3
“direct loan" conditions, having special regard to tne exceptional circumstances existing in Hong Kong at the present time.
290
8. The alternatives to a "direct loan" would be to issue the loan to the public in the usual way or to place it privately. We have discussed both these alteratives with our brokers and are advised that either would be possible. Some of the smaller investors might be deterred from applying for the stock by the uncertainty of the political situation in China, but it is believed that the larger investors and the market would regard it with the same confidence as other Crown Agents' loans, relying on the general considerations which we have set out at various times in previous correspondence. Indeed in the special circumstances of this loan it is considered that rather better terms could be obtained by a public issue than by placing it privately. In this case there would of course
be no necessity to fix the currency to be assigned to the loan at 13 years, and it would be possible to arrange for a comparatively long one, if required, provision for redemption being made at a rate not exceeding 1% per annum. In the present state of the market it would be possible to issue such a loan bearing interest at 5% per annum at a price of about 99, which would mean that the Colony, after allowing for expenses of issue, would net about 96%
9. As compared with, and based upon the foregoing
terms, the proper price in our opinion for a 5% "direct loan"
would be 98 net.
10. It will be evident that in the event of the
situation in Hong Kong becoming less favourable, or of
tne
money conditions in this country altering for the worse,
Colony could not expect to get such a good price for its loan
either by a public issue or under the "direct loan"
I have the honour to be,
sir,
Your obedient servant,
acneme.
Becchies