AGAINST REDUCTION

Grey River Argus, 3 July 1936, Page 6

AGAINST REDUCTION

In N.Z. Oversea Interest Bill LONDON PLESS “WHEEZED” (Aust & N.Z. Cable Assn.) LONDON, July 1. Th,, city is disturbed at reports that Mr. Nash w.ll seek a reduction in interest on New Zealand loans. “The Times's” City Editor says: It is not surprising that the stock mar Rets are uneasy and quotations lower. It is a pity that New Zealand credit should be injured by suggestions to interfere with contractual obligations. “The Star” declares: The new proposal is outside the accepted rules of finance, and comes as an unpleasant shock. Quotations for New Zealand stocks were nominal, as the result ot Mr Savage’s announcement, which met with an unfavourable reception in the citv, wnere it is pointed out that New Zealand cannot expect the investor to pay because she had not the good forTune to have more loans for redemption during the present cheap money period. "The Star” declares: Air. Savage’s phrase, “Mr. Nash will bounce the ball when tie gets to London,” sounds like th ( . intrusion of an ugly form ot bodyline into the investment market.

The “Telegraph's” City Editor describes as disturbing Mr. Nash’s intention to request a rejection of interest n New Zealand loans. This immediately affected New Zealand stocks, an :ui-rcund fall of two points taking juice. Dealers are widening the quotat.ons. Well-informed people are of opin on that the statement was designed for home consumpt'oa, ano ueVd not bo taken too, seriously Nevertheless, such a statement must be detrimental to the Dominion’s credit in London, ■which was recently high. Jt is dihieult to believe that Mr. Nash will ask English bond-holders to c-nrtail the existing rights. It would seriously affect New Zealand status and jeopardise future borrowings and conversions. An explanation can probably be sought in the sphere of local political controversy and uninst meted popular clamour, and demands that the conversion recently apjdied to internal loans should be repeated in London with New Zealand's overseas debt. -Moreover, Australia's sjieetacular conversions have greatly impressed the Dominion. It is hoped that. Mr. Nash, will have wiser second thoughts before his arrival.

The “News-Chronicle's” City Editor says; When n threatened defaulter is a State, or a niunieipality of the British Empire, as happens too frequently nowadays, the City is shocked to the Imperialistic core. Mir. Savage’s remark is something less than a. threat of default, but the possibility of default following the bondholders’ refusal seemed sufficiently near to justify a heavy fall in the price of stocks. , The longer-dated loans all fell three points. Jlr Savage will avoid disappointment if he realises there is no possibility of the bondholders acceding to his request. The added cost of the debt service is due to New Zealand deliberately and •without Australia's urgent necessity, depreciating the value of currency. New Zealand was not asked to pnv unduly high rates when the loans 'were raised. Slip always enjoyed the substantial preference accorded to .Dominion borrowers of probably one per cent.