NEW ZEALAND AIMS LOW.

Auckland Star, Volume LXVI, Issue 153, 1 July 1935, Page 6

NEW ZEALAND AIMS LOW.

In the terms announced for the New Zealand conversion loan o£ £8,000,000 in London the Dominion is aiming at a low mark. Australia has not been able to come below 3:} per cent in its long and remarkably successful series of London conversions, yet New Zealand is attempting 3 per cent at £98 10/, which means £3 2/ per cent for twenty years. This is putting the market to the fullest test. Only the smallncss of the sum, the favourable time chosen, and the high standing of New Zealand's credit at Home, can have encouraged the Government to seek this level. The saving in interest and exchange is about £180,000, and, further, the repayment of £2,135,000, which makes up the balance of the. stock now under treatment, should bring the total gain to over a quarter of a million. It is a pity New Zealand has not more loans nearing maturity. Interest rates around three per cent occur only once or twice in a lifetime. Australia has been more fortunate. Over the past three years Commonwealth and State loans converted in London have totalled £146,830,000, and the savings in interest and exchange have been £3,150,000 in Australian currency. The latest operation was in January, when Australia converted £22,384,000 to 3} per cent, but this appeared to be bedrock, for 39 per cent of the issue was left with the underwriters. Money rates in London have been unusually steady during the past few months, but in recent weeks the market has shown some indications of an advance. Investments in gilt-edged stocks at the prices now ruling are reported to be dull, and some easing may be expected. New Zealand trustee securities seem to be a temporary exception, owing to their shortage in the market, but it would be too much to hope that these conditions will continue for long. Although any rise in interest is not likely to be rapid, it may be considerable before New Zealand has the option to convert its large block of stock, £17,000,000, maturing in 1940. The only other conversion possible within the next few years is of £5,800,000 in 1936. A significant feature of the latest operation is the repayment of more than two millions of debt. This reduction in the Dominion's liabilities to overseas bondholders shows the trend towards tapering off external borrowing.