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November conversion loan, Australian savings bonds, local and semi-government borrowing rates and Treasury note yields



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TREASURER IRE LEASE

vs "---- - V

EMBARGO NOT FOR RELEASE BEFORE 6.00EM 31 OCT 1978

STATEMENT BY THE ACTING TREASURER, THE HON ERIC ROBINSON, M.P.

NOVEMBER CONVERSION LOAN, AUSTRALIAN SAVINGS BONDS, LOCAL AND SEMI-GOVERNMENT BORROWING RATES AND TREASURY NOTE YIELDS

The A c tin g T r e a s u re r , Mr R obinson, announced to d a y :

. term s f o r a c o n v e rsio n o f f e r t o h o ld e rs o f $626 m illio n o f

Commonwealth s e c u r i t i e s which m ature on 15 November 1978;

. a new s e r i e s o f A u s tr a lia n S avings Bonds - S e r ie s 13, c a r ry in g

an i n t e r e s t r a t e o f 8.75 p e r c e n t;

. new maximum i n t e r e s t r a t e s f o r borrow ings by l o c a l and sem i­

government a u t h o r i t i e s ; and

. a red u ced y i e l d on 26-week T rea su ry N o tes.

The s e c u r i t i e s w hich m ature on 15 November a re a 5·25 p e r c e n t s to c k

is s u e d i n 1968 and a 9 .8 p e r c e n t s to c k is s u e d i n 1977.

Mr Robinson s a id t h a t , a g a in s t th e background o f th e q u a r te r ly company

ta x in s ta lm e n t due i n November and, th e need t o av o id undue p re s s u re s in

f i n a n c i a l m a rk e ts, i t had been d e cid e d n o t t o h o ld a c o n c u rre n t cash

lo a n on t h i s o c c a s io n .

SECURITIES TO BE OFFERED IN THE CONVERSION LOAN

Four s e c u r i t i e s , w ith c u rre n c ie s ra n g in g from 1 y e a r 10 months to

18 y e a rs 8 m onths, would be o ff e re d t o h o ld e rs o f th e m a tu rin g

2

i s s u e s . They a r e :

. 8 .6 p e r c e n t Septem ber 1980, a t 99·94 p e r c e n t;

. 8 .8 p e r c e n t December 1983» a t p a r;

. 8 .8 p e r c e n t O ctober 1988, a t p a r; and

. 8 .8 p e r c e n t J u ly 1997» a t p a r ..

The Septem ber 1980 s to c k would o f f e r a y i e l d t o m a tu rity o f about

8 .6 5 p e r c e n t. T h is compares w ith a y i e l d o f 8 .8 p e r c e n t on a s to c k w ith

th e same m a tu r ity d a te is s u e d i n th e August lo a n . Y ie ld s on th e 1983» 1988

and 1997 s to c k s t o be o ff e re d re p re s e n te d a r e d u c tio n o f 0 .2 p e r c e n t on th e

y i e l d s w hich a p p lie d t o th e com parable s to c k s is s u e d in th e August lo a n .

The r e d u c tio n s i n th e r a t e s b e in g o ff e re d i n th e c o n v e rsio n lo a n were

c o n s is te n t w ith m arket tr e n d s and th e G overnm ent's o b je c tiv e o f

re s p o n s ib ly lo w e rin g i n t e r e s t r a t e s a s c o n d itio n s p e rm it, Mr Robinson s a id .

H o ld e rs o f th e s e c u r i t i e s m a tu rin g on 15 November would a ls o have th e

o p tio n o f c o n v e r tin g in to th e new s e r i e s o f A u s tr a lia n Savings Bonds -

S e r ie s 13.

The c o n v e rsio n lo a n would open on Wednesday 15 November and c lo s e on

T hursday 30 November.

