NEW ZEALAND LOAN

Evening Star, Issue 22069, 1 July 1935, Page 9

NEW ZEALAND LOAN

CONVERSION OPERATIONS IN LONDON A GOOD PRESS (Supplied and Released by the New Zealand Government.) LONDON, June 29. All the principal papers have headlines referring to the New Zealand conversion loan. Among the comments, the ‘ Financial News ’ editoi'ially states: “ The issue is almost certain to be well received, for New Zealand’s credit stands high in the estimation of the London market, and there is a definite shortage of New Zealand trustee stocks on offer. A further step will thus be made in placing New Zealand’s external debt on a lower interest basis. New Zealand is one of the few countries that can boast of a Budget surplus during its last financial year. By the establishment of a Reserve Bank the Government has been able to get rid of the whole of its largo “ floating debt.” The article continues: “New Zealand relies for her prosperity almost entirely on the export of agricultural products to Britain, which provide money with which the British bondholder is paid. Thus any discussion on what the future holds for New Zealand must consider the future of British agricultural policy. The shadow of Mr Elliot has already fallen over the New Zealand farmer, but there is no sign of so drastic a change in the British policy as would be necessary to endanger the high standard which the dominion has always enjoyed in the London capital market.” The ‘ Daily Chronicle ’ says: “ The market is inclined to think the terms are a little stiff, but the finances of New Zealand are sound, and there is no floating supply of New Zealand stock on the market, so a satisfactory response to the issue is looked for.” The ‘ Daily Mail ’ has a large heading across the financial page; ‘ New Zealand Terms Please the City.’ The ‘ Financial Times ’ says: “ The new issue is an excellent trustee investment.”

The ‘ Manchester Guardian,’ in a long financial article on New Zealand finances, remarks: “ New Zealand’s borrowings in 1933 and 1934 were almost nothing.” It refers to the report of the dominion’s Economic Committee in 1932, and adds; “ New Zealand is not yet wholly on the other side of the difficulties referred to in the report, but the leaders of the dominion havo tackled them with energy, over-riding the objections of those who refused to recognise the need for a change, while showing tact and skill in rejecting unrealistic proposals. The efforts of responsible leaders in New Zealand to find their way past obstacles without falling down precipices are recorded in some remarkable State papers of recent years.” It adds: ‘‘The New Zealand Government has not waited passively for an improvement in the prices of produce. Much work has been done in obtaining by Government mediation and assistance all-round cuts in the mortgage interest rates payable by farmers. Then, against the opposition of some conservative bankers, the New Zealand Government has taken the opportunity to found a Reserve Bank on modern lines and to establish currency exchange relations with London on modern lines.” The article concludes: “The improvement in Government finances is another part of the story. Here, too, the success has been considerable.” Most of the leading papers publish an interview with Mr Coates, in which the Minister expressed satisfaction with tlie borrowing terms the dominion had been able to arrange, which give the lowest rates of the century. NEW ISSUE BOOM FINANCIAL JOURNAL’S WARNING. LONDON, June 30. (Received July 1, at 9.45 a.m.) The New Zealand conversion is not attractive to the “ stags ” (speculators), and the ‘Financial News’ considers that the terms recommended to New Zealand suggest that the authorities are not oversure of the market.

Gilt-edged securities in general continue to hang fire. On the other hand, the new issue market is celebrating the half-year in a blaze of activity, which is developing into an unhealthy boom.

Tile ‘ Investors’ Chronicle ’ considers that investors are losing their heads and money. The fact that a few good names figure in prospectuses seems sufficient for a voracious public. The year 1928-29 showed how new issue booms cun lead not only to individual losses, but to losses to industry in general. It concludes: “ Wo do not suggest that the present movement has reached boom proportions, but the first signs of it necessitate a warning of the risks ahead.”