THE COMMONWEALTH LOAN.

Auckland Star, Volume LX, Issue 19, 23 January 1929, Page 6

THE COMMONWEALTH LOAN.

An Australian loan of £8,000,000 at 5 per cent has been floated in London on terms that cam give very little satisfaction to the Federal Government. Only 16 per cent of the stock has been taken up by the general public, and, considering that the two loans of £7,000,000 and £8,000,000 issued during the past twelve months have been taken up to the extent of about 85 per cent by the underwriters, tho financial outlook for the Commonwealth in the loan market is distinctly depressing. Of course, when there is a possibility, that a loan may fail, intending investors hold off, hoping to pick up the stock at a slight discount a littl? later-on. Conversely, in the case of a loan with hopeful prospects, keen competition for the issue means over-subscription, and the stock goes to a premium. But even if allowance is made for this and for the high price of issue, it is evident that Australian loans are not favourably regarded in the money market just now; and the causes are not far to seek. Too much borrowing, reckless expenditure, the bad impression produced at Home by strikes and industrial upheavals, and the eccentricities of certain State Governments —these things are quite sufficient to account for the comparative failure of these recent flotations; and we in New Zealand may profit by this lesson.