EMPIRE FINANCE.

Auckland Star, Volume LVI, Issue 244, 15 October 1925, Page 17

EMPIRE FINANCE.

DOMINION BORROWING. FUTURE PROSPECTS. (From Our Special Correspondent.) LOTDOX, September 10. From the financial columns of the Press this week we cull a few paragraphs which show in what light our Dominion securities are held. Thus one paper tells its readers: "For the investor who requires a fairly shortdated colonial Government stock, New Zealand 4 per cent, redeemable November, 1929, will probably be attractive. It is seldom that there is any particular supply of this stock in the market, but some is available just now, and can be bought at 97 J. This price includes over four months' accrued interest, and, allowing for this, the flat yield is fl 3/ per cent, but the redemption return is £5 1/ per cent. The stock is therefore of the ' tax-saving' variety, and the redemption yield is a good one for a New, Zealand stock which is a strong favourite with the investing public." Discussing loan projects, the "Manchester Guardian" eays:—"lt is about this time of the year that the Australian States decide upon their borrowing programmes for the ensuing financial year. Thus we have now the announcement by the Prime Minister of Queensland that the Government has decided upon a loan expenditure of £7,579.000, which is to be raised partly in Australia and partly overseas, while a week ago the Commonwealth Treasurer, in introducing a bill to sanction fresh borrowing to the extent of £8,000,000, intimated that if the money could not be obtained in London it might be necessary to go to America. Doubtless these two projects do not represent the sum of Australia's borrowing aspirations. It is hinted, too, that Xew Zealand also desires a loan, and it will be interesting to see how far the external lending capacity of this country will suffice, under the present conditions, to meet these demands, and how far the services of the United States may be requisitioned. "In that connection it is relevant to note the considerable discrepancy in market prices which now exists between the two Commonwealth 5 per cent issues made at the end of July, the one for £5,000,000 in London at 99i, and the other for 75,000,000 dollars at the same price in the United States. The sterling stock is now quoted at one-half premium, that is, at 100, but the dollar bonds, on the other hand, are no better than 97A to 98. In other words, there is now more than a two-point difference in favour (so far as the borrower is concerned) of the sterling issue. That hardly looks as though the Commonwealth Government will next time be successful in securing the same terms in New York as in London."