NEW ZEALAND LOAN.

Hawera Star, Volume XLV, 4 July 1925, Page 15

NEW ZEALAND LOAN.

REPLY TO CRITICS. A DIFFICULT To.ME. NO ANXIETY IN THE CITY. A responsible member oi: a firm in London closely connected with New Zealand hnam'e. during the course of a statement relative to the £7,000,000 New Zealand loan, referred to the issue from various aspects, and in view of the severity of much oi the newspaper comment throughout the country, he touched upon this phase in passing. “There is no doubt,” he said.

“that the issue came at a very inopportune moment just after the gold standard had been re-introduced. 1 think that the press—perhaps instigated by those in high quarters Jelt that the. fact that 'an oversea. dominion intended borrowing as much as £•7,000,000 was going to prejudice—perhaps slightly—our return to the gold .standard. That is to say that, obviously, if New Zealand borrowed seven millions of fresh money here it must give Australasia the power to draw more gold than if the money had been borrowed locally, even though the balk of it might be going to be spent in tbs country. And therefore, from that point of view, tlie people in authority who influenced the press did not tee I well disposed toward such a large loan. LflE MAN WHO KNOWS.

“On the other hand, despite the fact that it had been advertised that the underwriters would have to shoulder a large amount, over £1.,001),000 ol the stock applied for by the public. This shows that New Zealand stock is very popular with the public, and it is quite clear that the larger investor who is tiu fait with what is going on would not- apply, knowing that he would have an opportunity of purchasing later at a discount. “The course of the market has very much borne this out. because the number of buyers since the issue has been very huge, and the stock has steadiii improved front nearly 2 discount to I b-I(> discount. Now Zealand has been of recent years one of the most popular countries" for investment--!f not the most popular —outside Great Britain, and we have very little doubt tlmi within a reasonably short time the late issue will become absorbed and will stand as high in the market as did the previous loan quite recently. “It was unlucky that the return to the gold standard and the many other borrowers made a condition of affairs which prevented any possibility of the success of any big issue on reasonable terms. But we have no doubt that tt very (temporary rebuff will not rein,und in anv way to New Zealand’s discredit, and that in the future, as in the past, the investors of Great Britain will recognise that, outside f.his country, there is mo investment a s safe as New Zealand Government Stock.” CHECK TO OPTIMISM The Birmingham Gazette: “The exile Hence in regard to the Ne*_ Zealand loan this week has been distinctly discouraging for the future issues of the kind. There was no public rush for the issue of 41 per cent., stock at 94-J, and so the underwriters have had to take up ,a very large proportion of the -..mount. It is even said that they will find themselves called upon to bear the burden of 90 per cent, of the Joan. “The shyness of the public towards trustees securities is in startling con-

trust with the tremendous rush which was made for the Greek ami German loans a few months ago, but that is, ol course, accounted for by the speculative possibilities of the latter, and the opportunity that was given for heavy ‘stagging.’ What has happened in regard to the New Zealand issue is certain, however, to influence -several other operations that have been in contemplation. “It is known that Dominion and colonial borrowers have been looking forward to floating loans on the London market in the immediate future. Negotiations are already said to have begun in respect of one of the Australian "States, whilst both Kenya and the Gold Coast have been contemplating fairly large issues. If the New Zealand loan had gone well, they would have been encouraged to proceed, blit as things stand, tney would seem to be well advised not to take too optimistic a view of their prospects. The effect of a series of loans in which the greater amount of the stock is left on the hands of the. underwriters, would certainly not he very happy. UNDER WRITING WITH l JUT PRO FIT.

» Sussex Daily News (Brighton): “The underwriters are not having too good a time just now. and some of the lesser people, who often complain they are riot given a chance to underwrite giltedged issues are very pleased that they are not. The ‘big men” who took on the New Zealand issue have been left with £6.000,000 to get rid of. which means an almost certain loss of over LAO,OOO, and n» commission at all . -

Money is very tight as present, and an issue lias to be made in attractive terms to temot investors.”