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T~iS report is not to be published nor may itlbe quoted as representing the Bank's views .
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No. E 100
INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT
THE EXTERNAL DEBT OF ITALY
Economic Department
Prepared by: James 1. Lynch
1uly 15, 1950
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THE EXTEBNAt DEBT OF ITALY
Table pf Contents
External Debt Outstanding
Service Payments
The External Debt and Its Service Requirements
I. The Present Position
II. Oourse and Settlement of Recent Defaults
III. Note on the Histo;y of Italy's Foreign Debts
kppendix I - Tables A-I List of the Externpl Debt of ItalY'. December 31, 1949 A-2 Estimated Interest and ~ortiz~tion P~YEents on the
External Debt of Italy, 1950-1974
Appendix II - Present Debt Adjustment Plan
Appendix III - External Debt of Italy
Appendix IV - Economic 01auses of Pea,ce Trea,t:r
Appendix V - Informa,tion Pertaining to Gua,rantee of the Austria..'rl Gue.ranteed Oonversion Loan of Dec. 1, 1934. due Dec. 1. 1959
THE EXTElUtu. DEBT OF IT.d.JiY
External Debt Outstanding
At the end of 1949. the external debt of Italy i"laS estimated to amount
to $5>~ million, of which $374 million was accounted for by loans from the
U.S. Government. and $146 million represented dollar bonds issued in the New
York market from 1920 to 1930. making a total of $520 million on which interest
and amortization are payable in U. S. dollars. The remainder of the e=l:ternal
debt consists of the equivalent of $L~ million in SVliss francs. an EgY'ptian
reparation debt of $6.2 million 1/ and sterling bonds of $2 million.
Service Payment s
Payments on long-term external debts in 1950 l1ill amount to the equiva-
lent of about $37.6 million. These payments \'Jill rise to a pealt of $41.1
million in 1952 ($12.7 million of interest and $28.4 million amortization),
of which about 95% is payable in U. S. dollars. They \"ill decline to $39
million in 1953 and to $30.4 million in 1955, remaining at that level through
1958, thereafter declining gradually to $23.4 by 1963, to $19 million in 1964
and to $15.4 million by 1974.
11 Apart from the Egyptian claim. the financial obligations of Italy arising out of the t'VIO ';'!orld i'lars are :not covered in this paper. Intergovernmental indebtedness originating from the First \vorld Ivar is briefly described in Section E. and Reparation Payments under the Italian Peace Treaty after the Second ':lorld i'lar are referred to in Appendix IV.
- 2 -
The Exter~l Debt and Its Service Requirements I. The Present Position
;
The total foreign debt of Italy, as of December 31, 1949, amounted
to the equivalent of about ~5J3 million; of this, total dollar obligations
comprise no less than $520 million, including $22.6 million 11 not yet
disbursed. The remainder is made up mainly of Swiss franc debts equivalent
to about ~4 million, an Egyptian World Nar II debt of $6.2 million and sterling
debts of ~2 r.tillion. Details of the individual loans are listed belm·!! gj
Dollar Debt U.S. Intergov't:
O.F.L.O. E.O.A. Maritime Oomm'n
Export-Import Bank Utilized Undisbursed
Total Eximbank Total U.S. Intergov't Dollar Bonds under
Lombardo Plan Other Dollar Bonds Total Dollar Bonds
Total Dollar Debt Sterling Bonds (~700) Egyptian Debt (~E 2,162)
(in thousands) Princi- In-
pal terest Amount Rate a p p.a.
143.526 2-3/8 67.000 2-1/2 56,677 3-1/2
84,18lli3-1/2
22,644
106 z82,2 374.028
128,459 18,000
146z9-$9 520,457
1,959 6,201
1-3
1-3 None
Swiss Debt (Sw fr 17,440) 4,0.59
Total
Date Rate of of Ar.lorti-
Issue zation >J ';0 p.a.
9/9/46 4 1948 2-1/2 Vari- 6-1/4 ous approx.
1947 10-20
1/1/47 1-2
1862 iLA.
Date of !~-
turity PUrlJOSe
1/1/75 Surplus prop 1983 Reconstructi r
Various Surplus ship'
1950-59 See App.III
1/1/77 Various
1977 itfaremmana By 19.52 V/orld ~'1ar II
reparations. Societa Idroellettri( Piemonte.
11 $16 million unuti1ized as of lvfay 31, 1950. gj For additional details, see Appendix III. J1 Apart from the Egyptian reparation debt, for \'Jhich a definite ya,yment
schedule has been agreed, all \vorld ','lar II reparations are excluded from this total. Also excluded, outstanding balance (~~. fro 65 million) of a loan made by ~jiss banks in 1940 to the Italian Foreign Exchange Institute. See Appendix IV for further details.
- 3 -
~374 million of the total debt outstanding represents loans from the
U.S. Government. The largest of these arose from the acquisition of surplus
property through the O.F.L.C. credit. nO',l estimated at $144 million. Part
of the required interest and amortization payment on this loan may be paid
in local eurrency or property and it is estimated 11 that as much as $10
million may be paid in this ma~er. Export-Import Eaa~ loans total $107
million, of which Q84 million had been disbursed and $22.6 million remained
unutilized as of December 31, 1949.~ The balance is made up of the B.C.A.
lOan of $67 million and the U. S. ~'4a.ritime Commission I s ship loan of ;;;56.7
million.
The second major category of dollar debt is the $128 million of
securities, issued in exchange for the national, municipal and corporate debt
under the permanent debt adjustment plan (the "Lombardo Plann) discussed in
detail in Section II of this report. The remaining $18 million in dollar
bonds ''lere not included in the original settlement. Their O'l1ner -- the U. s.
corporC'>tion "International Povler Securities" -- has, hO'.1ever, agreed to a
settlement on a parallel basis.Jl The remainder of the debt is an ~gy.?tian
1'lorld I'lar II reparation debt of ;p6.2 million and an old sterling loan of $2
million.
In addition, an Argentine loan of 350 Sf million pesos ($75
million). J-3/4:P.· ,;a~ made in 1947-48, maturing in 25 years. rto.l;;t hOlds>
p e s.o.balances sufficient to payoff this obligation. It has not been
included in the debt figures above. (See A:ppendix I. Note).
