POLITICAL AND FINANCIAL CREDIT

Evening Post, Volume CXXV, Issue 107, 9 May 1938, Page 8

POLITICAL AND FINANCIAL CREDIT

The London loan market still has a meaning both for Government and for local government in this country. Government and local body oversea loans fall due from time to time, and the conversion of such loans is a matter of primary importance to the borrower, even if no newloans are raised. The reception of Australia's latest London loan operation is therefore of interest to New Zealand. Five millions of the seven millions are for redemption of Treasury bills, but the other two millions are for defence. From the London investor's point of view, points in favour of the loan are the defence item, reasonable terms as the market normally stands (3f per cent, at £99), and the fact that no one can accuse the Commonwealth Government of wild Socialistic or credit adventures; yet world conditions which are beyond Australia s control have so affected the market that 60 per cent, of the loan remains with the underwriters. All things considered, the result is not surprising. But if this is the reception met with by a borrower with a good record like the Commonwealth Government, it is evident that there is no margin for those things which make the London investor uneasy, such as new credit systems, heavy spending, expensive projects, and suggestions of unorthodoxy. Both the New Zealand taxpayer and the Wellington ratepayer are heavily indebted in the oversea markets. They will surely note how much the underwriters of the Australian loan are carrying, and may well wonder what reception investors would give to us unless we are careful to establish the basis for complete confidence.