815.51/566: Telegram

The Secretary of State to the Chargé in Honduras (Dennis)

29. Your No. 36, March 7, 6 p.m. You may inform the Government of Honduras that this Government cannot undertake to give advice regarding the acceptance or rejection of any specific agreement with the British bondholders. You may say, however, that you are authorized confidentially to call the attention of the Government of Honduras to the fact that the conclusion of a suitable arrangement with the British bondholders might strengthen the credit of Honduras and thus facilitate the flotation of any subsequent loan. You may also suggest that in order not to tie up permanently revenues or assets which might be used as security for a future loan, the Government might wish to include in any agreement reached with the British bondholders provision giving it the option to discharge its obligations to them at any time by the payment of the capitalized value of the installments remaining unpaid at that date. A provision could readily be inserted giving this option and specifying the rate of discount and the manner in which the unpaid installments would be capitalized.

Kellogg