NEW ZEALAND LOANS

Dominion, Volume 21, Issue 289, 6 September 1928, Page 10

NEW ZEALAND LOANS

RESPONSES FROM INVESTORS FAVOURABLE COMPARISON Further evidence of New Zealand’s standing on tlie London financial market was presented to the House of Representatives yesterday bby the Minister o£ Finance (Hon. Mr. W. D. Stewart) . The Leader of the Opposition (Mr. H. E. Holland) had referred to a cabled statement that the £5,000,000 4i per cent, bonds issued at £94 10s. in May had appreciated in price to £97 10s., representing an increase of £150,000 on the price of issue. The Minister was asked whether he did not consider that fact to constitute proof that the price of issue was altogether too 10 “ The market quotation of £97 10s. for the last London issue of New Zealand stock included about 19s. accrued interest, which must be deducted from the premium for comparative purposes,” Mr. Stewart replied. “This quotation was made at the end of August, whereas the New Zealand loan was raised on May 2, when quotations for similar stock were lower. In any case, while market quotations are an indication of the price at which parcels of stock can be purchased on the Stock Exchange, it does not necessarily or usually mean that £5,000,000 can be obtained at that price. “Comparisons with other States are generally invidious, but it may be mentioned that in March a 5 per cent, loan issued by the Commonwealth of Australia at 98, which would return to investors £5 3s. 3d. in twenty years, was largely left in the hands of the underwriters. In April, a few days before New Zealand came on the market. Western Australia floated a loan also at the above price, which was fully subscribed, but as far as I know was not greatly over-subscribed. Our 44 per cent, loan at £94 10s. returned investors only £4 19s. Bd., and reports in some financial newspapers indicate that the response greatly exceeded the expectations of the market generally. Further, the success of our loan had the effect of hardening the price of other stocks. Even so, a further loan by the Commonwealth in July on the same terms as the previous one, i.e., 5 per cent, at 98, was also left largely in the hands of the underwriters. The facts referred to by the Leader of the Opposition are no indication that the issue price of the New Zeteand loan was too low.”