STATE ADVANCES

Dominion, Volume 30, Issue 121, 16 February 1937, Page 10

STATE ADVANCES

£6,000,000 Lent By Corporation

MORE MONEY WANTED Issue of Short-dated Debentures SEVEN YEARS AT 31 PER CENT. A new issue of stock and debentures is being placed on the market by the State Advances Corporation. The loan will be guaranteed by the New Zealand Government. Interest has been fixed at 3J per cent, for seven years, the date of maturity being June 1, 1944. No limit has been set to the aggregate of applications. The corporation will accept all the money offering. Commenting on the issue of the “B series of stocks and debentures, the Prime Minister, Rt. Hon. M. J. Savage, as acting-Minister of Finance, said yesterday that since the corporation commenced lending in the latter part of 1935, there had been a continuous demand for advances both for refinancing on rural and urban securities and for the erection of new dwellings. The total value of loans sanctioned up to December 31,1936, was approximately £6,000,000.

“Having regard to the present commitments and the steady flow of new applications, it has been decided to place on the market this new loan issue with interest at 3i per cent, and having a maturity date of June 1, 1944.” Mr. Savage continued. ‘‘ln terms of the amending Act passed last session, the loan will be State-guaranteed. Securities to be issued under this authority wjll be in denominations to suit small and large investors and the comparatively short term of seven years should make it attractive to those people who are disinclined to take up long-dated issues, while the continuous instalment repayments of the mortgages enables the corporation to cope with the maturity of the loan. “Copies of the prospectus which is to be issued by the Reserve Bank and application forms will be available at all postal money order offices, banks and from members of the New Zealand Stock Exchange throughout the Dominion. Interest will accrue on amounts of stock and debentures allotted from date of receipt of the purchase money. The Post Office and branches of the Bank of New Zealand will accept remittances lodged with applications for transmission to Wellington free of exchange. Trustee Investments. “Securities issued by the corporation are authorised trustee investments and it is anticipated that trustees and others will welcome the opportunity of obtaining a State-guaranteed investment at par. In addition to the State .guarantee investors will have a floating charge ove r the assets of the corporation which when the transfer of the whole of the discharged soldiers settlers’ mortgages has been completed will include some 70,000 mortgages amounting in total to approximately £50,000.000. The general reserve fund which is Invested in a wide range of sound, local body debentures, now exceeds £3,000,000. “The corporation’s lending rate Is 4 1-8 per cent., and under the ordinary business section, advances are made on a two-thirds margin basis. A wider margin is available to applicants for building and certain rural loans who can comply with the special conditions laid down by the Minister of Finance. Such excess over the normal lending margin is made with the approval of the Government, which guarantees the amount by which the loan exceeds twothirds of the value of the property. “For some years prior to the advent of the State Advances Corporation,” added the Prime Minister, “the mortgage market in the Dominion had been somewhat dormant. The corporation’s reduced lending rate of interest of 4 1-S per cent, for terms up to 45 years in the case* of rural properties, and 35 years in the case of house properties introduced a new era of mortgage finance which borrowers were not slow to recognise, and thousands of mortgage obligations have been through this channel placed on a much sounder basis than formerly existed. “With the recent substantial increase of.funds arising from improved prices for some of our products, with the general improvement in trade and industry, and the repayment in cash of part of the Government 4 per cent., 1937-40 loan, the State Advances Corporation issue now provides a safe means of investing such funds in a gilt-edged security at par. “The issue will take the form of over-the-counter sale of securities — either stock or debentures at the option of the investor—and although no closing date has been fixed, due notice will be given to Hie public prior io the issue being terminated.”