11 By the U.S. De~)artment of State. See Appendix It Table A-I, Page 2,Footnote 1 ?J As of r4ay 31. 1950, $79.5 million had been disbursed. JJ For details see Appendix It Table A-I. Page 2. Footnote 5. I:!/ lifo\'! reduced to 302 million pesos,
-4-
The above debts call for interest and amortization payments ,~
mainly in, U.S. dol1ar~ except for small amoun~s in other currencies as
shown below (in thousands of U. S. dO{lars}lI:
-.. ...-./1 ...... ~ervice Payments b¥ Currencies • Debt Total Dollar Egyptian Swiss Fr. Sterling Out- Amor- In- Debt Debt Debt Debt Dent
Yea.r standing tization terest Service Service Service Service Servj . .Q,L . ,
1950 536 ,219 24,386 13,265 37,651 34 ,123 2,067 1,441 20 1951 511,832 28,924 11,344 40,268 38,081 2,067 81 39 1952 482,908 28,470 12,818 41,288 39,101 2,067 81 39 1953 453,870 26,143 12,853 38,996 38,756 162 78 1954 427,125 22,568 12,016 34,584 34,344 162 78 1955 4°3,931 19,260 11,312 30,572 30,332 162 78 1960 295,132 18,236 8,069 26,305 26,016 197 92 1965 206,651 13.212 5,565 18,777 18.488 197 92 1970 130,117 12,868 3,517 16,385 16,096 197 92
:'lith one minor exception, dollar, sterling and Egyptian service pay-
ments have been made punctually since 1948. Pa~rments on the O.F.L.C. credit
have been behind schedule for the last half of 1948 and the enttre year of 1949
pending negotiations ,.,ith the U.S. Government on the exact terms of yayment. A
payment Of ).7 million was made in the first half of 1950 redUCinG the arrearage " ,', ~ , ,
from 5.7 million to 1.9 million. I!. Cour§e a.nd Settlement of Recent De~aults
There ~ms no record of default on any publicly-held external obligation
of Italy V until June 1940 ,.,hen payments on all external obligations iiTere
suspended as a consequence of Italy's entering the ~mr.
11 For details see Appendix It Table A-2.
Y Like the other debtor countries. Italy in 1931 stopped payments on ':forld War I intergovernmental debts to the U.S. ($2 billion) and the U.K. (I,277 million) in line \,dth the Hoove:r Noratorium. Partial ~yments ,,'ere made to the United States up to December 15, 1933 but no payments were rrade after that time.
-5-
Since 1947 Italy has made everJ effort to place all its external
public issues on a paying basis.JJ Debt service payments on Italian dollar
bonds t'lere resumed under the "Lombardo Plan, U which 'vent into effect December
22, 1947. This plan provided for the issue of new 1 to 3%, 1947-1977, bonds
by (1) the Republic in exchange for the government issues, (2) the Credit
Oonsortium for Public Uorks for the outstanding municipal bonds, pnd (3) the
Public Utility Oredit Institute for the third group, mainly utility corpora-
tions. Old bonds were exchanged for new bonds on a par for par basis, plus
neyl bonds for full back interest. All the ne,v Donds, including those of the
Oonsortium and the Institute, are fully guaranteed by the ItaliDn Government.
All three issues have the same provisions. Interest started at 1% per annum
on January 1, 1947 t to]ill increase to 2;:; on January 1, 1950 and to 3~ on
JanuarJ 1, 1952. Sinking fund payments of 1% per annum start Jll~j~ 1 t 1952
and rise to 2% on July I, 1957. (For details see Appendix II).
JJ This excludes the Italian tranche of the 4-1/2% Austrian Guaronteed Oonversion Loan 1934-1959. According to the statement of the Oouncil of Foreign Bon~lo1ders, the Italian Government paid up in 1948 the arrears of interest due under its guaranty. It refused, houe:ver, ~md has since continued to refuse to fulfill its guaranty ns regards sinking fund "pending negotiation ''lith the Austrian Government I?lld cl~rific.,.tion of its position." Recently it has been stated on beh~lf of the ItDlbn Treasury to the French and British Governments that the Italian Government has decided to resist payment of future interest on the loan unless /3. conference of guar'mtor governments is called to investig9.te Italy's capacity to pay. In the opinion of the Italian Government, the occupation of Austria by France Dnd the United Kingdom changes "the.t equali ty of status between the guarantors \,lhich seems indispensable if there is to be equality of obligations bet,'leen the contracting pOt-Ters to carry the onus of the guarantees ana. if they /3.re to ha.ve the same possibilities for recovery vis-n-vis the guarDllteed country." (Unofficial translation.) The Italian Government has asked that n conference of the Guarentor Governments be held to investiga,te Austria's ability to pay.
- 6 -
Pursuant to the above program, issue of the fol1o\dng new dollar
bonds ~Jas authorized: Price Range Prices Current
t aBUe .Authorized 1242 - 12~0 6[26[50 Return* (Hil. $) (HE:l'11 York)
Italian Rep. 1-3%, 1977 39.7 48 - 18 38 5.26 Credit Consortium 1-3~, 1977 37.2 41-1/4 - 16-1/2 35 5.71 Public Utility Cr. lnst.
41-1/2 - 16-1/4 34-7/8 1-3~t 1977 55.1 5·73
132.0 -* Based on 2% interest payable through 1951.
The Italian dollar bonds actually issued under the exchange offer
nO~1 total close to the above $109 million or nearly 82~' 11 of the debts
included under the adjustment plan. The $18 million of clollar obligations
held by International Power Securities are nOvl being settled on a similar
basis.
For practically all the external sterling and ~1iss fran~/debts,
an arrangement along the same lines as the Lombardo Plan has been agreed to.
1.1 The :;Je"130nds of the three issues tl:l.at had been issued at June 15, 1950, in exchange for Old Bonds and coupons represent the fo2lowing percentages of the I'l'e"" Bonds 1Ilhich may be issued: IITe1l1 Bonds of the Italian Rel)ublic 85.9%; Nelll Bonds of the Consortium 84.2%; and 11'e':r Bonds of the Institute 70.7%.
?J Excludes 65 million Si1iss francs obligations. See Page 2. Footnote :3 of this Report for further details.
- 7-
III. Hote on the ~istory of Italyl,s Foreign Debts
Italy contracted some loans in London in the 19th Century but at
the outbreak of i,vorld ".var I had practically no e:tterna1 debts. HOVlever.
during the First 1'!or1d \var large sums \'rere borro'ted from the British and
later from the U.S. Government. Italy! s 'Vrar debt to the ti·ro governments. as
finally agreed on in 1926, amounted to ~277 million (originally b611 million)ll
and $2 billion of principal (plus $365 million accrued interest), respectively.
Al together by the end of 1926 the external ~.,ar debt of Italy "las equivalent
to about $3.4 billion. These obligations have not been serviced since the
Hoover IJIoratoriu.m in 1931.
Italy began its external borrouing in the NevT York market pub-
l~o~ in 1925 when it issued $100 million of Government bonds to lJaY debts
o\<red to the Bank of Italy. In addition. the cities of 1'lilan and Rome each
issued a $30 million loan. The Italian Credit Consortium for Public ~'lorks
also issued t\,10 loans, one for $4.5 million and another for $7.5 million,
and private corporatiolls issued securities, not guara.nteed by the government,
amounting to $109 million, bringill;.,?; the total of Italian dollar bonds floated
in the 11et·, York mar!ret through early 1927 to $281 million. After that time
there \':I'8.S no major long-term external borro"l1ng until the end of 1'lorld i,Ja.r II
,then loans from the United States Government's various agencies reached El.bout
$374 million.
1I Italy! s ,\far debt to Great Britain at the time of settlement a.mounted to h610.8 million sterling and \\fas settled for b277 million sterling, of \-,hieh ~22.2 million sterling t-ras credited as ];>aid to Grea.t Britain by Italy from a gold loan made to Great Britain early in ':TorId ';Jar I. The net debt. therefore. became ~254.6 million sterling 1:Thich 'flas to be -paid as an arumi ty annually amounting to e_IJproximately ~4 million sterlinf; a year for 62 years. .
