BOND ISSUE TO TEST MARKET

Evening Star, Issue 19552, 10 May 1927, Page 2

BOND ISSUE TO TEST MARKET

For the purposes of the Act we have appointed Mr Poison as a member of the board. As the bonds cannot be floated until there are sufficient mortgages to support them wo made a temporary advance to this department of £500,000. As'quickly as possible we will try out the bonds on the market, and to do so we are transferring some of the applications for loans, already in the ordinary Advances Department to the Rural Advances Department instead of waiting for fresh applications to come in. As soon as a sufficient number of mortgages have been granted to make it worth while testing the market, will try a bond issue, either in New Zealand or abroad, secured not on the revenue of the State, but on the security of the mortgages already in existence. As you are aware, the special features of this branch are, first, that it allows advances up to £5,500 instead of £3,500, which is the amount for each loan allowed in the ordinary department, and, secondly, as the bonds are secured on the mortgages and not on the State revenues, it avoids the criticism that we are increasing the Public Debt and, lastly, we advance •up to two-thirds instead of three-fifths as at present. I hope that when the bond issue is made the public will leaclily subscribe at a price which will enable us to lend money at approximately the same rate as it is now lent by the State Advances Department. If these bonds are freely subscribed foi it will enable us to expand the operations of the department, gnd if the bonds are taken up in New Zealand it will avoid the creation of further oversea liabilities.