New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1916-06-14
RUSSIA OFFERS
EXCHANGE PROFIT
Terms of New York Loan
Make $50,0O0,O 1000 Equal
150,000,000 RubleS.

Details of the new loan to Russia by
a group OF New York bankers, made
public yesterday by the National City
Bank, showed that the American syn
dictate will Establish a $4,000 900 credit
in this country to run for three years
in favor Of the Russian government.
simultaneously the Russian govern
ment will establish in Petrograd a
credit Of 150,000,O0O rubles in favor of
the American group, or at fixed rate
of three rubles 70 one dollar.
Interest on the credit at the rate of
6h per cent annually will be paid by
the Cars government in dollars IN
New York. The institutions handling
the loan here include the National City
Bank, Guaranty Trust Company, j. T..
Morgan & Co., Kidder, Peabody e. Co.
and Lee, Higginson & Co. The ruble
credit may be used by the American
group at any time at the three to one
ratio.
Although the official announcement
of the completion of the loan did not
say so it was learned that it is planned
to make public offering Of the securi-
ties, to be in effect participation GER
tificates. The recent successes OF the
Russian army it is believed will make
the offering more popular than II the
loan had been brought out earlier IN
the year. -.
"The Russian government" the City
Bank states, further extends TO the
American group an option TO purchase
at any time within the three-year
period 5la per cent five-year imperial
Russian government bonds at 94A, less
a commission; the bonds to run for
five wears from date of purchase-prin-
cipai and interest payable in dollars in
New York. Should the American group
elect to exercise its option the purchase
price Of these bonds may be paid with
the ruble credit at the rate OF ruoles
for 81.
"The unusual advantage OF the plan
lies in the prospect Of exchange prohts
during the life Of the loan. Ruble ex-
change now rules in New York at about
31c per ruble, whereas, the normal is
sic. or at present discount of about
30 per cent The terms OF the credit
and the option on the five-year BONDS
both provide against any possible loss
in exchange and leave open the oppor-
tunity for profit If exchange advances
which, in view of the present low rate
seems potable.
"If the American group should desire
10 make use of its ruble credit, It can,
in effect. at any time buy the use OF
rubles in Russia for 81 here, even
though the rate Of exchange may have
improved from the Russian standpoint
so that 81 is worth substantially less
than rubles, and if the American
group desires to exercise its option on
the fve-year imperial Russian govern
ment bonds at 94%, IL can pay for
these bonds at the rate OF 81 for
rubles. In other words, there is added
TO the exceptional rate Of interest, ana
to the undoubted security OF the loan
n speculative value in exchange, when
it seems very likely from present pros,
meets will accrue TO the advantage OF
the American lenders.
"The Russian government Is TO re-
ceive one-half of the profits arising
from the possible exchange profit IN
the ruble credit, which under the cir.
cumstanccs, and with the prospect OF
this added profit, is only fair to the
government"