G.F. 323
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9
In addition, lines of credit repayable in 1980 are being
made available to local contractors to enable the Corporation
to defer payments to these contractors until 1980, also at
an average overall cost of some 10% p.a.
It has been assumed that it should be possible to raise
HK$200 million p.a. for the Corporation, starting in 1976,
on the local bond market, following the initial Government
issue later this year. The assumed maturity is 3-5 years
with a fixed coupon of % p.a.
(c) International Markets: the main potential sources of long term
funds are the truly international Eurobond market and the bond
markets of the US and those European countries which permit
foreign issues on their domestic markets. Medium term funds
are available from private placements in similar markets.
Other markets, for instance in the Middle East or Japan,
are sometimes open.
All these markets entail an exchange risk, and advance
commitment of funds is not possible. However, they offer
the possibility of substantial amounts of medium-long term
funds, and the first steps to prepare to tap these markets
have been taken.
Owing to the unpredictability of international markets,
the annual availability assumed for the purpose of the cash
flow analysis has been restricted to US$15 million long term
bonds, with a twelve year life, costing some 10% p.a. and
US$25 million medium term, with a seven year life costing
some 9 p.a. In practice, substantially larger sums should
be forthcoming.
CONFIDENTIAL
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