The Hawaiian gazette. [volume] (Honolulu [Oahu, Hawaii]) 1865-1918, 1917-03-20
HUNDREDM|[LION
DOLLAR LOAN TO
FRANCE FLOATED
Details Of New Issues Of Bonds
Received BY Banking Rep
resentative
AMERICAN SYNDICATE OPENS
SUBSCRIPTION LIST TODAY
Valuable Privilege Is Given Holder
IN Unique Plan Of Re-
demption !

isE u
American bankers today will offer to
the American Investing public for sub
seription sIOO,DO0,OO0 of French loan
bonds, the second loan Of this size ne.
Eotiated by the French Republic in the
United States since the start of tho
war.
Wireless advices to H. A. Bruce, rep
resentatiye in Honolulu of the Ma!
tional City Company of New York, one
Of the syndicate OF big banking inter.
ssts floating the loan, yesterday re-
eeivcd wireless edvices giving the de-
tails Of the new issues of French bonds.
The bonds will be two.year FIVE and
one half per cent convertible securities
with unique feature In the payment
ofrpfincipal and interest that increases
their value TO the purchaser. The
holder has the option Of demanding the
payments In francs at the fixed rate of
SIS francs per dollar, which practically
assures the realisation of $il00 to a
bondholder ON q $1,000 bond at matur.
ity. In an interview yesterday Mr..
Bruce, explaining the new loan, said:
Similar TO British Loan
THE new loan Of 100000 to
France, which will be offered for sub
scription Monday morning by syndi
cate of American bankers, will be
quite similar 70 our recent loans to
Great Britain. Collateral will be
pledged with the trustee in New York,
and although the bonds actually mature
in two years, they will be convertible,
at the option of the holder, into twenty
year five and q half per cent bonds Of
the French Republic.
ssThere Is one feature about this new
loan, however, which has not been
found In previous loans. Although
principal and scmi-annual interest are
payable in United states gold coin, a
valuable privilege is given TO the pur;
chaser in the option to demand these
payments, If he 80 desires, in francs at
Tie fixed rate Of 5.75 francs per dollar,
g Under normal conditions exchange
on Paris sells in New York at SIS
francs per dollar. A credit Of SIS
francs is therefore worth $l.l0 under
such conditions. Under the terms Of
the loan, payments may be demanded
in francs, and it is thus quite possible
that $l1OO may be realized ON each
1900 bond at maturity. The coupons
may similarly prove more valuable
than their face amount.
SIX Per Cent Assured elg!
THE two-year five and one-half per
cent convertible bonds are to be offered
by the syndicate at $500 for each
$1,000 par value, As they mature April
{ 1919, the purchaser is assured of
receiving $1,000 on that date, or an as
sured six per cent on his investment.
In case the war is over at that time
and exchange has returned to normal,
the novel feature described assures a
premium which greatly increases the
rate of interest return.
"The option of converting into a
twenty-year FIVE and half per cent
bond Of the French Republic offers an
other possibility of profit. French
Rsntes sold In January, 1913, at prices
such that only $40 per cent was the net
return. on the investment. It Is UNI
likely that French government bonds
viii again command such prices in the
Immediate future, but il does seem
quite probable that investors will de.
mand far less than FIVE and a half
per cent on such bonds when peace has
finally been concluded. 1t is interest
ing TO note therefore, that a twenty
year five and a half per cent bond pur-
chased at $l205 would net four per
cent, and at $l285 there would be o re-
turn Of $50 per cent on the investment.
These figures indicate the possible value
Of the convertible privilege,
Collateral Carefully Guarded
"The collateral deposited with the
trustee in New York will be similar to
that pledged for the various British
loans, and, similarly, the French gov.
ernment obligates itself to pledge ad.
ditional securities if necessary so the
market value shall never fall below
one hundred and twenty per cent Of
the par value Of the loan outstanding.
n In view Of the fact that the fed.
eraI reserve board has reversed itself,
and now acknowledges the desirability
Of Investments In foreign government
issues, aud because of the excellent pos
abilities Of profit, in addition to the
conservative nature Of the bonds from
the Investment standpoint alone, there
seems 10 he every reason to expect that
the offering will meet with cordial
reception and be promptly subscribed
II Is, of course, desirable that such
should be tho case, as the creation Of
snch credits in the United States is es
sential TO the continued purchase of
our commodities"