CONVERSION LOAN

Evening Post, Volume CXVII, Issue 49, 27 February 1934, Page 12

CONVERSION LOAN

AUSTRALIAN SUCCESS

RELIEF TO THE BUDGET

"Evening-Post," February 27.

.- The success of the- recent Australian conversion loan of £21,636,550 has been ■the subject of much favourable commeut in Australia, and many tributes have been fcaid to Mr. Bruce, who was in charge of the operation! The loan is the seventh "since October, 1932, and it is the'highest yet made.

- The previous highest was that of September last, when £20,951,000 of £ per cent. and* 5% per centi .stock was" converted. The present conversion is also the most advantageous. The rate of 3% ■per cent, at an issue price of 97 on a maturity period of 25 years, with an option to the Government to redeem at 20 years, •gives on the longer term an effective yield to the investor of £3 13s 8d per cent., .against the ■£3 14s 5d per cent, of the previous 3% per cent/ issue, that of May, .1933, wHen £11.409,956 was,converted. On !'the •figures given by' Mr. Lyons' of a' total ""saving of £2j250,000 in Australian currency for all conversions, including that {now proposed, it'■would appear that the interest saving on the present conversion .'in Australian currency is £380,000. This ,3s somewhat less than may be calculated ';from the amount of the three'loans to be 'converted, but there should also be taken ;into account the price of issue, which will -iinake the amount of the new loan ; £3 •Spore for every £97 in the old loans. ■ ■

p\ "The'success of the conversion is ari*other tribute, not only to Mr. Bruce's .^acumen, but to his patience," the "Sydney Morning Herald" comments. "He ghas known how to wait for a favourable .market, and has refused,to be hurried by [political .considerations at this' .end. At ■.■times during the past twelve months the ■ '^pressure exerted on him .to put a loan* on "a market against; his better judgment in /order to quieten, political and ill-informed • clamour in Australia has-been of the '.'Severest. ~ He had the: courage to withstand the pressure. In doing so he has Served the people of Australia well." -'The saving in interest and exchange effected by the present conversion, is:—N^ '>."' ' ■":'■■ """' Interest. Exchange. Total. ,-V' •■:' ■' '■ ■■■ ■'■'■' £ '-.•' £■ -i £ 'iNey South Wales • 52,000 13,000 65,000 .'.Victoria . . 183,000 '45,750 228,750 'Queensland ... . 68,000. .17,000 85,000 '.#.■•'. Totals - ~.. .* £303,000 ■•■; £75,750 £378,750 *■• Commenting on the loan,. Mr. . Lyons i'said that the present operation was notable ins being the .largest, of the present series; j.The interest rate, was one of h the lowest' obtained for a long-term loan by an .Australian Government, and the currency for the long period of 25 years. It ■.was satisfactory that the Geries' of coni.versions ■in which Australia: had engaged [over a period -of about 18 months, and '.■amounting <in all to nearly £110,000,000 • had been completed with an operation iwhich gave, such cause for congratulation. .It was a welcome and emphatic indication v.of the steady rise', or'.;Australian prestige .abroad.. All Australian loans in London ,ivhich carry' an' interest rate- in excess of .'4 per. cent., and on which there has been .to date an option'of redemption, had now ' been ■■converted; li Mr:'; Lyons: said' that it was interesting to note the total amount of the conversions and .the savings accruing to-ther.various Governments from the 'series of conyei-sions just' completed. The ■ total ■ debt; bbnverted was as >' follows:— 'Comnidnwealtfi','" !r£15',000,000'," New South .■Wales, £49,798,000; Victoria, £20,763,000; £5,782,000; South: Australia, ":£11,594,000; Western Australia, £3,766,000; "■Tasrn'inia, £3,146,000..T0ta1, £109,849,000. i The" total" annual "savings will be- as ifol.•lows:'—"■:.' ./'. ■--. . ■-' ■ ..' '"'■'." ■'. v ,' ' : >»!. ,' ■ •Interest.-Exchange. Total. '-.■■■.■•'."■ . £ . £ £ j Commonwealth . 316,000 79,000 ' 395.000 'Kew South Wales 761.000 190,000 951,000 ...... -297,000 75,000 ! 372,000 .;Queensland •.. 107,000 - 27,000 134,000 /South Australia 205,000 51,000 256,000 ;West. Australia 71,000 18,000 . 89,000 Tasmania ■ .... 69,000 17,000 86,000 ' Totals ..... £1,826,000 457,000 2,283,000 ; The greater part of the savings will not £,be available for relief to Budgets in the financial year, but in 1934-35 a substantiil relief will be experienced.