AUSTRALIAN SAVINGS BONDS - SERIES 13

A new s e r i e s o f A u s tr a lia n S avings Bonds, S e r ie s 13» t o r e p la c e S e rie s 12,

would be on s a le from th e commencement o f b u s in e s s tomorrow, 1 November,

c a r r y in g an i n t e r e s t r a t e o f 8 .7 5 p e r c e n t - 0 .2 5 p e r c e n t low er th a n t h a t on

S e r ie s 12.

Mr R obinson s a id t h a t , s in c e i t s in tr o d u c tio n on 8 August 1978, S e rie s 12

had r a i s e d $27 m illi o n n e t o f redem ptions o f S p e c ia l Bonds and

A u s tr a lia n S avings Bonds.

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Mr Robinson s a id t h a t th e r e d u c tio n i n th e i n t e r e s t r a t e on A u s tr a lia n

S avings Bonds was i n l i n e w ith th e re d u c tio n s i n y ie ld s on c o n v e n tio n a l

bonds and would p ro v id e a s tro n g in c e n tiv e f o r f u r t h e r p ro g re s s t o be made

in re d u c in g com parable p r iv a te s e c to r i n t e r e s t r a t e s .

S e rie s . 13 would m ature on 1 June 1986. The f i r s t i n t e r e s t payment on th e

new S e r ie s 13 would be made on 1 June 1979» and subsequent i n t e r e s t payments

would be made a t h a l f y e a r ly i n t e r v a l s t h e r e a f t e r u n t i l f i n a l m a tu r ity .

As w ith p re v io u s is s u e s o f A u s tr a lia n S avings Bonds, S e r ie s 13 would be

redeem able a t any tim e a t th e o p tio n o f th e h o ld e r , s u b je c t t o one m o n th 's

n o t i c e . Should redem ption be e f f e c t e d p r i o r t o th e f i r s t i n t e r e s t d a te ,

i n t e r e s t would be p a id a t th e r a t e o f 6 .5 p e r c e n t p e r annum.

Terms and c o n d itio n s o f th e s e c u r i t i e s o f f e r e d i n th e c o n v ersio n lo a n and

o f A u s tr a lia n S avings Bonds - S e r ie s 13, a r e s e t out f u l l y in p ro s p e c tu s e s

now b e in g c i r c u l a t e d t o banks and s to c k b ro k e rs .

LOCAL AND SEMI-GOVERNMENT INTEREST RATES

Mr Robinson s a id t h a t , fo llo w in g th e re d u c tio n s i n m arket y ie ld s on

Commonwealth bonds which had o c c u rre d s in c e August and a g a in s t th e background

o f th e term s f o r th e November c o n v e rsio n lo a n , th e Loan C ouncil had review ed

th e c u r r e n t maximum i n t e r e s t r a t e s f o r p u b lic and p r iv a te borrow ings

by l o c a l and sem i-governm ent a u t h o r i t i e s w hich had a p p lie d s in c e 8 August

1978.

The new maximum r a t e s on borrow ings by th e s e a u t h o r i t i e s , t o be e f f e c t i v e

from tom orrow ,1 November 1978, would b e:

4

C urrency o f Loans P u b lic Loans P r iv a te T re a ty Loans

4-9

10 and o v e r

(Y ears) ( p e r c e n t)

9.1 (9.3)

9.2 (9.4)

( p e r c e n t )

9.2 (9.4)

9.3 (9.5)

(p re v io u s r a t e s a r e g iv e n in b r a c k e ts )

TREASURY NOTE YIELDS

Mr R obinson s a id t h a t th e y i e l d on 26-week T re a su ry N otes would be reduced

by 0 .0 8 7 p e r c e n t t o 8.618 p e r c e n t from th e commencement o f b u s in e s s on

1 November.

The new is s u e p r i c e f o r 26-week N otes would be 95*88 p e r c e n t. The is s u e

p r i c e f o r 13-week N otes would rem ain unchanged a t 9 7.96 p e r c e n t.

CANBERRA ACT .

31 O ctober 1978