The sun. [volume] (New York [N.Y.]) 1916-1920, 1919-06-04
PARIS MUNICIPAL LOAN
$500, 100000 In Five Per
Cent. Bonds.

During the last 81 months,
says the London Financial
Times" the Paris Municipal
ity has from time to time met
the extraordinary expenditure
entailed on its Budget through
circumstances rising directly
out of the war by the issue Of
Municipal bills at six and
twelve months, bearing inter-
est at 5N and 81 per cent, re-
spectively. The capital amount
represented by these bills is
very considerable, something
like $3OO,0O0,O00; and it is to
lpay off this enormous floating
debt that the city has been au-
thorized to issue, early in June,
IA loan of 1,50O,000,000 frs.
| The issue will be in Five per
cent. bonds of the face value
of 500 frs, offered to the pub
lie at 48O frs and redeemable
by six drawings per annum
over a period of 60 years. As
the Five per cent. coupon on
the bonds will be subject to
payment of taxation, the net
revenue will be slightly under
4M per cent, or exactly a frs
Coo net per 100 frs capital.
From the French point Of
view, however, the attraction
Of these Paris Municipal bonds
lies more especially in the fact
that they are of the variety
described in England as
"bonus" bonds, and on that &C
count, as English law now
stands, their negotiation would
be prohibited in the United
Kingdom. In view, however,
of the attention aroused a few
months ago by the proposal
that the British Government
should adopt the premium
bond system for its War
Loans, it is of some interest
to note the mechanism of these
premium or "bonus" bonds as
about to be issued by the City
of Paris.
The number of bonds to be
issued, secured on the general
revenues of the city, is 1885,
900. For 60 years to come a
certain number of the bonds
will be redeemed at par
namely, 500 frs-at each of
the six amortization drawings
to be held in each year. At
the first drawing in each year
the first number falling out of
the spherical cylinder contain
ing al the numbers of the
3,125,000 issued bonds will be
redeemed by the City Treasury
with a bonus of 100000 frs.
At the remaining five drawings
in each year the first bond
drawn will be redeemed with a
bonus of 100000 frs. Besides
these large bonuses, $500
other bonds in each year will
be redeemed varying from
1000 frs up to 100000 frs, and
including several bonuses Of
$4,000 frs, 10000 frs and
5000 frs.
This will be the first time in
the financial history of the
Paris Municipality that such a
large number of bonds as
3,125,000 will have been issued
in any one loan, and that any
municipal bond will be re-
deemed in such a large sum as
100000 frs.
1t is, of course, open to ques-
ton whether the bonuses com
pensate for a low rate of in
terest, but in France there is
a very large demand for these
Paris Municipal bonds, which
are treated as trustee securi-
ties. One great advantage to
The city is that, once bought.
the purchasers do not readily
part with their holdings, SO
that the market in the bonds
does not require official SUD-
port. All the great joint stock
banks are taking part in the
present issue, which of neces-
sity is strictly limited to the
French market, no subscrip-
lions being solicited abroad.
NOTE-This extract from the
Financial Times" IonSo