54126/4/47
118
Colonial office,
Downing Street,
S.W.1.
1st March, 1947.
le car
Dear Serpell,
with reference to your letter of the
27th February (8.52892/04) regarding the proposed Hong Kong loan, I have discussed the two points with Emanuel as they are technical points on which I do not pretend to be an expert. Emanuel's comments are as follows.
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Apparently it is not the normal practice in Colonial loans which are floated by the Crown Agents for provision to be made for a sinking fund which would redeem the loan within the period of its life. The usual practice is to provide for a 1 sinking fund which may be supplemented later on should the financial position of the territory improve sufficiently to enable this to be done. Emanuel's impression was that whilst you did not necessarily agree with the above procedure in the case of Hong Kong, you were prepared to leave the matter to the decision of the Colonial Office.
As regards paragraph 5 or your letter of the 1st February, the last sentence in (b) of our telegram No.220 suggested that the Crown Agents should be appointed as trustees to the sinking fund and that any investments of the proceeds of the sinking fund in "self stock" could only be done with the Secretary of State's approval. The requirement as to the Secretary of State's approval is contained in a draft Ordinance which we have sent to Hong Kong in connection with this loan. In these circumstances,
D.R. SERPELL, ESQ., 0.B.E.
it
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