THE #735m Monks Investment Trust has taken advantage of declining interest rates with the issue of #40m of debenture stock, but has no plans to immediately invest the cash.

Edinburgh-based fund manager Baillie Gifford intends to eventually spend the proceeds on the UK and internationally-quoted securities which the trust invests in. This relatively cheap form of borrowing will allow Monks to secure greater returns by purchasing more shares than would otherwise be possible.

However, investment manager Douglas McDougall said proceeds from the debenture issue would initially be held as cash or in fixed-interest securities until ''more favourable opportunities in equities occur''.

''We would want to go in at the low end of the market,'' he said.

The debenture, which was issued at the price of #96.189 per #100 nominal of stock, will increase Monks' gearing from 5.5% to 11% of shareholder funds.

The debenture issue has been completely underwritten by Greenwich NatWest, which is also acting as sole placing agent.

The new stock will rank equally in all respects with Monks' #40m of 11% debenture stock.

Dealings on the London Exchange are expected to begin on May 26.

Interest payments to stock-holders will be made in equal half-yearly instalments on March 1 and September 1.