APPENDIX t Table A-l: LIST OJ;' TH.:; :;Xr--JRii8.L Dl1BT OF ITALY .. DECEI,:lJ3BR 31, 19L9
(In thousands)
Item
u. S. DOLLAR DEBT
Dollar bonds under Lombardo Plan Italian Repub1io 1-3%, 1947-1977 Creeli t Consortium for Public ~rorks l-.3%r 1947-1977 Publio Utility Credit Institute 1-3~, 1947-1977
Total dollar bonds under Lombardo Plan
Bonds held by International Pot\l'er Securities t!I Public Utility Credit Institute 2-3%, 1969 ~
Total dollar bonds
U.S. Government debt E.C.A. 2 1/2%, 198) 11 Export-Import Bank -
Outstanding Undisbursed
Maritime Commission Surplus property gj
Total U.S. Government debt
Total dollar debt
ST:'RLIHG BOlIDS
I'{aremmana Raili-lay 1-3%, 1947-1977
EGY?T IA.N DEET
Egyptian Government (no interest)
SUISS FRANC BOlIDS
Public Utility Credit Institute l-)p. 1977
TOT.ri.L DEBT ':!I
Page 1 Outstandipg
In ourrenoy :~Jc)ressed in of p~ent U.S. dollars
$ 37,854 $ 36,833 $ 53.772
$ 18,000
$ 67,000
$ 84,181 $ 22,644-$ 56,677 $ 143,526
700
8'1.1 fr 17.440
37,854 36,8)3 53,772
128,459
18,000
146,459
67,000
84,181 22,644-56,677
143.526
374,028
520,487
1,959
6.201
4,059
5)2,706
11 This loan has a \\I'aiver clause as f0110\,18: "If at aD¥ time or from time to time the parties hereto determine that it 110uld be in their common interests because of adverse economic conditions or for any other re~sons to postpone, or provide for the postponement of, any instalments of interest or principal, or to aiher or provide for the alteration ot any provision of the aforesaid promiSSOry note relating to payment of interest and principal~ ·or to modify the aforesaid promissory note in any other respect~ they m~ by mutual agreement in \'/riting provide for any such postponement or alteration or other modification.'
APFIDIDIX I
Table A-l: LIST OF If'E:; EXT~~mJAL DEBT OF ITALY t DTCEi-lE:DR 3l, 1949 - Contd.
(In thousands) Pa~e 2
?J This consists of tuo credits: one for $125,526,020 and another for $18,000,000. On the former the Italian currency option provision limits the a~ount that the U.S. can receive in any one year to the e~uivalent of $5,000,000 but in addition to that the U.S. can ac~uire prope~ty Up to an estimated $8,750,000. llhen any such currency or property is acquired, the dollar value is applied first to past due interest and then pro rata. Under the second loan the U.S. has the right to ac~u1re Italian currency up to the value of $8,000,000, limi ted to not more than $1,000,000 ljer year, and, in addition, may acquire property limited to a total of $10,000,000. Currency or property \'lill be credited first to past due interest and then jJro rata.
11 The Egyptian pound equivalent is not l:no\in. The Eanca dlltalia states that the principal is repayable in annual instalments of $2,067,000 through 1952.
~ There are in addition the following external obligations payable ill foreiGn currencies:
a) Italian guarantee on the 4 1/2 Austrian bonds 1934-59 not-l in default. b) Argentine loan of pesos 302.5 million. Sufficient funds are at present
available to re?~ this obligation. c) Reparations debts. d) Societa Alluminio Veneta and Sismon bonds of S\,l fr 20.5 million, owned
by parent companies in Switzerland. No settlement has yet been reached.
:J It ''las assumed that this debt would be settled in the same ''lay as the dollar bonds under the Lombardo Plan. Recently there ''las a settlement covering the larger part of this group of debts, namely the bonds of the Italian Edison Co., held by International Power Securities Corp.. International Pouer Securities Corp. ,-,ill receive $1,000,000 in cash and $18,000,000 in Italian Public Utility Credit Institute bearing interest at 2~ in 1952 and 3~~ thereafter, maturing in 1969~ Also $7,641,000 face value of International Power Securities Corp~ bonds held by Italian interests uill be e4changed for $8,642,000 of Italian Edison bonds o\'lned by Interllational POi'Ter Securities Corp.
APPENDIX I TablEl A-2: :EST HlATED IHTERJS T iJ.ID llJ!IORTI Z,i'"TIOlI F AnrnNTS on TIm :;'~XT:EmJAL D:s:.oT OF ITALY, 1950-1974
(Expressed in thousands of U.S. dollars) ;ta€:;e 1 ..
DOLLA..B. BOnDS 11 TIXPORT-IN?ORT :DAHl{
Amount Payments Amount outstanding as of 12l31/~ Undisbursed portion as of 12/31/49 Amount Pa~ments Amount Payments Year
out- Amort i- In-Total out- Amort i- In- Total out- Amort i- In- Total
standing zation terest standing zation terest standing zation terest
1950 146,459 181 2,927 ),108 84.,181 18,.090 2,620 20,170 22,644 793 793 1951 146,278 185 2,923 3.108 66,090 14,504 2,186 16,690 22,644 3,099 793 3,892 1952 146,093 1,869 4,379 6,248 51,586 11,610 1,703 13,)13 19,545 3,099 684 3,783 1953 143,670 1,942 4,306 6,248 39,976 11,217 1,299 12,516 16,446 3,099 576 ),675 1954 141,152 2,019 4,229 6,248 28,759 8,650 929 9,579 13,347 2 .. 011 467 2,478 1955 138,532 2,097 4,151 6,248 20,109 5,256 658 5,914 11,336 2,013 397 2,410 1956 135,808 2,179 4,069 6,248 14,853 4,677 479 5,156 9,323 1,864 326 2,190 1957 132,976 3,248 3,985 7,233 10,176 4,462 317 4,779 7,459 1,864 261 2,125 1958 128,623 3,682 3,851 7,533 5,713 3.,660 166 3,826 5,595 1,864 196 2,060 1959 123,789 3,827 3,706 7,533 2,054 2,054 48 2,102 3,731 1,864 131 ,1,995 1 1960 118,760 3,979 3,554 7,533 ) . 1,867 1,867 65 1,932 1961 113,529 4,135 3,398 7,533 1962 108,088 4,299 3,234 7,533 1963 102,427 4,469 3,064 7.533 1964 96,537 4,647 2,886 7,533 1965 90,408 4,830 2,703 7,533 1966 84,033 5,022 2,511 7,.533 1967 77,399 5,220 2,313 7,533 1968 70,498 5,428 2,105 7,533 1969 63,328 5,~S? 1,890 7,147
1970 56,242 4,436 1,687 6,123 1971 49,898 4,626 1,497 6,123 1972 . 43,284 4,824 1,299 6,123 1973 36,386 5,032 1,091 6,123 1974 29,191 5,247 876 6,123
APPEiIDIX I Table :~STIlIATTID IHT:;RDST Al'iORTIZATI01T ?AYlvCNTS Oif T~ D~BT OF ITALY, 1950-1974 - Contd.
