LOW INTEREST

Southland Times, Issue 21836, 13 October 1932, Page 5

LOW INTEREST

TREASURY BONDS

IMMEDIATE SUCCESS OF ISSUE 2 PER CENT. AT PAR (British Official Wireless.) Rugby, October 11. 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 cash applications closed immediately. While cash applications are invited, however, the issue really represents a conversion operation, preference being given to applications from th holders of £140,000,000 of 4J per cent. Treasury bonds due for repayment on December 1. Such holders exercising the right to exchange into new 2 per cent, bonds will receive an equal amount of the latter, plus a cash payment of 10/- per cent. The announcement of the new conversion issue caused a sharp rise in the British war loan, the assented issue opening at £lOl 17/6 and later rising to £lO2 7/6. 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 the 4J- per cent. Treasury bonds and £13,000,000 for the remaining balance of the 41 per cent. It is assumed that die Government has plans other than the issue of a short-term bond 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 £150,000,000 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 gilt-edged securities generally. There were sharp rises among these, although fluctuation caused by the natural sequel of profittaking occurred during a busy day. At the close gains in British funds were general, ranging from 7/6 to £1 15/with the war loan assented finishing well under the best at £lOl 17/6.

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