FINANCIAL OPERATIONS

Evening Star, Issue 21231, 12 October 1932, Page 7

FINANCIAL OPERATIONS

THE BRITISH TREASURY ISSUE OF BONDS (British Official Wireless.) Press Association —By Telegraph—Copyright RUGBY, October 10. It is announced that the Government will make an immediate issue of £150,000,000 <rf 2 per cent. Treasury bonds at par, redeemable in 1935-38, and holders of 4$ per cent. Treasury bonds (1932-34), the redemption of which lias already been announced, may surrender this stock in whole or in part in exchange for the new stock. The list for cash applications will be closed on or before October 12, and for conversion on October 17. Converters of the 4J per cent, bonds to the new 2 per cent. Treasury bonds will receive 10s per cent, cash bonus. The ‘ Daily Telegraph ’ says it is believed that most of the maturing 4J bonds are held by public departments. Limitation of the issue to £150,000,000 will raise conjectures as regard the means the Government will employ to redeem the' £165,000,000 worth of unconverted war 5 per cents, on December 1. The new 2 per cent, bonds will provide a new standard of British credit. Gilt-edged stocks became buoyant on the appearance of the prospectus. RUSH FOR BONDS LONDON, October 11. There has been a great rush of applications for Treasury bonds, although the list has been open for only an hour. The success of the issue had an immediate effect on British funds, all of which were marked •up sensationally. The assented war loan rose 21s 3Jd and the conversion loan 12s 6d.

SUCCESSFUL CONVERSION OPERATION A STIMULATING EFFECT (British Official Wireless.) Press Association—By Telegraph—Copyright RUGBY, October 11. (Received October 12, at noon.) The offer of £150,000,000 of 2 per cent. Treasury bonds, 1935-38, at par, met with prompt success to-day, and the date for the cash applications closed immediately. While cash applications were invited, however, the issue really represents a conversion operation, preference being given to applications from holders of £140,000,000 of 4i per cent. Treasury bonds due for repayment on December 1. Such holders exercising the right of exchange into the new 2 per cent, bonds will receive an equal amount of the latter, plus a cash payment of 10s per cent.

The announcement of the new conversion issue caused a sharp rise in the British assented war loan, which opened at £lOl 17s 6d and later rose to £lO2 7s 6d. The market interprets the rise in the new issue to mean that in the official view money is likely to remain cheap for some time to come.

On December 1 the Government has to provide £165,000,000 for the repayment of the unconverted 5 per cent, war loan, £140,000,000 for the redemption of 4J per cent. Treasury bonds, and £13,000,000 for the remaining balance of the 4J per cent. loan. It is assumed that the Government has plans other than the issue of short-term bonds in view for dealing with the balance of approximately £168,000,000 which thus remains of this total of £318,000,000. Success had been expected for the issue of the £150,000,000 of 2 per cent. Treasury bonds, 1935-38, but the closing of the lists almost immediately after they had been opened this morning had a stimulating effect on British giltedged securities generally. There were sharp rises among these,-although fluctuation caused by the natural sequel of profit-taking occurred during the busy day. At the close the gains in British funds were general, ranging from f to IJ, with assented war loan finishing well under the best at £lOl 17s 6d.

The cash applications for the Treasury’s new bonds reached a very big figure, despite the fact that the 2 per cent, rate was the lowest offered on a British Government security within memory' of the city. Calculated so far as the 4i per cent. Treasury bonds are concerned, about £3,750,000 will be saved on the service of the national debt. The recent conversion of the 5 per cent, war loan .effected a saving of over £30,000,000.