(Ezpressed in thousands of U.S. dollars) Page .a
IvIA1UTIi:LJ CONHISSIOl! SURPLUS PHOP::".iRTY ECONOMIC COO:/IIR.ATIOlif ADIUHISTRATION Amount PaYments Amount pu;x:ments Amount Pa;z:ments
Year out- Amorti- In- out- Amorti- In- out- l.morti- In-W~tfi! standin~ zat!gn terest Total standing zr.tion terest Total standing ze.tion terest
19.50 56,677 4,048 1,984 6,032 143.526 3,409 3,409 67,000 1951 52,629 4,048 1,842 5,890 143.526 5,021 3,409 8,430 67,000 1952 48,581 4,048 1,700 5,748 138,505 5,741 3,289 9,030 67,000 838 838 1953 41.:';533 4,048 1;559 5,607 132,764 5,741 3,153 8,894 67,000 1,675 1,675 1954 40,485 4,048 1,417 5,465 127,023 5,741 3,017 8,758 67,000 1.675 1,675 1955 36,437 4,048 1,275 5,323 121,282 5,741 2,880 8,621 67,000 1,675 1,675 1956 32.389 4.048 1,134 5,182 115.541 5,741 2, 74L~ 8,485 67,000 2,393 1,675 4,068 1957 28.341 4,048 992 5,040 109,800 5.741 2,608 8,349 64',607 2,393 1,615 l},O08 1958 24.293 4,048 850 4,898 104,059 5,741 2,471 8,212 62,214 2,393 1,555 3,948 1959 20.245 4,048 709 4,757 98,318 5,741 2,335 8,076 59,821 2,393 1,496 3,889
1960 16,197 4,048 567 4,615 92.577 5,741 2,199 7.940 57,428 2,393 1,436 3,829 1961 12,149 4,048 425 4,473 86,836 5.741 2,062 7,803 55,035 2,393 1,376 3,769 1962 8,101 4,048 284 4,332 81,095 5.741 1,926 7,667 52,642 2,393 1,316 3,709 1963 4,053 4.053 142 4,195 75,354 5;741 1,790 7,531 50,249 2,393 1,256 3,649 1964 69,613 5,741 1,653 7.394 47,856 2,393 1,196 3.589 1965 63,872 5,741 1,517 7,258 45,463 2.393 1.137 3,530 1966 58,131 5,741 1,381 7,122 43,070 2,393 1,077 3.470 1967 52,390 5,741 1,244 6,985 40,677 2.393 1,017 3,410 1968 46,649 5.741 1,108 6,849 38,284 2,393 957 3,350 1969 40,908 5.741 972 6,713 35,891 2.393 897 3.290
1970 351 167 5,741 835 6,516 33.498 2,393 837 3.230 1971 29,426 5,741 699 6,lj4() 31.105 2.393 778 3.171 1972 23,685 5.741 563 6.304 28,712 2,393 718 3.111 1973 17,944 5,741 426 6,167 26.319 2.393 658 3,0051 1974 12,203 5,741 290 6,031 23,926 2,393 598 2,991
APPENDIX I Table A-2: TISTHiAT::-m Il~1:~lCiST 11m 11..HORTIZATION PAYlvlENTS ON THE TIXT.:J.L"'U\Jl\L DEBT OF ITALY, 1950-1974 - Contd.
(Ibq)res3ed in thousands of U.S. dollars) Page 3
TOT~\L UtS I OOv.ill1.NlmrT ~OT~\L DOLL-~~ DBET STZRLIl'TG BONDS Jl Amount Pa;i:lllonts Amount P~ments Amount Pa.yments Year out- Amort i- 111- out- Amorti .... In- out- Amort i- In-
standing zation terest Tota.l standing zation terest Total standing zation terest Total
1950 374,028 22,138 8,806 30,944 520,487 22,319 11,733 34,052 1,959 20 20 1951 351~889 26,672 8,230 .34,902 498,167 26,857 11,153 38,010 1.959 39 39 19S2 325,217 24,498 8,214 32,712 1.1-71,310 26,367 12,593 38,960 1,959 39 39 1953 300,719 24,105 8,262 32,367 44lt,389 26,047 12.568 38,615 1,959 19 59 78 1954 276,614 20,450 7.505 27,955 417,766 22,469 11,734 34,203 1,9.31 19 59 78 1955 256,.164 17,058 6,885 23,943 394,696 19,155 11,036 30,191 1,903 22 56 78 1956 239,106 18,723 6,358 25,081 374,914 20,902 10,427 31,329 1,872 22 56 78 1957 220.383 18,508 5,793 24,301 353,359 21,756 9,778 31,534 1,842 22 56 78 1958 201,874 17.706 5,238 22,944 330,497 21,388 9,089 30,477 1.811 39 53 92 1959 184,169 16,100 4,719 20,819 307,958 19,927 8,425 28,352 1,755 39 53 92
1960 168,069 14,049 4,267 18.316 286,829 18,028 7,821 25,849 1,699 42 50 92 1961 154,020 12,182 3,863 16,045 267,549 16,317 7,261 - 23,578 1,640 42 50 92 1962 141,838 12,182 3,526 15,708 249,926 16,481 6.760 23,241 1,581 45 47 92 1963 129,6.56 12.187 3.188 15,375 232,083 16,656 6,252 22,908 1,517 47 45 92 1964 117,469 8,134 2,849 10,983 214,006 12,-781 5,735 18,516 1,450 47 45 92 1965 109,335 8,134 2,654 10,788 199,743 12,964 5,357 18,321 1,383 50 42 92 1966 101,201 8,134 2,458 10,592 185,2;4 1.3,156 4,969 18,125 1.310 5.3 39 92 1967 9.3,067 8,134 2,261 10,395 170,466 13,.354 4,574 17.928 1,234 56 36 92 1968 84,933 8,134 2,065 10,199 15.5,431 13,562 4,170 17,732 1,153 59 33 92 1969 76,799 8,1.34 1,869 10,003 140,127 1.3,,391 .3.759 17,150 1,069 61 ,31 92
1970 68,665 8,1,34 1,672 9,806 124,907 12,570 ,3,,359 15,929 982 61 31 92 1971 60,531 8,134 1,477 9,611 110,429 12.760 2,974 15,7.34 896 64 28 92 1972 52,397 8, I.3L~ 1,281 9,415 95,681 12,958 2,580 15,538 803 67 25 92 1973 44,263 8,134 1,084 9,218 80,649 13,166 2,175 15,.341 708 70 22 92 1974 36,129 8,1.34 888 9,022 6.5,320 13,381 1,764 15,145 607 7'3 19 92
Year
1950 1951 1952 1953 1954 1955 1955 1957 1958 1959
1960 1961 1962 196,3 1964 1965 1966 1967 1968 1969
1970 1971 1972 1973 1974
APPENDIX I Table A-2: :::STIHAT:CD IHT:~1lliST .AND AMORTlZATIOH P1I.'DCNTS ON Tm: :eXTERNAL DEBT OF ITALY, 1950-1974 - Contd,
(EXpressed in thousands of U.S. dollars)
;S:tl.lUi.s;~~m jjOlIDS 4/ EGYJ?TIAlf DEBT _ GHAIID TOTAL 51 Page 4
