A National Loan for £25 million will open for subscription on Monday next, 21st November. Firm pre-issue applications by assurance companies and other financial houses amount to £5,350,000. These will be granted in full, leaving £19,650,000 for cash subscription. Applications amounting to £5 million are being made on behalf of departmental funds. The balance of £14,650,000 will be available for public subscription and has been underwritten jointly by the banks and the Minister for Finance. In the event that applications in excess of £14,650,000 are received from the public, the allocation to departmental funds will be scaled down.
The rate of interest will be 7½ per cent per annum and the price £99 per cent. The stock will be redeemed at par not later than 1st July, 1986, and may be redeemed on three months notice at any time from 1st July, 1981. The yield to final redemption on these terms is £7.12. 0d. per cent.
£10 per cent of the purchase price is payable on application, £30 per cent on 14th December, a further £30 per cent on 4th January, 1967, and the balance of £29 per cent on 18th January, 1967. If, however, anyone wishes to pay the full amount on application or, having paid £10 per cent with application desires to pay the full balance on 14th December, he may do so and he will be allowed a discount equivalent to an interest rate of 7½ per cent per annum on the advance payments. This means that a cash payment of £98. 6s. with application will secure £100 worth of the stock or, if £10 per cent is paid with application, a payment of £88.13s. per cent on the 14th December will complete the purchase.
The tax privileges attached to recent National Loans are again included. Interest will be paid without deduction of income tax at source, but, of course, holders ordinarily resident in the State will be liable for whatever tax on the interest is appropriate to their incomes. Stock of the issue will be accepted at its nominal value as the equivalent of cash in satisfaction of death duties on estates of which it forms a part. The stock and the interest on it will be exempt from all Irish taxation, present and future, if owned by a person neither domiciled nor ordinarily resident in the State.
There is a valuable additional concession this year which should effectively maintain the market value of the loan during the first three years of its life. The prospectus provides that stock of the issue will be accepted at £99 per cent. with an allowance for any accrued interest as the equivalent of cash for the purpose of subscription to any other issue by the Government which is offered for public subscription in the State within three years from this date and is quoted on the Stock Exchange. Under this arrangement, if the general level of interest rates should rise so that National Loans have to be issued on terms which give a higher yield than the present issue, holders of stock of the present issue will be able to exchange it for the higher-yield stock.
The issue is being made under the authority of the Central Fund (Permanent Provisions) Act, 1965, and other statutes. Both principal and interest will be a charge on the Central Fund. The historically high interest rate, the status of the stock as a trustee security, the death duty concession and the conversion option should all operate to maintain the value of the stock.
5½% National Loan, 1966, is due for redemption on 15th December next.
There is £5,700,000 of that stock outstanding and I am giving holders an option of converting into the present issue at the rate of £101 10s of the new stock for £100 of the maturing stock as an alternative to receiving cash repayment. This is a very attractive offer which I am sure will be widely availed of. Stock of the new loan issued under this conversion offer will be additional to the stock issued for cash.
The prospectus will be published in tomorrow morning's newspapers and copies, with application forms attached, can be got as from tomorrow from any bank, stockbroker or post office.
The proceeds of the loan will, of course, be applied to the financing of the Programme for Economic Expansion, including State capital outlay on agriculture and industry, housing, sanitary services, schools, afforestation, telephones, fuel resources, transport and other schemes of national development.
I ask the support of every Deputy in the House to make the loan a success.
