I wish to inform the House that on Monday next, 7th March, a new national loan will be issued for public subscription.
It is almost exactly a year since I announced the flotation of a loan of £12,000,000. On this occasion both the amount and the terms are being repeated. Cash subscriptions at par are being invited for £12,000,000 for 3 per cent. Exchequer Bonds repayable at the option of the State in 1965 and compulsorily repayable in 1970. From 1st September next, when the new bonds will be quoted ex-dividend, there will be no distinction between them and the bonds issued a year ago. Both issues will be consolidated to form a single stock which will then be of an amount more conducive to a normal flow of market transactions.
Last year's issue was over-subscribed by the public and the popularity of the stock is shown by the premium at which it has been quoted on the stock exchange ever since dealings commenced. The opportunity of acquiring identical bonds at par should be attractive and I am hoping for a ready response from the public, the more so as it is still desirable, as an offset to inflation, that State expenditure proper to be met from borrowings should be financed out of private savings. Accordingly, although in a position to invest up to £4,000,000 in the loan on behalf of funds under my control, I am prepared, as before, to accept a drastic reduction in the amount of my allotment. On this occasion also, subscriptions to the loan are not being sought outside the State.
The loan is being floated to provide for the financing of schemes of economic and social benefit to the community, in particular for electricity development and housing. The financial position at the moment is, in some respects, similar to that which obtained before the previous issue was made. The amount of ways and means advances and Exchequer Bills outstanding has again become considerable —it amounted to £9.8 million on 1st March as against £13.1 million on the same date last year—and in order to be in a position to finance the coming year's capital outlay it is necessary to raise new long-term borrowings.
So far, in 1948/49, Exchequer issues for capital expenditure amount to £8 million, of which advances to the Electricity Supply Board account for £3.75 million, advances to the Local Loans Fund for £1.7 million, advances to Bord na Móna for £.74 million, Road Fund advances for £.69 million and telephone capital expenditure for £.75 million. Capital expenditure on these and other works of national importance will continue in 1949/50.
Like all previous loans, the new bonds will have the protection of a substantial sinking fund. This will amount to over £120,000 in the first year and subsequent annual provisions will be on an increasing scale according as bonds are extinguished by purchase and cancellation. The sinking fund, which will be provided out of ordinary revenue, will be a safeguard for investors against depreciation in the capital value of their holdings. Subscribers will also feel secure in the knowledge that the credit of the State is high and the national debt comparatively low.
The bonds should appeal both to small and large investors. They will be a trustee investment and will be marketable at any time on the stock exchange. Any sum from £10 upwards, in multiples of £10, may be subscribed to the loan and I shall endeavour to secure that, as far as possible, applicants for amounts not exceeding £5,000 will receive allotments in full.
The 4 per cent. Exchequer Bonds issued in December, 1939, and redeemable at the option of the State on 1st January, 1950, carry the right of conversion at par into any subsequent public loan raised during the emergency or within six months of its termination. In accordance with that undertaking, holdings of 4 per cent. Exchequer Bonds, 1950/60, may be exchanged, in whole or in part, at par, for the 3 per cent. bonds now offered.
The prospectus of the new issue will appear in the daily papers on Friday, 4th March, and copies of the prospectus and forms of application will be available at banks, post offices and stockbroking offices as from that day. The list of cash applications will close not later than Friday, 11th March, which is also the final date for applications for conversion of 4 per cent. Exchequer Bonds.
The terms of the new issue are attractive and the purposes for which the money is required should commend themselves to all. I, therefore, feel that I can rely on the active support of members of all Parties in the House in ensuring the success of the issue.