lImount Pa;yments lImount Payments Amount Payments out- lImorti- In- T t1 out- Amort i- In- Ttl out- _~orti- In- T tal
stunding __ zatiop~ j;~:rest 0 a standing zation terest 0 a standing zation terest 0
4,059 4,059 4,059 4,059 4,018 3.976 3.934 ,3,889 3,884 3,763
3,679 3.592 3,504 3,412 3,318 3,221 3,121 3,018 2,912 2,802
2,690 2,574 2,454 2.331 2,205
40 42 4,3 44 46 81 84
87 89 92 94 97
100 10,3 106 110 113
116 120 123 127 131
1,441 81 81
122 120 119 118 116 116 113
110 108 105 103 100
97 94 91 87 84
81 77 74 70 66
1.4!J.l 81 81
162 162 162 162 162 197 197
197 197 197 197 197 197 197 :J.97 197 197
197 197 197 197 197
6,201 4,134 2,067
2,067 2.067 2,067
2,067 2,067 2,067
532,706 508,319 479,]95 l.JjO, 407 42],715 400,575 380,720 359,090 336,192 313,476
292,207 272,781 255,011 237,012 218,774 204,347 189,665 174,718 159,496 143,998
128,579 113,899 98,938 83,688 68,132
2L~,386 ,924
28,4.'34 26,106 22,530 19,220 20,968 21,824 21,508 20,050
18,157 16,448 16,618 16,79'7 12,925 13,114 13,312 13,516 13,731 13,565
12,747 12,94L1-13,148 13,363 13,585
13,194 37,580 11,273 40,197 12,.713 41,147 12,71}9 38,.855 11,913 34,443 11,211 30,431 10,601 31,569 9,950 31,774 9,258 30,766 8,591 28,641
7,981 26,138 7,419 23,867 6~912 23,530 6,400 23,197 5,880 18,805 5,496 18,610 5,102 18,414 4,701 18,2U 4,290 18,021 3,874 17,439
3,471 16,218 3,079 16,023 2,679 15,827 2,267 15,630 1,849 15,434
AP?ENDIX I Table A-2: ESTIf4i~T:;D n~TI;HLST AIm A!JIORTIZATION ?AYNBHTS ON TIm EXT2JRiTAL DEBT OF ITALY, 1950-1974 - Contd.
(EJyressed in thousands of U.S. dollars
11 It \'Ias assumed that the dollar bonds under the Lombardo Plan \10uld be bought in the o-fJen market at an average j?rice of 70 and that the bonds of the public Utility Credit Institute held by International PO\ITer Securities will be retired at par.
Y These consist of the EXIM Bank loanll. authorized but undisbursed. It "las assumed thE.t all of these would be drawn do\'1l1 by June 30, 19.50.
J./ It is assumed that all sterling bonds will be bought in the open market at an average .:)rice of 70.
~ It is assumed that all SwiSS franc BG.ds will be ret1r~d at par.
:J Not included are the following: parent companies in Switzerland.
Societa Alluminio Veneta and Sismon bonds of Sw fr 20.5 million, owned by No settlement has yet been reached.
APPENDIX II - Page 1
Present Debt Adjustment Plan
Debt service payments on Italian dollar bonds were resumed under a debt plan which became effective December 22, 1947. This plan provided for the issuance of new bonds b,y (1) the Republic in exchange for the government issue, (2) the Credit Consortium for the second group of outstanding bonds (municipal), and (3) the Public Utility Credit Institute for the third group. Old bonds are exchanged for new bonds plus scrip in amounts (equivalent to principal plus accrued interest) as follows:
In Exchange of Each $1,000 Outstanding Bond and Interest to Jan. 1. 1947
(1) (2)
Kingdom of Italy 7% 1951 Credit Consortium 7% 1947 Nilan (City of) 6-1/2% 1952 Rome (City of) 6-1/2% 1952 Venetian Provinces (Htge Bank of) 7% Public Utility Cr. Inst. 7% Adriatic Electric Co. 7% Breda (Ernesto) Co. 7% Ercole Harel1i Elec. Co. 6-1/2% Isarco HYdro-Elec. Co. 7% Italian Text. Estab. (Crespi) 7% Isotta Frachini 7% Lombard Electric Co. 7% Heridiondale Elec. Co. 7% Piedmont Hydro-Electric 6-1/2% Temi Ind. & Elec. Co. 6-1/2% United Electric Serve Co. 7%
}/ Exchangeable in multiples of ~:ilOO for new bonds.
Amount New Bonds
:;;>1,400 1,400 1,400 1,400 1,400 1,400 1,400 1,400 1,400 1,1 .. 00 1,400 ') I 1,300 Zt 1,400 1,400 1,400 1,400 1,400
Convertible
ScriR t.f.. ~60.80
78.30 38.70 33.70 72.50 90.00 72.50 84~20 33.30 66.70 66.70 43.80 60.80 72.50 38.70 49.60 60.80
61 On and after Dec. 5, 1947, part payment (principal and interest) of $117 per $1,000 bond was made.
Source: Canadian-Foreign Bond Selector, Standard & Poorls Bond Investments, IIovember 10, 1949, p. 177.
APPElIDIX II - Page .?
As of June 30, 1950, the position of the three groups of old bonds was the fol1o\-ring:
Government Consortium Institute Totals Principal bonds group group and interest $ $ $ $ outstanding
55,076,505.30 Jan.l, 1947 39.651,898.67 37,243.193.84 131,971,597.
Ditto repatriated after Dec.23,
3,512,663, 1947 to June 1,797,485.36 410,433.82 1.304.744.14 30, 1950 37.854,413.31 39,632.760.02 53,771,761.16 128,458,934.
Ditto exchanged
(i) up to June 30, 1950 32,357.368.17 31,023,107·37 45.169.499.89 108 ,975·
Ditto reInaining outstanding June 30, 1950 5,497.045·14 5.809,652.65 8,602,261.27 19.908,959·
or or or or 14.52~; 15.77% 16% 15.50%
(i) Giving effect to $ 6,267.500 princilJ8.1 amount 0: Heridional and Adriatic bonds. plus coupons. surrendered by April 29. 1950, in ~Nitzerland in exchange for new Institute bonds.
