O REGISTRAT RECEIVED
E
£ - JAN 1934
C. O. REGY
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Telegram from the Governor of Hong Kong to the Secretary of
State or the Colonies.
Dated 6th.Jannary. Received 1-20 a.m. 6th,January, 1934.
No.5 Confidential.
73789/33 ne 18
Your telegram of the 19th. December No. 111 Confidential.Loan proposal. HAVE conferred with leading
bankers. Latter stressed community's need of local gilt edged dollar investment and recommends local issue at 4 per cent at par. At 8 per cent prospect of success is more than doubtful having regard to magnitude and period of the loan, A portion might be obtained but failure to obtain whole would be prejudicial to Government prestigo. They strongly deprecate proposal for long term borrowing by tender as an innovation to Far East and they regarded any prospect of success by such methods as more than doubtful. I conour
and recommend local loan for dollara 25 million be authorised
but that only dollars 15 million be raised in first instance. Bankers reasonably confident that such amounts could be raised in Hong Kong without unduly dislocating local market. The balance if need arises should be issued later possibly in abou 4 years time. Period of loan to be 25 years at 4 per cent interest with redemption by equal annual drawing commencing end of first year,
Bankers stress extra † per cent in local interest rate amply counterbalanced by reduction in riak due to exchango
factors.
Conference sees no objection to redemption of existing sterling stock and issue of notification by Crom Agents on 15th. January. This immediate redemption will necessitate fund from new loan becoming available about Julyat the earlies otherwise current balance would suffice for 1934. If however you consider that position will not be prejudiced by delay of
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