The Securities and Exchange Commission has made effective the registration of the “Development Issue” of State of Israel Bonds, involving an offer of $350,000,000 of coupon and capital appreciation bonds, with $75,000,000 to be sold in 1954, it was announced here today by Rufolf G. Sonneborn, president of the American Financial and Development Corporation for Israel, which has been named by the State of Israel as the sole underwriter for the bonds in countries throughout the world.
The “Development Issue” is the title given to this second offering bonds by the State of Israel, the first, which was launched on May 1,1951, having been termed the “Independence Issue.” There are two types of bonds to be offered: 1) Interest-bearing bonds, denominated 15-year 4% dollar coupon bonds, and 2) Capital-appreciation bonds, denominated 10-year dollar saving bonds.
The principal of all bonds and interest on coupon bonds are payable in currency of the United States at agencies of the State in New York, Chicago and San Francisco-Interest is payable on July 1 and January 1. Both types of bonds are non-transferable and non-assignable until July 1,1959, except in certain special instances. After July 1,1959, each bond is fully transferable.
The terms of the Development Issue of Israel Bonds also provide that a holder may borrow up to 75% of the Value of the bond, subject to limitations set forth in the prospectus. Such loans will be granted by banks designated for such purpose and will be repayable by the borrower in quarterly instalments over a period of two years. The arrangements, including a guarantee by the State, are intended to apply during the period of non-transferability.
The Development Bond can be cashed in Israel currency at any time, at the rate of exchange applicable to dollars, for the purpose of bona fide tourist expenses, but not exceeding $25,000 per year; for the purpose of applying the cash surrender value in Israel currency to contributions to recognized charitable organizations in Israel; for investment in enterprises in Israel within the framework of the State’s development budget or other enterprises which may be designated from time to time by the State.
The privilege of exchanging Independence Issue Bonds for Development Bonds may be extended by the State from time to all holders of registered independence Issue Bonds, thereby enabling holders of registered Independence Issue Bonds to take advantage of the higher interest rate and other features of the Development Bond.
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