Italy's dOllar bonds issued under the exchange offer (as sho~~ above) total approximately $108.5 million through June 30, 1950. This is 81~ of the total $132 million authorized under this debt adjustment plan, and of that amount $3.5 million has been repatriated and cancelled leaving outstanding as of June 30, 1950 $128.5 million as the m8.ximum amount ""hich ma~r be assented to the plan. In Vie'lrl of the amount already exchanged ($108.5 million) there is left only about $20 million yet to be assented to the program. It is believed that of the present amount not yet exchanged for new obligations, a portion \'las destroyed, lost or forgotten and that part of this $20 million tiill never be presented. On the other l'>..and, there appears to be justification for assuming that many investors are holding these bonds for higher ;)ricas, possible until the coupon runs up to 3% at \-!hich time they may sell their bonds and take a profit, on which the capital gains ta~ i11as applied, rather than assenting not'l and h:'wing a portion of the ne',11 bonds classified £l,S interest and therefore subject to materially higher income taxes.
APP~i!DIX II - Page 3
The bonds have been relatively active in the HeTd York stock market in 1949 and trading r~s amounted to approximately $14 million. The price and yield history of restricted Italian bonds are sho\'lU belo".n
PRICES kID YlJiiLDS OF SELECTED ITALIA1'I EXTEIDIAL :B01IDS.
Coupon: 1-3 per cent 1-3 per cent ?J Maturity: Jan.1977 1.1 July 1977 11 Call Date: 30 days 30 days Call Price: 100 100 J'.iarket: Uew York London
Price Yield Price Yield End of: ..1 c'b
78':"1/4 ;0 I
1937 . . 9.90 57-1/2 9.8Z 1938 •• 76-1/8 10·39 49-1/2 11.50 1939 • . . . . 65-3/4 12.61 49,,1/2 11.66 1940 •. 46-3/8 !l/ 15 '±I 1941 • 6-1/8 !l/ 11-1/2 1:±/ 1942 •• :iI !±I 17-1/2 !l/ 1943 ~ 1jJ 38-1/2 !l/ 1944 • . . !l/ 45 !l/ 1945 •. fJ !l/ 55 !l/ 1946 •. !l/ 64 lJ./ 1947 • 24 4.169J 77 !l/ 1948 • 18-1/2 5.41 §j 32-1/2 !l/ 1949 -- June • 34 2.94 §j 40 2·50 fJ
July. 36-1/2 5.48 §./ 39 2·57 §./ Aug. 35-3/4 5.59 §} 40 2·51 §.I Sept . 36-3/4 5.45 £/ 52-1/2 1.91 &.1 Oct. 37-3/8 5.35 §./ 52-1/2 1.92 fJ lTov. . 39-1/2 5.06 &.1 52-liz 1.90 §.I Dec. • 40-1/8 4.98 §j 52-1/2 1.90 2.1
1950 -- Jan. 44-1/2 4.49 fd 52-1/Z 1.91 §./ Feb. 43 4.65 §./ 52-1/2 1.91 Y {,far. . 42 4.76 §./ 49-1/2 2.03 §} Apr .• 40-7/8 4.89 QI 47-1/2 4.24 fJ lIi8.Y· 40 5.00 §} 47-1/2 4.21 fd June 35 5· 71 48-1/2 4.12
1.1 Prior to 1947 the 5 per cent bonds due December 1951 are sho\V!l. Interest is no\'l 1 per cent and increases on a graduated scale to 3 per cent in 1952; current yields based on present coupon rate (2 per cent) are calculated.
~ Maremmana Railway. guaranteed by national government. 11 Prior to 1949 interest was 5 per cent and maturity was 1959.
Interest increases on a graduated scale from 1 per cent in 1947 to 3 per cent in 1953.
!l/ Interest payments suspended. jJ Trading suspended. 21 Current yield.
Princil'al Amount 12/31/ 49
Dollar Debt U.S. Intergov't Loans
O.F.L.C. 143,526 E.C.A. 67,000 Maritime Commission 56.677 Export-Import Bank
Outstanding 6/30/49 84 1 181 417A 11,200 417B 3,990 417C 5,765 417D 2.952 417E 787 417F 1.375 417G 500 417H 8,217 4171 2,997 41% 1,000 417M 1.000 417N 2,510 4170 3.578 417P 496 417Q. 6.380 4l7R 21,160 417S 109 417U 154 4l7V 585 417Y 3,166 420 4.119 420 780 437 1,361
Undisbursed 22 1 644 Total U.S. Intergov't Debt 374.028
APPENDIX III - (page 1)
External Debt of Italy.
(Expressed in thousands of U.S. Dollars)
Interest Date of Date cf Rate Issue Maturity ____ Purpose %
2-3/8 9/9/46 1/1/76 Purchase of surplus property 2-1/2 1948 1983 Reconstruction 3-1/2 Various Various Purchase of surplus ships
3-1/2 7/31/47 1954 Automotive industry - Fiat 3-1/ 2 7/31/ 47 1953 Tire and rubber industry - Pirel1i 3-1/2 7/31/47 1955 Chemical industry - Montecatini 3-1/ 2 10/1/47 1959 Shipyards - Ansaldo S.P.A. 3-1/ 2 10/1/47 1959 Shipyards - S.P.A. Odero - Terni - Orlando 3-1/2 10/1/47 1959 Shipyards - Cantieri Riuni ti S oF .A. 3-1/2 1011/47 1959 Shipyards - S.P.A. Navalmeccanica 3-1/2 10/23/47 1959 Steel mil1s-Ilva A1ti Forni Acciaieri d'Italia SPA 3-1/2 10/23/47 1959 Steel mi1ls-Terni SP L'Industria e l'Elettricita 3-1/ 2 10/23/47 1959 Steel mills - Dalmine S.P.A. 3-1/ 2 10/23/47 1959 Steel mills-Soc. Italiana Acciaierie Cornigliano 3-1/ 2 10/23/47 1959 Steel mills-Acciaierie e Ferriere Lomarde Fa.lck SPA 3-1/2 10/15/47 1955 Medium chemical industry 3-1/.2 10/.15/47 1953 Medium rubber industry 3-1/ 2 10/15/47 1954 Medium electric-mechanical industry 3-1/ 2 10/15/47 1959 Medium metallurgical industry 3-1/2 10/23/47 1955 Small chemical industry 3-1/2 10/23/47 1954 Small electro-mechanical industry 3-1/2 10/23/47 1959 Small metallurgical industry 3-1/2 1/5/49 1960 Miscellaneous materials and equipment 2-1/2 2/19/47 1950 Tobacco 3-1/2 2/19/47 1950 Tobacco 3-1/2 12/3/47 1954 Raw materials for Italian handicraft industries 3-1/2 1947-9
( r.ontin"p.~.)
APPENDIX III - (Page 2)
External Debt of Italy
(Expressed in thousands of U.S. Dollars)
Principal Interest Date of Date of ~___ Amount _R~te I.!"lsue Maturity n_l''l.'lX'Pose
Dollar Bonds under Lombardo Plan Italian Republic Credit Consortium for Pub.Works Public Utility Credit Inst.
Other Dollar Bonds
Total Dollar Debt
Egyptian Debt Swiss Debt
Sterling Bonds
TOTAL
N.A. - Not available.
12/)1/49
39.652 37.243 55.077
131.972
18,000
524.000
6.201 4,059
1,959 536,219
1 - 3 1 - 3 1 - 3
1 - 3
None
1 - 3
1 - 3
1/1/47 1/1/47 1/1/47
1950
N.A.
