A/1796
RECEIV
1zNOV1946
162 21
/0 54126/4/46.
4, MILLBANK,
WESTMINSTER,
LONDON,
S. W. 1.
(ABBEY 7730)
C. O. REGY
7th November, 1946.
Dear Palmer,
28.
Your would no doubt like our comments on Hong Kong telegram of 30 th October. The figure of 3 to which the Governor refers applies, of course, only to a local loan. The rate at which a loan could be
issued in London must depend on conditions at the time of issue- as you may know we have recently brought out a conversion loan for Nigeria at about 22.
2. There is no need for separate Ordinances to cover the possibility of London and local issues and I attach a suggested draft Ordinance which covers this point.
3. It is difficult for us to advise whether a sinking fund loan or a drawing loan as contempla ted under Ordinance 11 of 1934 is preferable for the local issue. This depends largely on local taste. If local interest rates are likely to fall the investor will prefer a loan on which he is certain of his interest for at least 20 years, while if they are likely to rise the annual drawings tend to keep the market price
up.
4. We confirm that, unless it is agreed to be in the best interests of Hong Kong, we should make no attempt to float the loan in London unless this becomes necessary to repay advances by the joint Colonial Fund and this situation is unlikely to arise for some considerable time. No reference to this is necessary or indeed would be appropriate in the Ordinance.
Loopy to Inwonery
30
H. Palmer Esq.,
0.B.E.
and
Yours sincerely.
A. Hann Kraken
#K. FEEF
t
CA
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