1451/025
Treasury Chambers
Parliament Street London SW1P 3AG
Telex 262405
Mk< ;78/1
RECEIVED IN REGISTRY
04 FEB 1986
3
Telephone Direct Line 01-233
7495
DESK OFFICER
REGISTRY
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INDEX
FA
Action Taken
M Sherwani Esq
Export Credits Guarantee Department
Aldermanbury House
Aldermanbury
LONDON EC2P 2EL
Your reference
Our reference
Date
36 Amaurvy 1986
DCCHKD
OPEROR 47 OPP R&R on 4/2wCUR PA
083/2
Jia Ali
HONG
FINANCE
NEW HONG KONG TUNNEL COMPANY
-
LILLEY
KONG DOLLAR
CONSTRUCTION LIMITED
Thank you for your letter of 31 January about Hong Kong Dollar finance for Lilley's bid for work on the second cross harbour tunnel and also in respect of a number of other cases where Hong Kong Dollar finance has been agreed.
The question of whether a surcharge is required on Consensus Rates for Hong Kong Dollar finance needs to
finance needs to be considered whenever there are changes in Consensus Interest Rates, the rates used in calculating subsidies generally and any significant movement in Hong Kong Dollar interest rates. As such the issue of the surcharge should now be reviewed. We expect shortly to be able to promulgate new factors for subsidy calculations,
The factors used for Hong Kong Dollar finance should be on an agreed rate of 8.3 per cent and a discount rate of 6.8 per cent. On this basis subsidies payable at the new Consensus Rate for Category II countries is negative and is below the, positive, subsidies payable for either US Dollars or Sterling. Accordingly therefore there is no need, currently, to impose a surcharge on the new Consensus interest rate where finance is provided in Hong Kong Dollars funded
on the basis of
HIBOR rates.
This of course applies to all new offers of Hong Kong Dollar finance
to be made
made during the current six month period, unless the factors are changed in
are changed in the meantime.
current problem however concerns the requests you have received to reduce the rates quoted Karlier business. Where it is necessary and permissible under the terms of the Consensus to requote a Consensus Rate indicated earlier following a reduction in Consensus Rates, it is clearly right that in the case of
of Hong Kong Dollar finance
finance that if there is no surcharge applied to new indications, none should be applied
on
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