1950
1862
1/1/77 1/1/77 1/1/77
1969
1952 1977
1977
In exchange for bonds of the Kingdom Milan. Rome & Mtge Bank of Venetian Provinces In exeh. for bonds of various Italian companies
Bonds o'fned by International Power Securities
World War II reparation payment. Settlement of Societa Idroel1ettriea Piemonte
bonds. Maremmana Railway construction
Note: There are, in addition. the following external obligations payable in foreign currencies: a) Italian guarantee on the 4-1/2% Austrian bonds 1934-59 now in default. b} Argentine loan of Pesos 302.5 million. Sufficient funds are at present available
to repay this obligation. c) Reparations debts. d) Societa Alluminio Veneta and Siamon bonds of Sw. Fes. 20.5 million owned by parent
companies in Switzerland. No settlement has yet been reached.
APYiNDIX IV - Page 1
ECONajIC CLAUSES OF PEACE TREATY
Under Article 74 of the Peace Treaty, Italy is required to pay 360 million dollars distributed as foll~~:
100 million to the U.S.S.R. 12, million to Yugoslavia 10, million to Greece
25 million to Ethiopia , million to Albania
Repq,rations deliveries must be made within seven years of the effective date of'the Treaty from the following sources:
part of the installations and war plants that exceed the needs of the military forces permitted and are not convertible for peacetime use;
current industrial production including products of the extractive industries.
Russia may also obtain reparations due her from Italian property in ROlli~ania, Bulgaria and Hungary as provided in Article 79, while the remaining countries may obtain reparations from any other category of capital goods and services excepting Italian property situated in their respective jurisdictions but including the motor ships Saturnia and Vulcania, if requested.
Under the Treaty, the interested countries are obliged to supply Italy nunder commercial conditions" with the raw materials and products it usually imports and which are necessary for the production of goods to be delivered as reparations. Such raw materials or products shall be paid for by deducting their value from the value of the merchandise given to the interested State.
Since Article 74 provides for a delay of two years regarding the deliveries from current industrial production, and since withdrawals from other sources have not in the meantime been important, the concrete effects of reparations payments on Italy have not yet been significant. Since the Treaty became effective on September 1" 1947 for the Soviet Union and Yugoslavia, on October 20, 1947 for Albania, on October 28, 1947 for Greece and on November 6, 1947 for Ethiopia, Italy's obligation to pay current reparations begins two years after each of the above dates. In all cases reparations are to be fully paid before the corresponding dates of 1954.
The Treaty also provides that the amounts and types of merchandise and services to be supplied shall be agreed upon by the governments concerned. The choice of goods shall be made and the deliveries distributed over time in such a manner as not to interfere with Italy's economic reconstruction, or to impose further burdens on the other Allied or associated powers. Attention should be drawn to this clause although its precise significance cannot be precisely estimated now. Its
APPE!IDIX rJ - Page 2
execution is left in part to the interpretation of the four ambassadors.!!
To date, agreements have been signed with the U.S.S.R. and Greece only. Negotiations are in progress with Yugoslavia but no steps have yet been taken to start discussions ynth Albania and Ethiopia. In this connection, it may be pointed out that diplomatic relations between Italy and Albania were resumed only on May 2, 1949, while no official relations exist with Ethiopia.
In signing the La Malfa agreement of December 11, 1948 in Moscow, Russia accepted the principle of changing her right to receive in reparation payments Italian property in Roumania, Hungary and Bulgaria into an obligation to receive payments in this manner. The valuation of such property was referred to a special mixed Commission. Thus only the difference between the 100 million dollars due for reparations and the value of this property will be paid in ~~e form of raw materials and industrial products (sulphur, pyrites, mercury, ships, railroad material, etc.) The agreement provides explicitly that deliveries shall be spread over a period of 5 years beginning September 15, 1949 so that any yearly payment be at least equal to 1/5 of the total payments on all deliveries during the 5-year period. However, the mixed Commissions called upon to appraise the Italia~~roperty subject to transfer to the Soviet Union have not yet reached agreement.£( .
The agreement between Italy and Greece (signed in Home on August 31, 1949), 9n~'conomic cooperation and the regulation of questions arising from the Treaty of Peace, also provides for reparation payments in the form of special industrial deliveries and current raw material deliveries and, in exceptional circuI!lstances of services, in five annual payments beginning September 1, 1949. As in the agreement vlith the Soviet Union, the Greek agreement also indicates the general amounts and categories of goods to be furnished as well as the conditions under which both countries shall furnish the raw materials usually imported by Italy.
~ With regard to the functions of the four ambassadors, it is noted that the Treaty distinguishes between the U.S.S.R. and the other countries. In fact, for the U.S.S.R. the functions of the four ambassadors are limited to determining the value of the Italian assets to be transferred and receiving the information pertaining to the agreements that will be signed vdth Italy. As far as the other States are concerned, they will have coordinating and controlling functions as well as arbitrating powers in case differences of opinion should arise during the negotiations betvreen the individual States and Italy with regard to the execution of the obligations stemning from the article in question; in particular, they shall have power to recommend the modification of an agreement if it is not in harmony with the principles laid down for the safeguarding of Italyfs reconstruction and the interests of the other Allied and associated powers.
g( In fact, the overall estL~ates for the three countries represented on the mixed Commissions vary greatly. The Italian estimate of the property is approximately 178 million dollars thus yielding a credit of 78 million dollars to Italy. The Russian estimate is of apprOximately 11.5 million dollars. The discrepancy is due not only to differing criteria~of appraisal, but chiefly to differences in t~e definition of Italian proper~YI much of which belongs either to companies of mLXed ownership or to companies the capital of which is entirely Italian but which are incorporated in the respective countries. '
APPENDIX IV - Paf,\e 3
Installments are established as tollows:
Period
1/9/1949-30/6/1950 1/7/1950-30/6/1951 1/7/1951-30/6/1952 1/7/1952-30/6/1953 1/7/1953-30/6/1954
Amt. to be credited to Greece
20.8 millions 24.5 It
24.9 " 20.5 It.
10.2 "
100.9 millions
Percent of Total
20 25 25 20 10
100
It also gives a detailed program for the first year including the instructions for the delivery of the raw materials which Greece will have to make to Italy.
It is difficult to make any forecast concerning the agreement now under discussion with Yugoslavia. It is known that Italy claims certain offsetting credits from Yugoslavia, among which is property in the territories ceded by people who opted for Italian citizenship. The value of this must be paid by Yugoslavia to the Italian Government which shall indemnify the interested parties. The value of this property is to be determined by a special mixed Commission which has started work in Belgrade. However any prediction regarding the aggregate and the annual debt which Italy will have to pay is prema.ture.
(Source: Summary translation of document submitted by the Italian Government.)
APPElr.DIX V - Page 1.
Information pertaining to guarantee of the Austrian Guaranteed Conversion Loan of Dec.1, 1934, d~e Dec.1. 1259.
