My hon. friend would
no doubt expect me to say that at the moment one cannot lay down or formulate a definite line of policy with regard to the terms of issues which may be made in the future. With regard to maturity, one of the major factors-[DOT] I cannot give them all
is obviously to endeavour to find a maturity which is at such a date that it will not involve too great a burden of refunding in any particular year. That is one factor.
Another factor which must be considered is the length of term of the bonds which are being refunded and where they are held. Rate of interest will of course depend on the length of term for which the money is asked, and on what the market may be for bonds of a comparable maturity which are outstanding at the time of the refunding operation.
Obviously a third factor in connection with rates of interest on issues being made at this time is the readiness of Canadians to help. While we want to be sure that the issue is taken, at the same time we want to be sure that the money shall be secured at the cheapest possible rate. We believe we can depend on the Canadian people to see to it that the issues made by the government at reasonable terms will be taken up.
With regard to the callable feature, we took advantage of a feature of that kind in connection with the 48-52's which were issued in January last. One always has to consider the price and coupon rate so that the call feature will not mean that you are paying a long-term rate of interest for a short-term bond. I agree fully with my hon. friend when he suggests that, in so far as it does not interfere with the salability of the bond or make the money too expensive, it is most desirable that there should be a call feature in a bond. That is perhaps somewhat more applicable in respect of bonds bearing a high rate of interest, such as those to which my hon. friend has referred. But generally speaking I think the government's being able to
Government Loan Bill
call bonds on such terms as they may see fit, after leaving a reasonable time for the bond to run, is a proper precaution to take.
Subtopic: LOAN OF $750,000,000 TO MEET LOANS OR OBLIGATIONS, TO PURCHASE UN MATURED SECURITIES, AND FOR PUBLIC WORKS AND GENERAL PURPOSES