CITY LOAN RENEWAL.

Evening Star, Issue 21622, 18 January 1934, Page 8

CITY LOAN RENEWAL.

Further information as to Mr G. A. Lewin’s loan renewal operations in London was furnished at last night’s City Council meeting. The amount falling due was £356,000, and the existing bond-holders were asked to renew this for a fifteen-twenty-year term at 4i per cent. The response to this offer was only moderately satisfactory, the amount renewed on those terms being £147,000, or slightly over 40 per cent, of what was required. To raise the balance other methods were adopted. The town clerk has arranged for the sale of 3 per cent, bonds in London up to £200,000 face value. They are of only five-year currency, and are purchasable at £94 10s per £IOO bond. In effect the City Corporation receives £189,000 wherewith to redeem the matured stock, and repays the. new lenders £200,000 five years hence. This works out at almost exactly the, same rate of interest as is payable to those lenders who /renewed the smaller portion of the loan—viz., 4J per cent. It might appear at first sight that the short-term currency of the new issue indicates that the market was found not as receptive as was expected, but it is understood that this was decided on by Mr Lewin for a reason which appears sound. At the end of the .term mentioned it is regarded as highly probable that the present artificial rate of exchange will have been abolished, in which case it would be deemed profitable to raise the £200,000 locally and remit the proceeds to London to pay off the bond-holders. Unquestionably the expenses of the operations Mr Lewin has carried out have been kept to a bare minimum, and taking into consideration also the service he has done the Otago Harbour Board in respect of its £600,000 redemption loan (which has a twenty-twenty-five-year currency), it should be recognised that he has done good work on behalf of this city during his trip Home. Last night Cr Shacklock spoke of difficult conditions oA the London money market. The ruling rates of interest have been low, especially on securities of this description, but with reviving trade and industry in Britain the demand for money for investment in industrial undertakings is likely to be relieving the superabundance of money that has for long been available for Government and municipal loans. It may also be a fact that the recent disputes over the payment of interest in London on colonial issues—whether in New Zealand currency or in sterling —has not reacted favourably on the credit of even those local authorities, of which the Dunedin City Corporation is one, which 1 paid the Home investor in sterling without raising any controversy over the matter.