832.51 Sa 6/118
Speyer & Co. to the Assistant Secretary of State ( Castle )
[Received June 20.]
Sir: Referring to the Department’s request that American bankers furnish information regarding loans that they may be negotiating [Page 1023] with foreign governments,5 we beg to submit the following concerning a loan to the State of San Paulo, Brazil.
The State of San Paulo proposes to issue about $25,000,000 principal amount of its Forty-Year 6% Sinking Fund Gold Bonds, being part of an international loan to be known as either the “External Refunding Loan of 1928” or the “External Loan of 1928” of an authorized amount of about £10,000,000. We are negotiating with London bankers for the above $25,000,000 Bonds, being the American tranche.
Of the remaining bonds constituting this loan, about £5,000,000 principal amount are being negotiated in London by Messrs. J. Henry Schroder & Co., Baring Brothers & Co., Ltd. and N. M. Rothschild & Sons.
A sinking fund will be provided sufficient to retire all of the bonds at or before maturity. The bonds will be the direct and unconditional obligation of the State of San Paulo, and will be payable in Pounds Sterling and in United States gold, free from all Brazilian taxes. The State will covenant that if in the future it shall guarantee any loan, or issue a loan secured by a lien on any of its assets, it would give first to this loan adequate security approved by the Fiscal Agents.
We are advised that approximately $15,350,000 of the proceeds of this loan will be used to pay by July 1, 1929 the outstanding $7,920,000 Dollar Bonds and fl.14,240,000 Guilder Bonds of 8% External Loan of 1921, about $7,500,000 for additions, betterments and extensions to the water supply and sewerage systems of the City of San Paulo, and the balance of the proceeds for the extension of the Sorocabana Railway from Mayrink to the port of Santos.
We trust that the Department of State will find no objection to the flotation in this country of the American part of the above loan, and shall be obliged if you will so advise us at your earliest convenience.
Respectfully yours,