Punters may get fingers burnt

Press, 28 May 1984, Page 26

Punters may get fingers burnt

By

ADRIAN BROKKING

Interest rates in the New Zealand short-term money market reached unprecedented heights last week, because of an extreme shortage of money. On Friday some dealers had been paying 15.5 per cent for call money, said Mr V. G. Duffy, general manager of APA Discount Corporation, Ltd, an official money market dealer. The interest rate on 90day commercial bills climbed to 15 per cent plus. Trading bank transferable certificates of deposit (TCD’s) traded around 14 per cent, although there were signs on Friday that yields on TCD’s were eas-

ing. It is believed that some institutions lent stock surplus to their requirements to the trading banks — to help the banks meet their stock requirements — at margins of 4 to 5 per cent. Dealers are no doubt trying to get liquid because the stock allotted in the seventh Government stock tender has to be paid for on Friday. Three days ago the Reserve Bank said that only $294 million worth of the allocation of $5OO million index-linked stock had been taken up, and only $51.6 million of the $lOO million

ordinary stock allotted. It appears that some dealers who subscribed in the latest tender “for a punt” — after the success of those who took up in the previous (sixth) tender more stock than they needed — could be in for some substantial losses. In the open market yields have increased, and are generally higher than 11 per cent, whereas the maximum allotment yield on ordinary stock in the latest tender was 10 per cent. Also, the punters are finding it much harder to find the money to honour their commitments.