City Sinking Funds.

Press, Volume LXV, Issue 19714, 3 September 1929, Page 8

City Sinking Funds.

The annual report of the' Sinking Fund Commissioners presented at the meeting of the City Council last night, although quite formal, yet was interesting because it showed how the loan liability of the City is being reduced. For the year ended March 31st, 1929, the sinking funds under the control of the Commissioners amounted to £369,536, an increase over the previous year's total of £38,551, which amount was contributed partly through the City Treasurer, from the collection of special rates on special loans, and partly by interest received on investments. The fact that the interest receipts for the year represented a return of 5.75 per cent, on the fund under the control of the Commissioners indicates that the money was very prudently invested, as does the further fact that no interest was in arrears on March 31st. Certainly the interest return is slightly less than what it was the previous year; but. as the Commissioners explain in their report, a sum of nearly £IOO,OOO had to be held back from investment for any long period, because the money was wanted for the repayment of a loan maturing on September Ist. Available for shortterm investment only, it returned accordingly low rates of interest. The loan in point was one of £98,000, part of the £150,000 Electricity Distribution Loan, and was raised in September, 1919. At that time interest rates were high, and the Council had to pay as much as six and a half per cent, in order to get the money. However the right was reserved of repaying either in ten or fifteen years, and the Council exercised the option of repaying at the expiration of the shorter term. Certain other loans, also bearing interest at the same high rate of six and a half per cent., will not mature for some time yet. These loans include the Sydenham Waterworks Renewal Loan of £14,000, doe in 1931, the Administrative Offices Loan of £50,000, due in 1931, the Sanitary Conveniences TiOan of £7OOO, due in 1930 or 1935, and the Linwood Channelling Renewal lx>an of £7500, due in 1930 or 1935. Most of the loan money for the repayment of

which the City is liable was raised at a lower rate than six and a half per cent., much of it as low as four per cent.; and with very few exceptions the loans were raised in Xew Zealand. A few were raised in London, while the money for one loan (Workers' Dwellings 1926 Xo. 2, for £15,000) came from Sydney, interest being at the rate of five and three-quarters per cent., and the term thirty years. Although the accumulated sinking: funds now amount to £369,536, it must not be forgotten that the loan liability of the City, according to the 1928 accounts (those for 1929 are not issued yet), comes to no less a sum than £1.312,069. Since it does not seem likely, to judge from the condition of some of the loans, that the accumulated sinking funds will in all cases suffice to repay in full on maturity, renewal loans will have to be floated or some other financial device adopted to meet this situation.