Smaller Dollar Loan Sought

Press, Volume CV, Issue 31011, 17 March 1966, Page 1

Smaller Dollar Loan Sought

(New Zealand Press Association)

WELLINGTON, Marchl6.

New Zealand is now seeking only a 15-million dollars loan on the Euro-dollar market instead of the 20-million dollar loan announced last month. This was made known tonight by the Minister of Finance, Mr Lake, who said the cut was made because of congestion on the market due to a spate of United States corporation and European issues.

He said New Zealand’s 15-million dollar loan had now been underwritten and w’ould be for up to 20 years.

The loan is being underwritten by a wide group of financial houses in the United States, Britain and Europe. Mr Lake said that one of the reasons for the pressure

on the Euro-dollar market was from the earlier relatively favourable interest rates' available compared with other international markets. He said the competition had recently led to an increase in interest rates.

The Minister said the interest rate on the loan would be 61 per cent It would be issued at a discount to give a yield to investors of £6 17s 4d per cent. “This is considered satisfactory as the World Bank maximum loan rate to mar-ket-eligible countries has recently been raised to £7 per cent for periods exceeding 15 years,” he said.

Mr Lake was announcing the terms of the loan for the first time.

Explaining that borrowing on the Euro-dollar market involved a different procedure to Landon market operations, the Minister said: “In London a loan is underwritten and its final terms determined before any public announcement is made on the Stock Exchange. N.Y. Procedure

“In New York the procedure is in two stages—the filing of a preliminary statement with the United States Securities and Exchange Commission without detailed terms, and the filing of a final statement just before issue to the public giving final terms of the loan when filing and underwriting have been completed.”

Mr Lake said the reason for the New York procedure was to obtain the best terms available in the market immediately before an issue was made.