CITY LOANS.

Evening Star, Issue 21631, 29 January 1934, Page 12

CITY LOANS.

TO THE EDITOR.

Sir.—Your report and leading article in Thursday’s ‘Star’ make it clear that the Dunedin City Council, by sending iis-town clerk Home; succeeded hr raising its new loan at per cent., part of it for a long term, the balance of nearly £200,000 for a five-year period.’ The transaction will be. completed by the Bank of New Zealand as the council’s agents. _ In- last- week’s Auckland papers it is recorded that the Auckland City Council ' arranged with the Bank' of New Zealand to issue in London £200,000 of debentures, the currency being four years, rate of interest 4 per cent., and the issue price par. It would appear that,. by working through the usual channels, Auckland, gets i per cent, per annum better terms than Dunedin gets. Is this a mere chance happening, or is Dunedin’s experience another instance of loss due to “trying to be clever”?— I am, etc., ■■ ZExeas. January 26. [The question of the cost of raising the loans must he-taken into consideration. -The Dunedin loan ' has been raised at a minimum of cost, and wa are informed that presumably Auckland would have to pay underwriting and , other charges.. If this is so, the Auck- ' land' loan would probably cost more to raise than the Dunedin-loan. For instance, if a, charge of 2 'per cent, is spread _ over four ' years, there' would be an increase in the effective rate of interest of from ! 4 - per cent, to 44 per cent.—Ed. E.S.] -