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Tap issue stocks and maximum borrowing rates for semi and local Government authorities



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TREASURER

EMBARGO NOT FOR RELEASE BEFORE 5.00 EM 29 APR 1980

PRESS RELEASE NO. 42

STATEMENT BY THE ACTING TREASURER, THE HON ERIC L. ROBINSON, MP

TAP ISSUE STOCKS AND MAXIMUM BORROWING RATES FOR SEMI AND LOCAL GOVERNMENT AUTHORITIES

Details of the arrangements for the issue of Commonwealth Bonds under

the new tap system were announced by the Treasurer on 13 April.

The Australian Loan Council has now decided on the terms and conditions

for the initial stocks to be issued under the new arrangements.

In considering the terms and conditions at which to offer the initial

tap stocks, Loan Council has been conscious of recent movements over the

broad range of domestic interest rates, and of the need to offer tap

stocks at yields in line with the bond market.

Two tap stocks will be on issue from the commencement of business

Wednesday 50 April.

MATURITY COUPON INITIAL INITIAL FIRST INTEREST

RATE ISSUE PRICE YIELD PAYMENT DATE

% %

April 1982 11.5 Par 11.5 October 1980

April 1985 11.7 99.50 11.84 October 1980

2

: These, initial prices arid yields for these stocks will apply on the first

day of their issue. Subsequent daily prices and yields will be

available from the Reserve Bank.

It is envisaged that the 11.5 per cent April 1902 stock will be

available to an amount in the order of $500 million, and that the

11.7 per cent April 1985 stock will be available to an amount in the

order of $250 million. The stocks may, however, be withdrawn at any

time.

Further details of the terms and conditions applying to the two tap

stocks are contained in prospectuses available from Australian branches

of the Reserve Bank.

Consistent with the yields offered on the initial tap stocks, the

Australian Loan Council has also decided to increase the maximum

borrowing rates by local and semi-government authorities so as to

maintain the broad relativities between these rates and bond yields.

The new maximum rates will be:

CURRENCY OF LOAN PUBLIC LOANS PRIVATE TREATY LOANS

(years) (per cent) (per cent)

4 to 9 12.2 (11.6)

12.3 (11.7)

12.5 (11.9)

12.6 (12.0) 10 and over

(previous rates shown in brackets)

3

The new maximum rates will apply,from the start of business Wednesday 30 April.

Under the arrangements applying to the marketing of semi and local

government securities an announcement will normally be made each Friday

evening of the maximum rates to apply in the following week. On

occasions it may be appropriate to announce a variation in rates at

other times.

CANBERRA ACT

29 Apr 1980