Zealand to borrow up to SUSSOO million over seven years. The funds will be raised through the issue of three, six, or 12-month \notes, with . the American bank,

Citicorp International, assembling a group of managing banks to provide support for up to SUSSOO million over the seven-year period. The Prime Minister (Mr Muldoon) announced that the Government had accepted Citicorp’s offer of the facility, but gave no further detail. An informed source told the New Zealand Press Association that the money had been arranged with no specific target in mind. The facility allowed the Government to take

up any part of the loan as and when required over the agreed period, the source said. Each note will carry interest at i per cent over London interbank offered rates. The agent bank for the' deal is the Asia Pacif-

ic Capital Corporation, Ltd. It is similar to a Eurocommercial paper operation, but previous deals of this type have been for smaller amounts and support finance has not been provided on such a scale.