LONDON LOANS

Press, Volume LXXXI, Issue 24712, 1 November 1945, Page 4

LONDON LOANS

♦ TWO TO BE REPAID NEXT YEAR TOTAL OF £23,392,099 INVOLVED (P.A.) WELLINGTON, October 31. The Government's decision to repay in January and February next year two London loans totalling £23,392,099 (sterling) was announced in the House of Representatives this afternoon by the Minister of Finance (the Hon. W. Nash). Overseas interest payments will thus be reduced by £1,064,545 (sterling) annually. Mr Nash said stock would have to be issued in New Zealand for the equivalent in New Zealand currency of the amount being repaid. "Consideration has recently been given to the action which should be taken regarding certain loans on the London market," said Mr Nash. "In one case an amount of £12,888,110 (sterling), bearing interest at 5 per cent., matures on January 1 next. The possibility of converting a- portion of this loan and repaying the balance received attention, but after taking all factors into account it has been decided to pay off the whole amount at maturity. "The other loan is for £10,505,989 (sterling) bearing interest at 4 per cent., and maturing on February 1, 1963, but in respect of which we hold an option to repay on or after February 1, 1943, on giving three months' notice. The question of dealing with this loan has been consideration for some considerable time, but owing to the financial restrictions on operations on the London market it has not been possible to make a conversion offer, and the Government has decided to exercise its option to repay the loan. The necessary notice will be given in the London Gazette, and the loan will! be repaid on February. 1 next. A small portion of this loan, £378,638 14s 4d, was transferred to the New Zealand register some years ago, and will also be subject to the repayment notice now being issued. "The total debt domiciled in the United. Kingdom is £162,112,382 (sterling), and the present transaction will reduce that figure by £23,392,099, leaving a balance of £138,720,283, of which £44,191,108 is owing to the British Government. This latter figure comprises £26,191,108 in respect of the funded debt of the 1914-18 war period, and £18,000,000 under the Memorandum of Security for the present war. "The repayment of the two loans totalling £23,392,099 on January 1 "and February 1 respectively will effect a saving in futuce years in our interest payments overseas of £1,064,545 (sterling) each-year," said Mr Nash. *'These, transactions, while improving consider-' ably the position of our overseas debt, do not involve immediate liquidation of the liability, as stock will have to be issued in New Zealand for the equivalent in New Zealand currency of the amount being repaid. This stock will be taken up by various Government accounts with funds available for investment, or by the Reserve Bank, in exchange for the sterling funds made available for repayment purposes." Some applause from Government members greeted Mr Nash's announcement of the repayment of the loans Answering a question by the Leader of the-Opposition (Mr S. G. Holland), Mr Nash said the question of how the £18,000,000 under the Memorandum of Security should be settled was to be discussed with the British Government after the end of the war, but .those discussions had not yet taken place.