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May cash and conversion loan and Australian savings bonds



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NO. 48

TREASURER RELEASE

EMBARGO

NOT FOR RELEASE BEFORE 6.00PM 5 MAY 1977

STATEMENT BY THE TREASURER, THE RT HON PHILLIP LYNCH, M.P.

MAY CASH AND CONVERSION LOAN AND AUSTRALIAN SAVINGS BONDS

The Treasurer, Mr Phillip Lynch, today announced terms for a

Commonwealth cash and conversion loan and a new series of

Australian Savings Bonds.

CASH AND CONVERSION LOAN

Mr Lynch said that the cash loan would open on Thursday

12 May and close not later than Thursday 19 May.

Three securities would be issued in the loan, all with yields

in line with those prevailing in the market.

Mr Lynch said that market yields had remained steady since the

previous Commonweal*h loan in February.

The securities to be issued, all at par, are:

Mr Lynch said the 9*8 per cent November stock had been issued in

the February loan at a small discount to provide a yield to

9.8 per cent November 1978

10.2 per cent February 1982

10.4 per cent February 1987

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maturity of about 9.86 per cent. The yield of 9.8 per cent

now offered reflected the shorter period to maturity - 18 months

compared with 21 months at the time of the February loan.

Yields on the 1982 and 1987 securities were the same as those

on the corresponding stocks issued in the February loan.

Investors would thus be offered a choice of stocks in the loan

with periods to maturity ranging from eighteen months to

almost ten years. A longer term stock, such as had been

included in loans since January 1976, was not being issued on

this occasion.

A concurrent conversion offer would be made to holders of

$280 million Commonwealth securities which mature on 15 May;

this offer would close on Tuesday 31 May.

Mr Lynch said that the issues which mature on 15 May are an

8.2 per cent security issued in October 1973» and an 8.5

per cent security issued in February 1975·

Holders of the maturing securities would also have the option

of converting into the new series of Australian Savings Bonds -

Series 8.

AUSTRALIAN SAVINGS BONDS - SERIES 8 *

A new series of Australian Savings Bonds, Series 8, to replace

Series 7 would be offered from the commencement of business

tomorrow, 6 May.

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Mr Lynch said that since its introduction on 3 December, Series

7 had raised gross subscriptions of $393 million; after allowing

for redemptions of Special Bonds and Australian Savings Bonds

effected since this series was introduced, the net amount

raised was $203 million, representing an average weekly rate

of subscription of about $10 million. ·

Series 8 would carry an interest rate of 10.0 per cent, the

same as that for Series 7» and would have a maturity of about

seven years and seven months.

After the first interest date, 1 December 1977» interest would

be paid half-yearly until final maturity on 1 December 1984.

As with previous issues, Savings Bonds Series 8 would be

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

one month's notice. *

Should redemption be effected prior to the first interest date,

interest on amounts redeemed would be paid to the original

subscriber at the rate of 7·5 per cent per annum; this rate

was unchanged from that applying to Series 7·

Holders of Special Bonds - Series T - which.mature on 1 June,

will have the opportunity to convert their holdings on maturity

into the new series of Australian Savings Bonds.

Terms and conditions of securities offered in the cash and

conversion loan and Australian Savings Bonds-Series 8 were set out

fully in prospectuses now being circulated to banks and stockbrokers.

CANBERRA ACT 5 May 1977