BRITISH FINANCE

Hawke's Bay Tribune, Volume XXIV, Issue 94, 4 April 1934, Page 7

BRITISH FINANCE

NEW FUNDING LOAN £150,000,000 at 3 Per Cent. REPAYING FOUR PER CENTS. (British Official Wireless.) (Received 4, 12.30 p.m.) RUGBY, April 3. A large Government funding operation was announced to-night. It takes the form of a three per cent, funding loan 1959-1969 issue of £150,000,000. On April 15 the Government is under contract to repay £105,000,000 of four per cent. Treasury bonds, and the present time is regarded as suitable for issuing a new loan. The price of the new issue is 98 per cent., and the straight yield of interest is 3 1-3 per cent. An interesting feature of the prospectus is the provision for a sinking fund. Each half-year the Government undertakes to set aside a sum equal to two per cent, of the nominal amount of the loan originally created. Out of this there will be paid interest on the loan for the half-year, and the balance will form a sinking fund to be used for purchasing the loan for cancellation if it stands at or below par. If it stands above par the sinking fund money will either be used in the same way or otherwise invested. Insofar as the proceeds of the new loan are used for repaying four per cent, bonds the present operation will result in a saving of interest to the Treasury at a rate just under £1,000,000 per annum. The additional £45,000,000, as between £105,000,000 and £150,000,000, of the new issue will be available for any purpose of the floating debt er reducing Treasury bills.