LOAN MONEY NOT EASY TO OBTAIN

Dominion, Volume 32, Issue 93, 13 January 1939, Page 10

LOAN MONEY NOT EASY TO OBTAIN

Experience Of Local Bodies

DROP IN APPLICATIONS SINCE ELECTION

Dominion Special Service.

AUCKLAND, January 12.

Because people with money to invest: are either withholding investment pending more settled conditions for finance, or have found u better market for their money, Auckland local bodies are finding it increasingly difficult, to raise public money for short-term loans. Some are more fortunate than others, most fortunate of all being those who at present have no need of loan money, but even the Auckland City Council, which is satisfied with the response to its large works loan, has noticed that since last September sales have not been so good as they were before then. For a number of months before the election sales averaging from £16.000 to £17,000 a month were made, but now only .spasmodic sales are being made. That this experience is general, though the city council expects no difficulty in obtaining the rest of the money as it is needed, is shown by sales of a loan for £245.000 being raised by the Titnani Harbour Board. Since last March only £95,000 has been obtained, of which one parcel was for £65,000, apparently from sinking fund. Before September substantial individual amounts were being taken up, but since then they have tailed off to a few hundreds at a time.

For suburban local 'bodies the raising of short-term loans from the public lias for months been an almost impossible task. It has been found, for instance. that competition of Government stocks, which are returning from 41 to 44 per cent, on a market price of about: £2 below .par. has been too severe for local body loans that are generally quoted at about par. and are returning only tlhe original 34 per cent, interest rate which is allowed by law for local body debentures.

The market response to both these ty,pes of loans draws attention to the projected internal loan of the Government for public works. In addition to the general tendency of invest ments to be withheld pending more settled conditions, this loan will have to compete with other Government loans that, are returning up to 44 per cent. Suburban local bodies, however, seem to have reached the far worse stage of being unable any longer to Consider the public as prospective purchasers of new loan debentures. Instead they have come to rely upon the assistance of the State Advances Corporal ion. this avenue being opened to them as the result of strong representations .made by the local bod ies concerned some time ago. ■