TNAG-0564-FCO40-659-Construction-of-an-underground-railway-system-in-Hong-Kong-1975 — Page 48

CONFIDENTIAL

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Re-financing

In order to minimise the difficulties associated with re-

financing, the Corporation will accept opportunities to take funds with maturities extending into the second half of the 1980s. The prime

source, export credits, will of course be tapped to the full; to the

extent that the local Hong Kong market permits the raising of funds for longer than 5-7 years, these will be taken in preference to the

short-medium term; and full advantage will be taken of longer term fixed interest funds from foreign markets, paying due regard to the avoidance of any unusually high exchange risk.

Sensitivity

30.

The conclusions are, of course, no more valid than the

underlying assumptions and a great many factors could improve or

weaken the financial position. Some of these factors are reasonably

susceptible to control by the Corporation (for instance, the cost of construction in real terms). Others are unlikely to be consistently adverse (for instance, rates of interest, inflation and exchange

risks). Then there are those factors which are crucial to the com-

mercial and financial viability of the Corporation, and over which it

Revenue and the availability of market funds come

has less control.

into this category. Both are, to some extent, dependent on Government policies. Even in the highly unlikely event that all factors were

to be significantly adverse, however, there is, given the availability

of property development, adequate leeway within which to absorb cost

increases or revenue shortfalls, without making the project a burden

on the public finances.

G.F. 323

CONFIDENTIAL

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