LONDON LOAN.

Press, Volume LXIX, Issue 20828, 11 April 1933, Page 8

LONDON LOAN.

CITY COUNCIL'S PROPOSAL. LOANS BOARD'S ADVERSE OPINION. The opinion that the Christchurch City Council has only "a remote possibility" of floating a loan of £17,000 in London to meet stock which matures there on August 1, 1933, was expressed in a letter from the Local Government Loans Board, which was received by the council at its meeting last night. Although sinking fund to cover this loan is actually in hand, the council has been hoping to reraise it in London and avoid paying the present high exchange costs. The Loans Board acknowledged receipt of three applications from the council for the raising in London, to such an extent as might be necessary, of loans of £17,000, £25,000, and £SOOO. The letter continued:— "The application in respect of the loan of £ 17,000, which matures on August 1 next, will be submitted to the Loans Board in due course. It is pointed out that it is not usual to go on tne London market for such small amounts, and the possibility of floating a loan for this sum is very remote. Information is therefore desired as to whether your council intends to combine this amount with other loans. "In view of the fact that the loans of £25,000 and £SOOO do not mature until 1935, it is suggested that these applications be held over until nearer maturity date, as the Loans Board is averse to dealing with renewal loan proposals in respect of which the maturing loans fall due so far ahead." Committee's Opinion. The Finance Committee reported having advised the board that while it recognised that to raise small amounts on the London market was unusual, it thought that probably an arrangement could be made with the bank, as was made regarding the waterworks loans, to approach the holders and find out if they would be willing to take debentures in the redemption loan. In view of the low rates ruling in England on deposits and securities, the committee thought that there would be no difficulty in raising the portions of the loans necessary. The board had also been advised that owing to the fact that the council had no other amounts to raise in London in 1933, it was not possible to combine this amount with other loans. The suggestion that the application for the loans of £25,000 and £SOOO should be held over had been noted. The report was adopted.

MEETING COST OF LOANS. COUNCIL'S MOVE OPPOSED. Advice that the Christchurch City Council is not empowered by the Finance Act, 1932 (No. 2) to pay out of exchange savings certain costs incurred in raising in London three waterworks redemption loans amounting to £73,750, was contained in a letter which the council received last night from the Act-ing-Secretary to the Treasury (Mr G. C. Rodda). It was presumed, stated the letter, that the council's request was made under sub-section 5 of section 25, which contained a proviso that an amount sanctioned might include a sum for the purpose of meeting the costs of raising a repayment loan. It was apparent, however, that the provision of section 25 related only to cases where the accumulated sinking funds were being retained by sinking fund commissioners to augment the sinking funds for a repayment loan. As the sinking funds of the lt>an totalling £73,750 were used for meeting the maturing debentures, the provisions of section 25 were not applicable. "Furthermore, it may be added that this section was not in operation at the time the applications for sanction to raise the loans referred to were dealt with by the Local Government Loans Board," continued the letter. "There can apparently be no question of invoking the provisions of the section in order to enable the City Council to meet the cost of raising the loans out of the savings in exchange."