AUTHORIZED -- In an amount approximately equivalent to the outstanding total of the Austrian External Guaranteed Gold Bonds of 1923, ,,,hieh ";las redeemed in 1935·
It is a single loan issued in various national issues in bonds of various denominations and in various currencies. The bonds of the various issues of the loan will be the direct and unconditional obligation of the Federation of Austria and vJill ran..l{ pari :passu irrespective of date, place of issue or otherwise. In carrying out its obligations the Austrian Gover~~ent will not discriminate bet'l'Ieen the different issues of the loan. Ca.:?ita1 and interest \'Till be payable without deduction of any Austrian taxes present or future.
The loan comprises the follo\,;ing issues:
AUstrian Guaranteed Conversion Loan Amount outstanding in
Country v.There issued currency of -payment.
Austria .... 5~ s 1.250.700 Belgium - .5jb Be1gas 1, 781. 300 Czechoslovakia - 5% Kcs265.09l.000 France - 5% fr 68.660,000 Great Britain - 4-1/2% ~ 5,640,400 Italy - 4-1/2% Lit 1,879,000 Uether1ands - 4-l/2~~ f 1.094,000 Spain - 5% Pesetas 21,300,000 &1aden - 4-1/2% SKr 5.273,000 Swi t zer1and - 5% Sv. fr 5.439 I 000 Sv/iss Government
Credit - 4-1/2% Sw fr 13,894,000
(Source - for above Table only -
Exch. Rate
lj)
.03846
.09985
.01994
.00286 2.7988
.0016
.26281
.04237
.19305
.23272
.23272
Amount outstanding expressed in U.S. dollars
$ 48,102
177,863 .5,28.5,91.5
196,)68 15,786,352
301 287,514 902,481
1.017,9.53 1,265.764
Total • • • • $28,202,025
Italy's share of Guarantee (20-1/2%2
$ 9,861
36,462 1,083.613
40,2.55 3,2)6,202
62 58.940
185,009 208.680 2.59,482
662.849
$.5.781,415
( Report of Council of Foreign Bon~ho1ders 1949; Hoody's Governments 19.50.)
PURPOSE -- The sale purpose of the loan is to provide for the redem~tion of the Austrian Guaranteed Loan. 1923-1943, in accordance 'lrrith the right reserved to the Austrian Government under Article VI of the ganare,l bond of that loan.
IHTEREST PAYNEl:rTS - Interest paid in full on all issues until June )0, 1939. inclusive (except on Spanish issue on 'V/hich payments vIere suspended after Dec.1, 1936); for subsequent payments effected out of funds made available by the guarantor nations, see under description of individual issues.
SECURITY GUARANTEE -- The bonds are guaranteed in the same manner as the loan of 1923 was and accordingly, \-,i th the exception of the Spanish tranche, are guaranteed both as to capital and interest by the undermentioned countries in the proportions stated;
Great Britain .. . • 24-1/2cp Belgium · • 2~ France . 24-1/2 SI."reden . . · · 2 Italy 20-1/2 Denmark . . · · 1 Czechoslovakia . • .. 24-1/2 l'letherlands · · 1
APPElID IX V .,;;page 2
The Spanish tranche is guaranteed 100% by the Spanish Government.
Before each issue of this loan was issued each guarantor State deposited with the l~tional Bank of Switzerland, in the name of the trustee, its own bonds of like tenor and currency to cover the amount of its guarantee in respect of each issue.
PLEDGED REVENUES -- The loan is secured upon the gross revenues and receipts of the Austrian Customs and Tobacco Monopoly and any additional security ""hieh may be provided for outstanding bonds of loans which rank pari passu with this loan. No further charge on such revenues and receipts may be created ranking in priority to or pari passu ",ith these charges except that the Austrian Government reserves the right to secure pari passu ",ith this loan any future loans issued to provide for redemption of the Austrian Government Interne.tional Loan, 1930, the AUstrian Government International Guaranteed Loan, 1933-1953. or bonds of this loan outstanding immediately prior to such redemption.
Srl~NG FUND -- The loan is redeemable on or before Dec.l. 1959. by a cumulative sinking fund commencing Dec .1, 1937 and calculated to reo.eem 'the ,,,hole loan by Dec.l, 1959. The sinking fund will be applicable annually in the redemption of bonds by drawings at par, except that SO long as there is no default in the loan, the Austrian Government will be entitled to reqUire the sinking fund moneys to be applied in the purchase of bonds at. or below par. exclusive of accrued interest. Drawings, if necessary t are to take place bet"Jeen Mar. 15 and Apr. 15, in respect of the sinking fund moneys provided during the preceding financial year ending l'lov. )0. Bonds so dre.~'/ll 't/ill be due for repa;;,"ment on June 1, following.
Sinking fund paid on all issues until June 30. 1939, incl. (except Spanish issue on which payment suspended in 1936); for subsequent payments effected out of funds made available by the ~Jarantor nations, see under description of individual issues in current Hoody! s Government 1-1a.nual.
CALL PRICE -- The Austrian GoverThllent is entitled to redeem the loan as a. whole at par. On Dec.l, 1949. or any interest date thereafter on 90 days' previous notice and also, with the consent of the Control Committee, to redeem at par the whole of any particular issue of the loan on Dec.l. 1944, or any interest date thereafter on 90 days I previous notice.
SCHILLING BOlr.DS -- Interest 5% per annum, payable June and Dec.l. Denominations S 100, 500, 1,000 and 5,000. Schilling bonds are equipped with a gold value safeguarding clause, both as to principal and interest, guaranteeing holders a stable value during the life of the bonds on the basis of their gold equivalent as of Dec.l, 1934, as fixed by the gold cla.use decree of i4ar .2:3. 1933. Schilling bonds were offered holders of 4ffierican tranche of the loan of 1923 at the rate of Schilling 600 prinCipal amount plus Schilling 11.50 in cash for every $100 principal amount held. Offer expired Jan.15. 1935. Proceeds of the Schilling issue were to be used to redeem one half of the outstanding dollar bonds of 1923-
Interest and sinki~g fQ~ds paid tr~ough 1944. Certain delays and adjustments made on payments after that time.
(Source: Moody's Government IvIanual. 1950)
APJ?ElWIX V Page 3.
HOTE:
According to the statement of the Council of Foreign Bondholders, the Italian Government paid up in 1948 the arrears of interest due under its gua,ranty. It refused. however, and has since continued to refuse to fulfill 1 ts guaranty as regards sinking fund upending negotiation with the Austrian Government and clarification of its position". Recently it has been stated on behalf of the Italian Treasury to the French and ~ritish Governments that the Italian Government has decided to resist payment of future interest on t~le loan unless a conference of guarantor governments is called to investigate Italy1s capacity to pay. In the opinion of the Italian Government, the occupation of Austria by France and the United Kingdom changes !ltl:at equality of status betv!een the guarantors "1hich seems indispensa:ble if there is to be equali ty of obligations betvJeen the contracting pOiI'lers to carry the onus of the guarantees and if they are to have the same nossibilities for recovery vis-a-vis the guaranteed count~~II. (Unofficial translation). The Italian Government has asked that a conference of the Guar~mtor Governments be held to investigate Austria1s ability to yay.
