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Wednesday, 27 August 1941

Senator McBRIDE (South Australia) (Minister for Munitions) . - Some time ago Senator Darcy asked the following questions -

1.   What were total conversion costs in connexion with the Australian loan in June last?

2.   Why was this loan converted at 99 instead of at par?

3.   How much was taken up by the British Government?

4.   Why was the interest rate raised to 4 per cent. ?

The Treasurer has furnished the following replies: -

1.   As the operation has only just been concluded, having been spread over the last few months, information regarding cost of conversion is not yet available.

2.   The decision to issue the conversion loan at a discount of 1 per cent. was made on the advice of the British Government and the Commonwealth's financial advisers in London, having regard to market prices of similar securities.

3.   In a normal conversion loan new cash is sought to pay off those holders who do not convert. In view of the special nature of this transaction, new cash was not asked for, but the British Government has agreed to lend the Commonwealth the money required to redeem the securities of those holders who do not convert. The amount involved will be approximately £6,000,000.

4.   The interest rate on the new loan is 3½, per cent. The interest rates on the loans converted were 4¾ per cent. and5 per cent.

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