THE LATEST LOAN.

Dominion, Volume 3, Issue 781, 2 April 1910, Page 4

THE LATEST LOAN.

In a cable. message published on March 18 it was stated that nearly £2,000,000 of Now Zealand three and a half per cent, five-year convertible bonds would be issued after Easter, and this is now confirmed, for the prospectus has been issued in London of a loan of £1,850,000, and the price of issue is fixed at £98 10s. per £100 debenture. Simultaneously with the preliminary announcement the Bank of England late of discount was advanced from 3 to 4 per cent., and a few days later tho British Government went on the market for a five-year loan of .£21,000,000. The Financial Adviser to the New Zealand Government no doubt consulted the Bank of England, the bankers' to the New Zealand Govcrnmont, before fixing on the date and terms of issue, from which we may assume that it is the belief of the Bank officials that money will be cheap this week, or as cheap as it is likely to be for some months to come. We can well believe that the best course to secure a successful flotation has been taken, and we have no doubt that the debentures will be taken up... At the .same time it is difficult ,to see why the High Commissioner could not have consulted tho Bank and made the arrangements guite as satisfactorily as the Financial Adviser. The issue price of £98 10s. is £l 10s. per cent, better than the price fixed for the New SoutW Wales loan of £2,750,000, issued on February 12. But on the latter there was some concession as regards the payment of interest which reduced the net price to £96 2s. sd. per cent. This makes the price of the New Zealand 1 loan all the more creditable. It >is more than probable that our loan has been underwritten on the usual terms, and if this and the other'charge's are. deducted the net price will be I about £97 per cent.,; so that the actual interest on the 'debentures will be approximately £3 12s. per cent. The holders of the' debentures have I the option of converting into 3i per I cent, inscribed stock; that ,is, every J £100 debenture, for which. £98 10s.' ,is now paid, will be,exchanged for. £102 of inscribed stock provided application is made at any time be-, fore April, 1914. Otherwise the debentures mature on April 1, 1915. Although the debentures are issued at 3i per cent, nominally;.the actual cost to New Zealand will be. ecjual to over 4 per cent., unless they are converted into inscribed stock as proposed. This is due to the fact that the Dominion will only receive about 97 per. cent of the face value of the debentures, but will have to redeem them at par. ~■'..