AND "THE TIMES" CABLE.

Press, Volume LXVI, Issue 13926, 28 December 1910, Page 11

AND "THE TIMES" CABLE.

SOME PLAIN TRUTHS

(FROM OVU OWN CORKESPOXDKXT.) LONDON, November 18. Enquiries I have made in reliable financial quarters indicato that the £5 000,000 loan which was announced last Week, lias gone off very badly. Of course it is underwritten, and the GoTornraent will get its money, but everything tends to show that the time was most inopportune. Money to-day is dear. The bank rate is high. The political atmosphere is not re-assuring. In point of fact, I believe the underwriters »re at present —a work after the issue— holding almost 90 per cent, of the debentures. They are, however, so certain that the market will be greedy for them presently that they declined yesterday an offer for the whole lot of £i£ discount. Jf they bad n«»t been confident of working them off at an early date they would certainly have seized this opportunity of getting out with a profit of £30,000 on the unliquidated Balance. The debentures are really a good investment. By acceptance of the terms of conversion they will yield to investors £ 1 2s, and to the underwriters £4 7s. The following cable message from "The Tiines's" correspondent at Wellington, has caused some comment: — Regarding the issue of the loan of £5,000,000, the Premier of New Zealanu has telegraplied to the High Commissioner complaining of the premature leakage of information from London. The High Commissioner has replied, regretting the leakage, which, he Bays, was unavoidable in view of underwriting operations. He had hoped that no statement concerning the Conference would have been made until Tuesday, which would have suited them splendidly. He added that they must now make the best of it, but eaid that it was extremely fortunate that tie underwriting was done before the announcement of the failure- of the Conference and the run on the Birkbeck Bank.

The suggestion that there can be any strict secrecy when n loan of this scale is laid before the underwriters in tho City is absurd. I personally received an outside hint that underwriters were being consulted early in the week. The matter was actually gone into on Wednesday. Probably fifty financial t firms in the City knew of it on Thursday, and it was not till Thursday evening that the first newspaper hint of the issue was published. <'■ Whether it could have been avoided or-not, the announcement of the New Zealand issue synchronised almost exactly with the failure of the Conferonce, On Wednesday the market knew absolutely nothing of the issue. But the belief was already gaining ground that the Conference would fail, and Consols fell accordingly. The only other suggestion of a" reason for. the fall in Consols was the continuance of the Welsh coal troubles. The imminence of the issue was a secret, so far a3 the public and the market generally were concerned, until Thursday evening. Then, simultaneous with the failure of the Conference, the "Evening News" announced that arrangements were being made for the underwriting of five millions for New Zealand. The general impression was, as I stated last week, that the loan, was to be a 4 per cent., and the definite announcement on Friday that it would be a 3£ was a disappointment to ; many. '- In point of fact, tho issue had exercised a depressing effect on the market on Thursday, fully twenty-four -hours before tho prospectus was issued. There was a leakage, undoubtedly, but 'it is questionable whether the actual announcement of the result of the Conference affected the underwriting agreement. The terms of the underwriting were fixed before Thursday evening, and were "stated clearly in one paper on Friday morninc, simultaneous* with the failure of the Conference. The prospectuses (a copy of which I sent you last week) only came to light on Friday afternoon, within an hour or two of the underwriters finally giving their assent. _ ' is "admitted to-day that the proportion of the loan left on the hands of the underwriters w»s 93 per cent. The '"Financial Times" says:—"The New. Zealand loan issue has been a fiasco. 'The scrip has fallen to | — J discount. . Tho explanation is to be found not in the terms —which were unusually generous—but in the "general disturbance occasioned by the constitutional crisis. This yery poor result has greatly surprised trie Stock Exchange. Of course, the issue came at an unfortunate time, tho combination of political fog and a per cent, scarcely being conducive to freedom of iwrchnse on the part of the investing public."