N.Z. BONDS HELD IN LONDON.

Press, Volume LXIX, Issue 20903, 10 July 1933, Page 9

N.Z. BONDS HELD IN LONDON.

CONTROVERSY OVER INTEREST. TEN ISSUES NOT QUOTED. OJMTE!.. PIIKSS ASSOCIATION -TV IXEXTMC TIXEGIUPn— COrTTEIOIIT.) (Received July 9, 8.15 p.m.) LONDON, July 8. The '-Financial News" says that the intimation that coupons paid earlier in the year of the Auckland Harbour Board 5 per cent, debentures, 1936-44. come under the New Zealand Audit Department's interpretation of the Broken Hill ruling has caused bewilderment on the colonial market in London, especially as the authorities are seeking to claim the benefit of the ruling in tire case of all such issues, as from January. Consequently quotations of the stocks have been removed from the official list. A Stock Exchange committee has taken the matter up. Dealers are prepared for stronger measures if the questions involved are not soon settled. There are now 10 New Zealand issues unquoted on the official list. These coupon irregularities are damaging to New i Zealand credit, and it is consequently I hoped that the Government will act; quickly. ' OVERSEAS INTEREST PAIDJ IN STERLING. ; STATEMENT HY SECRETARY OF BOARD. ■racs A.siCH.i.vno:; -i AUCKLAND, July 9. "It is difficult to understand how the position has arisen, because the Auckland Harbour Board has not raised any question concerning the payment of interest on its overseas debentures," the secretary of the Harbour Board. Mr H. B. Burnett, said when the message was referred to him. "In every case where it has been specified on the debentures that the interest is payable in New Zealand. Australia, or in London, we have paid our overseas interest in sterling," Mr Burnett said. "There are not many such debentures on issue by the board, but we have paid in sterling where it has been required. Since the Auckland Harbour Board has not raised any question as to the amount of interest that should be paid in London on the debentures mentioned in the message, it was suggested that the London developments are another complication of the raising of the exchange rate to 25 per cent, and of the local authorities interest reduction and loans conversion, and the belief was expressed that some New Zealand holders of bonds, such as those of the Auckland Harbour Board, might desire to use them to pay London debts, thus avoiding a good partof the 25 per cent, exchange. The bonds would be accepted in London at the market rate, but having been issued in New Zealand they may contain no reference as to the currency in which the interest is to be paid. In normal times the exchange on the interest would not amount to a great deal, but exchange is vital at the present moment. A second complication arises when regard is had to the place where the last interest payment was made before the passing of the Interest Reduction Act this year. If that interest was paid in New Zealand, the interest on the bonds becomes subject to the 20 per cent, reduction and it remains so subject notwithstanding that the bonds may have been sent overseas since to pay, as suggested, a debt due in London or elsewhere. It was submitted that creditors who accepted bonds in payment of a I debt might be unaware of the legisllation affecting locally held bonds 1 and the determination of domicile until they collected their interest.