CO129-504-12 Loan to cover work on Shing Mun Valley Scheme etc.- draft ordinance 28-4-1927 - 4-12-1927 — Page 6

6

Weller St Elbr

/

+5

Mr. Ellis.

When you speak of repayment in 5 years, I

presume you have in mind a clause similar to clause 4

of the War Loan Ordinance, 1916, enabling the Governor

to redeem at any time after 5 years,

If we issued 5-year bonds for Hong Kong

here, say 5 per cent Bonds at 99, the "expenses" of

underwriting etc., would bring the net proceeds below

97, and the effective annual cost to the Government

would approximate to 5 per cent. To this must be

added any risks of fall in the Hong Kong exchange

I though of course if the exchange should happen to

be higher at the time of redemption there would be

a profit instead of a loss in this respect).

For the reasons you give I entirely agree

that it would be better to let the Governor raise the

loan locally as he proposes, even at 6 per cent.

locally

? ceply

as

GAAR

im deb herewith

um my G.G. 6.7.77

7.7.27

69707-20