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August cash and conversion loan, Australian savings bonds, local and semi-government interest rates, and treasury note yields



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TREASURES

EMBARGO NOT FOR RELEASE BEFORE 6.00 PM 7 AUGUST 1978

NO. 73

STATEMENT BY THE TREASURER, THE HON JOHN HOWARD, MP

AUGUST CASH AND CONVERSION LOAN, AUSTRALIAN SAVINGS BONDS, LOCAL AND SEMI-GOVERNMENT INTEREST RATES, AND /'TREASURY NOTE YIELDS .

The Treasurer, Mr John Howard, today announced:

. terms for an August Commonwealth cash and

conversion loan;

. a new series of Australian Savings Bonds -

Series 12; . .

. new maximum interest rat^s~'fo^trOTri3Wings '

by local and semi-government authorities; and

. . ' a reduced yield on 26-week Treasury Notes.

CASH AND CONVERSION LOAN .

Mr Howard said that the cash loan would open on Monday 14 August

and close not later than Monday 21 August.

Four securities would be offered in the loan, with yields

marginally below those prevailing in the market on bonds of

comparable periods to maturity. . .

i

Mr Howard said that Government policy had been directed towards

creating the necessary preconditions for sustained lowering of

I .

interest rates. I ' - ■

Significant progress had been made on this front in 1977-78 ,

particularly in lowering the rate of inflation, and he was / ' 1

confident that further progress would be made in 1978-79·

/

The yields proposed for the stocks to be issued in the August loan

were consistent with this outlook.

The securities to be issued in the loan, all at par, are;

. . 8.8 per cent September 1980 .

. 9·0 per cent October 1983 .

. 9.0 per cent October 1988 ' .

. - 9.0 per cent February 1997

The yield to be offered on the 1980 stock represented a reduction

of 0.05 per cent on the present market yield and on the 1983$ 1988

and 1997 stocks a reduction of 0.1 per cent.

A concurrent.conversion offer would be made to holders of $441

jaiiMon securities which mature on 15 August; this offer will

close on Thursday 31 August. ,

The issues which mature on 15 August are a 6.8 per cent security

originally issued in 1970 and an 8.5 per cent stock issued in 1976.

Holders of the maturing securities would also have the option of

converting into the new series of Australian Savings Bonds - Series 12.

5

AUSTRALIAN SAVINGS BONDS

A new series of Australian Savings Bonds - Series 12 - will be

on sale from the commencement of business tomorrow Tuesday 8 August.

The Treasurer said that, from its introduction on 15 February 1978,

redemptions of Special Bonds and Australian Savings Bonds.

Series 12 will carry an interest rate of 9*0 per cent, the same as

for Series 11. A lower interest rate of 6.5 per cent will apply to

amounts redeemed before the first interest payment date. · ;

j The first interest payment on the new Series 12 would be made on 1 May 1979; subsequent interest payments would be made at half

yearly intervals thereafter until final maturity on 1 May 1986.

As with previous issues, Australian Savings Bonds Series 12 would

be redeemable at any time at the option of the holder subject to

one month's notice. ____ ■

Terms and conditions of the securities offered in the cash and

conversion loan and Australian Savings Bonds - Series 12 are set

out fully in prospectuses now being circulated to banks and

stockbrokers. · .

LOCAL AND SEMI-GOVERNMENT INTEREST RATES

Mr Howard said the Loan Council had agreed to a lowering of the

maximum interest rates applying to borrowings by local and semi­

government authorities. '

This was consistent with.the reductions in yields on Commonwealth

Government securities which had occurred since these maximum rates

were last adjusted, in February 1978, and the further reductions

proposed for the August loan.

until its withdrawal today, Series 11 raised $90 million, net of

I

4

The new maximum rates, to be effective from tomorrow, 8 August,

would be:. .

/ I CURRENCY OF LOAN years ■ .

PUBLIC LOANS per cent PRIVATE TREATY LOANS per cent

I 4 - 6 9-5 (9-4) 9-4 (9-5)

. I - 7 - 9 9-5 (9.5) 9-4 (9-6)

1 0 - 1 4 , 9-4 (9-6) 9-5 (9-7)

15 years and over 9-4 (9-6) 9-5(9-7)

(Previous rates are given in brackets)

TREASURY NOTE YIELDS

Mr Howard said that the yield on 26-week Treasury Notes would be

reduced by 0.044 per cent to 8.705 per cent, from the commencement

of business on 8 August. l . '

: '

The new issue price for 26-week Notes xd.ll be 95-84 per cent. The

issue price for 13-week Notes will remain unchanged at 97-96 per cent.

CANBERRA ACT

7 August 1978 '