LOAN FOR AUSTRALIA

Evening Star, Issue 18998, 21 July 1925, Page 5

LOAN FOR AUSTRALIA

FEDERAL TREASURER’S STATEMENT THE TERMS ANNOUNCED Press Association—By Telegraph—Copyright. Australian and N.Z. Press Association. MELBOURNE, July 20. Tho Federal Treasurer (Dr Earle Rage), in an official statement regarding tho new loan of £20,000,000 at 991 carrying 5 per cent, interest, said that £51300,000 was being floated in London, and £15,000,000 in New York. Tho London portion was redeemable in fifty years, with the option of redeeming on thrqp months’ notice at any time after ‘thirty years. Jl’lio New York portion was redeemable in thirty years, with tho option of redeeming at the end of twenty-seven years. Ho anticipated that the average rate of interest over tho whole period would he 5J per cent. He expected that tho. expenses of flotation would be practically the same in tho two capitals. Dr Pago explains that tho necessity for appealing to tho American market is due to tho London market not being capable of immediately absorbing all tho flotations offering. The Loan Council was most reluctant. to leave the London market, which had served Australia so well, but after exhaustive inquiries it acted upon tho advice of the best London financial authorities. Dr Pago added that it seemed manifest that had a large sum been placed in London tho favorable terms secured would not have been obtainable. THE AMERICAN QUOTA. NEW YORK, July 19. The Morgan Company announces that tho Australian loan subscription hooks will be opened at Morgan’s office at 10 a.m. to-morrow. The bonds are dated July 15, 1925, and mature on July 18, 1955. They arc rgit redeemable before July 15, 1952, but mav bo recalled on or after that date.

Eight firms are associated with the Morgan Company in underwriting the loan—the First National Bank of New York, the National City Company, the Guaranty Trust Company, the Bankers’ Trust Company, the Forges Company, the Lee, Higginson Company, Brown Brothers, and the .Kidder, Peabody Company. The loan is the largest floated in New York since the 100,000,000c10l French loan last November.—A, and N.Z. Cable. LONDON NEWSPAPER COMMENT. LONDON, July 19. The newspapers give prominence to the Australian loan. The ‘Financial News ’ emphasises the (Sinking fund clauses. The ‘ Financial Times/ recalling the trustee security, says that the reception was doubtless favorably affected by the changes to bettor monetary conditions. The ‘Morning Post's’ financial editor says; “The outstanding fact in the money market is the remarkable change in'the monetary situation, and the improved tone of the market for high-class investments owing to the unexpectedly extensive and persistent character of the gold influx. This has added so much to the bank reserves and floating credits in the market that it is impossible to maintain the 5 per cent, bank rate. Naturally the market for gilt-edged stock is sympathetically affected, and the knowledge that largo colonial borrowings are being shared with the United states has had a stimulating influence. The English portion of tile Australian loan appears to bo rather cheaper than the American. The market, while glad to bo relieved of the task of absorbing the full amount, is glad that the Australian Government is not turning to New York instead of to London, and that the entire operations are in the hands of the firm which was responsible for earlier Australian flotations. There is every likelihood of more gold arriving in the near future, winch is a favorable point for the gilt-edged market.” —A. and N.Z. C:«fle. OVERSUBSCRIBED IN NEW YORK. NEW YORK,- July 20. ('Received July 21, at 11.40 am.) '.flip Australian loan was oversubscribed within an hour after the books opened.—A. and N.Z. Cable. QU ESTIONS IN COMA lONS. LONDON, July 20. (Received July 21. at 12.15 p.m.) In the House of Commons, replying to Mr J. N. Konworthy, who asked if it was not a bad thing for the Empire to place the Australian loan in Now York, Air W. Guinness (Financial Secretary to the Treasury) said it would not bo desirable that the 'Treasury should take action in such a case. They could not lend abroad more than the export surplus, otherwise they would soon be landed in financial difficulties.—A. and N.Z. Cable.