Borrowing eased

Press, 28 April 1980, Page 4

Borrowing eased

■ PA Wellington The Government has decided not to raise a cash loan this quarter, the Prime Minister (Mr Muldoon) has (said. But there will be a conversion offer to holders of existing stock due to mature on May 15. ' “The growth in the broad money supply and private sector credit from most inistitutions has moved down; (to more reasonable levels ,during the last nine months and these trends should continue.’’ Mr Muldoon said.' Therefore there was less' need to raise new private

loans in order to finance the deficit before borrowing and for monetary policy purposes.' Reduced Government competition for funds should ease the pressure on interest rates. Mr Muldoon said. But there was a need to at least maintain the present level of investment in Government securities.

A conversion loan offer (will be made to holders of existing stock due to mature on May 15. and letters detailing" the offer will be. sent to them next week by the Reserve Bank. The new stocks F \ 'g offered are: one year at 12

per cent, two years at 12.5 per cent, three' years at 13 per cent, and five years at 13.5 per cent. 1

Mr Muldoon said these I yields were similar to those* offered by the Reserve Bank, on sales of Government' :stock from its portfolio. I The only change was that] the peak rate of 13.5 peri cent would he offered for al ■five-year term as against six years at present. Government stock will continue to be available to other investors through the! specialised dealers even! though there is no cash! loan.