NEW LOAN MONEYS

Gisborne Times, Volume LXXXVI, Issue 13094, 16 February 1937, Page 5

NEW LOAN MONEYS

For State Advances Corporation Interest 3J Per Cent; Term 7 Years No Limit as to Amount All Applications Will Be Accepted (Press Association; WELLINGTON, Feb. 15. A new issue of stock and debentures is being placed on. the market by the Stato Advances Corporation. Tho loan will be guaranteed by the New Zealand Government. Interest has been fixed at 3i per cent, for seven years, the date of maturity being June 1, 1944. No limit lias been set to tho aggregate of applications. Tlio Corporation will accept all money offering.

Commenting on tho issue ol the “B” series of stocks and debentures, the Prime Minister (Mr. Savage) as Acting Minister of Finance said today that, since the Corporation commenced lending in the latter part of 1935, there had been a continuous demand for advances both for re-financ-ing on rural and urban securities and for erection of new dwellings. The total value of the loans sanctioned uji to December 31, 1936, was approximately £G,000,000. “Having regard to the present commitments and the steady flow of new applications, it has been decided to place on the market this new loan issue, with interest at 3-1 per cent., and having a maturity date of June, 1.944,” Mr. Savage continued. “In terms of the amending Act passed last session, the loan will be State guaranteed. The securities to be l issued under this authority will be in denominations to suit small and large investors and tho comparatively short tenu of seven years should make it

attractive to those people who are disinclined to take up long-dated isniics, whilst tho continuous instalment repayments of mortgages baubles the Corporation to cope with the maturity of the loan. In addition to tho State guarantee*, investors will have a floating charge over the assets of tlio Corporation, which, when the transfer of tho whole -of the Discharged Soldiers Settlers mortgages has been completed, will include some <O,OOO mortgages amounting in a total to approximately ' £50,000,000. Tho general reserve fund which is invested in a wide range of sound local body debentures now exceeds £3,000,000. The Corporation’s lending rate is 4|- per cent, and, under the ordinary business section, advances are made, on a two-thirds margin basis. A wider margin is available to applicants for braiding and certain rural loans who can comply with the special conditions laid down by tlio Minister of Finance. Such ex’cess over tlio normal lending margin is made with the approval of the Government, which guarantees the amount by which tho loan exceeds tlio two-thirds of the value of tlio property. “For some years prior to the advent of State Advances Corporation, stated Mr. Savage, tho mortgage market in the Dominion had been somewhat dormant. Tho Corporation’s reduced lending rate of interest of 4-J per cent, for terms up to 45 years in tho case of rural properties and of 35, years in the case of house, properties, introduced a new era of mortgage finance which borrowers were not slow to recognise and thousands of mortgage obligations have, through this channel, been placed on a much sounder basis than formerly existed. With the recent substantial increase of funds arising from improved prices for some of our products, with the general improvement in trade* and industry, and the repayment in cash of part of the Government 4 per cent. 1937/40 loan., tho State Advances Corporation issue now provides a safe, means of investing such funds in a gilt-edged security at par. The issue will take the form of over tho counter sale of securities—either stock or debentures at the. option of investor—and although no closing date has been fixed, due notice will he given to the public prior to the closing date.