N.Z. firms fear devaluation, replace loans

Press, 19 January 1979, Page 2

N.Z. firms fear devaluation, replace loans

PA Auckland Devaluation fears have started a run by New Zealand companies trying to replace expensive overseas loans. They are being joined by emigrants taking millions of dollars out each week to avoid an expected economic crunch. More money available locally has meant that companies can refinance their overseas loans in New Zealand without exposing themselves to higher repayment costs through foreign currency revaluations.

The Reserve Bank says that private capital payments made by borrowers for overseas loans rose SIOOM in the year to November to total 5296.5 M. There has been a rush since July and the sums sent overseas for private capital payments have tone up in leaps and ounds each month. In the five months to November, $157.9M flowed out of the country, compared with only SBB.BM over the same period in 1977.

Last September, $30.4M was sent out, followed by 539.1 M in October and $47.4M in November, which is the latest figure available.

Companies such as Fletcher’s and Tasman have been quitting overseas loans. Tasman repaid SUSI 1,032,000 in Eurocurrency loans in the year to March, 1978, while Fletcher’s hoped to replace at least SUSBM from local sources in 1979.

Some exporters are believed to be holding back repatriation of overseas earnings in anticipation of devaluation. The advantage would be considerable if the dollar devalues by the 15 per cent to 20 per cent predicted by some economists.

Meanwhile, people leaving New Zealand took S67M with them in the year to November, or SIBM more than the year before. In the five months to November, they took 531.3 M, compared with only SI9M over the same period in 1977.