Dairy bonds sell slowly

Press, 6 March 1984, Page 26

Dairy bonds sell slowly

PA Wellington The Dairy Board bond issue has not been as attractive to the public as had been hoped. The board’s chairman, Mr J. T. Graham, said yesterday that less than a quarter of the issue taken up had been bought by the public. “With the present interest rate constraints on finance houses and trading banks, I would have thought that the bond issue of the board would be a most attractive offering,” delegates to the New Zealand Co-operative Dairy Company ward conference were told by Mr Graham.

“Some commentators have said the board has been extremely successful with this issue and that large amounts are coming forward on a regular basis. Unfortunately, this is not the case. Of the $3B million received to date, some S3OM has been obtained from large placements, while only SBM has been taken up by the public.” He told delegates: “If you are to be paid we have to get the necessary money. We can’t—and we don’t want to—offer highter rates so the alternative is to get out and sell our bonds. After all that’s what Marac and our competitors do.” The board had had to enter the money market because the Government has limited the amount it could borrow, at 1 per cent

interest, from the Reserve Bank. The board has arranged with the Government and the Reserve Bank a subordinated loan of S7SOM to be repaid from May 31,1986, over a 40-year period. In addition to the bond issue and subordinated loan the board had been able to secure the funds needed to support its trading from a number of other sources, Mr Graham said.