NEW AUSTRALIAN LOAN

New Zealand Herald, Volume LXXV, Issue 23029, 5 May 1938, Page 14

NEW AUSTRALIAN LOAN

Australia has re-entered the London market as a borrower of new money. The -return, coming after a long period of abstention, has been made possible because the British Treasury recently lifted the ban on overseas lending, or more accurately released the City of London from the undei'taking not to make such issues. The idea of resuming the predepression practice of borrowing in London has been suggested a number of times in Australia, but this is the first actual move to do so. The last operation there was in November last year, when a cash and conversion issue of some £11,400,000 was launched to deal with Commonwealth stock about to mature. The terms then were 3£ per cent at £97, 1951-54, making the yield with redemption over the longer period £3 15s Id. The result was that 67 per cent of the issue remained with the underwriters, this being attributed to disturbed market conditions at the time. The new loan is on slightly more generous terms, 3£ per cent at £99, maturing 1952-56, giving a yield for the full period of £3 16s 6d. Both the announced purposes of the loan are interesting—£2,ooo,ooo for the defence programme, and £5,000,000 for the repayment of Treasury bills. It is a new development to find Australia going abroad for defence funds, but raising the loan will simplify paying for purchases made in Great Britain. The funding of Treasury bills aims at reducing the London floating debt, which in the latest return stood at £32,875,000.