CONFIDENTIAL.
to Wild (2)
Lafay
to
30
4,
MILLBANK,
WESTMINSTER,
LONDON, S. W. 1.
22/-13
Dear Martin,
(ABBEY 7730)
30th January 1940.
In reply to your letter of the 24th January,
No.53593/39, about the Hong Kong local loan, I am afraid that
we still think the terms proposed are capable of being improved
upon. It is true that the Bank have raised their figure from
93 to 95; but since we wrote our letter of the 1st December,
the market price of War Loan here has risen from just over 92
to over 981⁄2. At 95, with an average life of 121⁄2 years, the
local issue would give a yield to redemption of just over 4%
which seems to us to be too high.
We are not, of course, well placed to weigh the local
possibilities, and cannot well give an opinion as to what
amount would be likely to be taken up by the other Banks or the
public, but we do feel that the terms put up ought to be
capable of improvement, and the effect of the conversion of the
42% loan here may well lead to a further general lowering of
rates in which case an issue price of even 95 would be much
too generous to the investor.
J.M.Martin Esq.
met
The/