I wish to inform the House that a new National Loan to be known as National Development Loan will open for subscription on Monday next, 2nd November. The Loan will be for £12 million and it will be underwritten jointly by the Banks and the Government. The rate of interest will be 5¼ per cent. per annum and the price £99 for each £100 of stock purchased. The stock will be redeemed at par not later than 1984 and may be redeemed at any time from November, 1979. As the issue is being made at a discount, there will be a capital gain of £1 per cent. on redemption and this will be tax-free to the ordinary investor.
The usual provision is made in the prospectus whereby only 10 per cent. of the purchase price need be paid on application, the remainder being paid in three further instalments spread over the period until early January. This should facilitate investors in taking up stock. On the other hand, those who wish to pay the full amount on application next week, or to complete their subscription on allotment later in November, will be entitled to discounts equivalent to an interest rate of 5¼ per cent. on the advance payments.
The tax privileges attached to recent National Loans are again included. Interest will be paid without deduction of tax at source, though, of course, a holder ordinarily resident in the State will be assessed to tax at the rate appropriate to his income. Stock of the issue will be accepted at its nominal value as the equivalent of cash in satisfaction of death duties on properties of which it formed 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.
The issue is being made under the authority of the Appropriation Act, 1959, and other statutes. Both principal and interest will be a charge on the Central Fund. The market value of the stock will be upheld by the attractive interest rate it carries, by its status as a trustee security, by the concession whereby it will be accepted in payment of death duties and by the substantial sinking fund allocations. The Government Stockbroker will at all times be prepared to buy and sell reasonable amounts of the stock, and this will help to maintain an active market in it.
Two conversion options are associated with the new Loan, and stock issued under them will be additional to the £12 million offered for cash subscription. The first option relates to 3 per cent. Transport Stock, 1955-60. This stock, of which nearly £10 million is outstanding, is due for redemption on 30th June next and holders are being given the opportunity now of converting into the new Loan on the basis of £100 of the new stock for £100 of the Transport Stock. The exchange will take effect as from 1st January, 1960, and holders who convert will receive their normal half-year's interest on the Transport Stock up to 31st December, 1959.
The conversion offer provides an excellent opportunity of profitable reinvestment. The new loan carries a much higher rate of interest than that applicable to the Transport Stock— 5¼ per cent. as compared with 3 per cent.—and, in addition, has the tax privileges and other advantages which I have already mentioned. Transfers of the new stock, unlike transfers of the Transport Stock, will be free of stamp duty and transfer fee. Moreover, holders who convert will, by a special concession, receive the same first interest payment as cash subscribers to the Loan although, having regard to the effective date of the exchange, the interest earned by them on the stock of the new Loan would be 6s. 2d. per cent. less. As interest rates generally have been tending downwards, equally favourable terms for re-investment may not be available to holders of Transport Stock if they wait until the stock becomes due for redemption in June next, and I trust that they will avail themselves of the attractive terms now being offered.
The second conversion option arises from the right that holders of 5½ per cent. National Loan, 1966, which was issued in October, 1956, have of converting into any public issue made by the Government within five years.
The Loan will directly assist the implementation of the Programme for Economic Expansion outlined in the Government White Paper published in November, 1958, and investors who subscribe to it will be doing their share to ensure that adequate resources will be available for financing State capital outlay on agriculture and industry; on housing, sanitary services and schools, on afforestation and fuel resources; on the telephone service and on other development schemes. The main source of capital for economic expansion must continue to be the people's savings and, consequently, I should like to emphasise once again the importance of a high level of saving. Subscribing to the new Loan is a valuable form of saving and not only will subscribers be helping to promote the development of the national economy but at the same time they will be securing for themselves a safe investment and an attractive annual return on their capital.
The prospectus of the Loan will be published in tomorrow morning's newspapers and copies, with the application from for cash subscriptions attached, will be available from any bank, stockbroker or Post Office. The lists will close not later than Friday, 6th November.
I am sure that every Deputy in the House will give his fullest support to the issue.
