News Release
Gilt-Edged Conversion Offer From 12% Exchequer Stock 2013-2017 Into 8% Treasury Stock 2015
29 October 96
The Bank of England has today announced an offer to convert holdings of 12% Exchequer Stock 2013-2017 into 8% Treasury Stock 2015 on 12 December 1996. The rate of conversion will be set at the discretion of the Bank of England. It will be on a clean price basis, announced at 3.30 pm on 12 November 1996, together with details of the action required to be taken by holders to assent to the terms of the conversion offer.
Registered holders of 12% Exchequer Stock 2013-2017 at the close of business on 5 December 1996 who have exercised the option to convert will be entitled to the full interest payment, gross or net of income tax as appropriate, due on 12 December 1996, the next interest payment date for 12% Exchequer Stock 2013-2017. However, an amount equal to five days' gross accrued interest on 8% Treasury Stock 2015 (in respect of the period from 7 December 1996, the previous interest payment date for 8% Treasury Stock 2015, to the date of the conversion), at the rate of GBP0.10959 per GBP100 nominal of the converted amount of stock, will be deducted from the payment made, as consideration for the purchase of the gross accrued interest.
8% Treasury Stock 2015 issued as a result of the conversion will be fungible in all respects with the existing stock from the date of conversion. Holders who exercise the option to convert will receive the full six months' interest payment on 8% Treasury Stock 2015 due on 7 June 1997 which will be paid without deduction of income tax to all holders on that and all subsequent interest payment dates.
Note to Editors
The conversion offer announced today is the second conversion offer of conventional stock announced this year; on 13 August 1996 an offer was made to holders of 13 1/2% Treasury Stock 2004-2008 to convert their holdings into 8 1/2% Treasury Stock 2005 on 26 September 1996. Approximately 92.4% of the GBP1,250 million of 13 1/2% Treasury Stock 2004-2008 then in issue was converted.
The latest conversion offer, like the last one, is being undertaken with a view to building up a pool of strippable stock ahead of the introduction of the gilt strips facility. Such offers were foreshadowed in the Debt Management Report 1996-97.
As in the previous conversion offer, the initial announcement of the offer has been made ahead of the terms of the offer being fixed. This is to allow investors to have as much notice as possible and to allow the Bank to determine the terms taking account of any adjustment in the prices of the stocks following the initial announcement of the conversion offer.
The interest payment arrangements in this offer are also similar to the previous offer.
12% Exchequer Stock 2013-2017 was first issued in June 1978. Interest is payable on the stock half- yearly on 12 June and 12 December. The stock can be registered at the Bank of England or at the Bank of Ireland, Belfast or may be held on the National Savings Stock Register. If not previously redeemed, this stock will be repaid at par on 12 December 2017, but the stock can be redeemed early by HM Treasury, in whole or in part, at par on or at any time after 12 December 2013 on giving not less than three months' notice in the London Gazette.
8% Treasury Stock 2015 was first issued in January 1995. Interest on the stock is payable half-yearly on 7 June and 7 December and the stock will be repaid at par on 7 December 2015. The stock can be registered at the Bank of England or at the Bank of Ireland, Belfast or may be held on the National Savings Stock Register. The stock will be strippable when an official gilt strips facility is introduced. The prospectus for this stock includes provision for exemption from United Kingdom taxation in favour of non-residents. With effect from 7 June 1997, interest payments will be paid to all holders of this stock without deduction of income tax.
Copies of the prospectuses for 12% Exchequer Stock 2013-2017 and 8% Treasury Stock 2015 are available from Bank of England, Conversions, Southgate House, Southgate Street, Gloucester, GL1 1UW.
Stockholders uncertain as to the best course to follow should consult their stockbroker, solicitor, accountant or other professional adviser.
| Amounts outstanding | Total | of which, in market hands |
| 12% Exchequer Stock 2013-2017 | GBP1,000 million | GBP993 million |
| 8% Treasury Stock 2015 | GBP12,500 million | GBP12,423 million |
