Interest rates fall

Press, 31 January 1983, Page 21

Interest rates fall

Interest rates declined again on Friday, coinciding with the publication of the latest reserve asset ratios on the banks which gave a further indication of the present level of high liquidity. Indicating that it had received a continuing good response to its present issue, Fletcher Challenge cut its rates for sums under $20,000. This is the second time in a little over a month that the corporate giant has reduced rates in this prospectus. These latest cuts are half a per cent across the board for deposits under $20,000. A company spokesman said that the move was a progresive one, and that it was possible there could be

more as liquidity improved in the economy and interest rates in general fell. The reduction is effective from February 4. The half per cent cut comes on top of the December cuts which brought back some rates in the Fletcher Challenge prospectus by as much as 2 per cent.

The spokesman said that in spite of the good response the issue was having, there was no intention of closing it early, and it would go to term at the end of April, unless the $35 million sought was received.

This leaves it open for the company to continue to bring back its rates, however. NZI Finance, Ltd, also

brought back some of its rates on Friday. Money markets were also active on Friday, with bank 90 days bills (cds) being quoted at between 15 and 15.25 per cent, indicating a further easing. Three months ago these bills were trading in excess of 17.5 per cent.

Commercial bill rates seemed out of line and firmed during the week with 90 days selling at 16.3 per cent on Thursday, but these eased back to 16.1 — 16.2 per cent on Friday afternoon, dealers reported. The gap between bank commercial bills suggests there is room for commercial bills to ease in price during the next week or so.