EMBARGO NOT FOR RELEASE BEFORE 7 P. M.
FRIDAY, 15 1967
S1E96P7 -4PM No. 92/ 1967
FOR PRESS* AUSTRALIAN LOAN-IN LONDON
Statement by the Prime Minlister and Chairman
of the Australian Loan Council? Mr-Harold Holt~
A new Australian cash loan is to be issued in London
next week. This will be the first Australian loan issued on
the London market since October 1963.
The new loan will be for an amount of œ CStg 14 million
35 million) and will have an interest coupon of 7 per cent.
The loan will finally mature in September 1981 and will have an
issue price of 99, offering the investor a yield of 7.11 per cent.
While this will be the highest yield ever offered in a
Commonwealth loan raised overseas, underwriting and other charges
are considerably lower in London than in other oversea capital
markets. From the point of view of the borrower, this offsets
to a large extent the difference between the interest coupon
now being offered by major borrowers in London and the slightly
lower interest coupons which are possible in other markets.
The approval of the British authorities was originally
obtained for a conversion loan of œ-Stg 14+ million to refinance
State Government maturities of œ Stg 14+. 6 million 36.6 million)
which fell due on 1 July 1967, but the market conditions at the
time made this impracticable. The new cash loan is in effect a
deferred refinancing operation for the securities which were
repaid on maturity on 1 July. Funds for this purpose were
provided partly from the National Debt Sinking Fund and partly
from a special internal loan subscribed to by the Commonwealth
on 1 July out of the cash balances of the Loan Consolidation and
Investment Reserve.
In accordance with the undertaking given to the
States last year to arrange for the refinancing of their
oversea maturities at Australian rates of interest until
June 1969, the new loan will be issued in the name of the
Commonwealth. Since October 1963, four Australian loans totalling
œ Stg 59 million have been paid off in London on reaching
their final maturity dates. After allowing for market
purchases by the National Debt Sinking Fund, Australian
debt in London has been reduced by approximately œ Stg
million 200 million) since July 1964. A further œ Stg 100
million 250 million) Australian securities mature in
London before the end of 1972, mostly resulting initially
from State Government loans raised 20 or more years ago.
It is against this background that the Commonwealth
has decided, with the approval of the Loan Council, to re-enter
the London market on this occasion after a break of four years.
oOo
NOTE: During the absence of the Treasurer ( Mr. McMahon)
overseas, Mr. Holt is Chairman of the Australian
Loan Council. This follows normal procedures
adopted when the Treasurer, whom the Prime Minister
customarily nominates as Chairman, is overseas.
CANBERRA September 1967