CHEAP MONEY

Manawatu Standard, Volume LII, Issue 268, 12 October 1932, Page 7

CHEAP MONEY

ISSUE OF TREASURY BONDS,

PROMPT SUCCESS OBTAINED.

SAVINGS TO BRITISH NATION.

(United Press Association—By Electric Telegraph.—Copyright.) (British Official Wireless.) Received October 12, 11.49 a.m. RUGBY, Oct. 11.

The offer of £150,000,000 of 2 per cent. Treasury bonds, 1933-38, at par, met with prompt success to-day, the date for cash applications, and the lists are being closed immediately. While cash applications were invited the issue really represents a conversion operation, preference being given to applications from holders of the £140,000,000 of 4£ 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 war loan, assented opening at £lOl 17s 6d, and later rising 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 repayment of the unconverted 5 per cent, war loan, £140,000,000 for redemption of the 4£ 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 two 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 gilt-edged securities generally. There were sharp rises among these, although the fluctuations caused by the natural sequel of profit-taking occurred during the busy day. At tho close the gains in British funds generally ranged from 7s 6d to £1 los with the war loan assented finisliing well under the best at £lOl 17s 6d. Although the cash applications for the Treasury’s new bonds reached a very big figure, de- ' spite the fact of the 2 per cent, rate, the lowest offered oh a British Government security within memory of tho City, tlie issue really represents- a conversion operation with preference given to holders of the £150,000,000 4>) per cents.

Calculated so far as the 41 per cent. Treasury bonds are concerned, about £3,750,000 will be saved on the service of tho national debt. The recent .conversion of the 5 per cent, war loan effected a saving of over £30,000,000.

NEW STANDARD PROVIDED. LONDON, Oct. 11. The Daily Telegraph says: “It is believed that most of the maturing 4$ per cent, bonds are held by public departments. The limitation of the issue to £150,000,000 will raise conjectures in regard to the moans the Government will employ to redeem £165,000,000 worth of unconverted War Loan 5 per cents on December 1. The new 2 per cent bonds provide a now standard of British credit. Gilt-edged securities became buoyant on the appearance of the prospectus.”