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Yen borrowing by the Commonwealth



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TREASURER

EMBARGO NOT FOR RELEASE BEFORE 5.00PM 23 OCT 1978

PRESS RELEASE NO. 110

STATEMENT BY THE TREASURER, THE HON JOHN HOWARD, M.P.

YEN BORROWING BY THE COMMONWEALTH

The Treasurer, Mr John Howard, today announced the completion of

negotiations for the second of the two Yen-denominated private

institutional borrowings foreshadowed in his statements of 5 October

and 18 October.

The loan of ¥40 billion (|A187 million), the documentation for

which was signed in Tokyo today, was provided by a number of Japanese

trust banks and life insurance companies led by The Mitsubishi Trust

and Banking Corporation and the Nippon Life Insurance Company and was

arranged through Morgan Stanley & Co.

The loan will finally mature in 1998 and be repaid in eleven semi­

annual instalments commencing in 1993» to provide an average life of

17·5 years. The average life of the loan is the longest yet secured

in the Tokyo market by the Commonwealth. This reflects the growing

range of Japanese institutions participating directly in the

international loan market and Australia's high standing in the

world's capital markets.

Mr Howard said that the loan would carry an interest rate of 7.6 per

cent per annum. After taking commissions and other expenses into

account, the effective cost to the Commonwealth would be 7.65 per

cent per annum.

2

The terms of the "borrowing equalled those obtained by the World Bank

in its recent 20 year Yen loan and were considered to be very favourable

to the Commonwealth.

Mr Howard said that the successful completion of the two Yen loans,

of ¥40 billion each, was evidence of the growing strength of. the

Tokyo market as a source of capital.

The loans were fully consistent with the Commonwealth's continued

policy of supplementing the level of Australia's international

reserves, as appropriate, through official borrowings.

CANBERRA ACT 23 Oct 1978