OUR LATEST LOAN

Hawke's Bay Tribune, Volume XVII, Issue 120, 6 May 1927, Page 4

OUR LATEST LOAN

At the moment of writing the only message to hand with regard to the eventual fate of New Zealand’s latest loan issue, one of six million, on the London market, is one stating barely that it has been over-subscribed. Nothing is said about the extent of the surplus tenders, but from the facts, as earlier cables mentioned, that the terms were favourably discussed by the financial press and that the books were closed u day earlier than had been intended, there is a chance that the applications were substantially in excess of requirements. However this may be, it would be distinctly gratifying to our Finance Minister to find even a barely sufficient public response to a proposal the terms of which are more favourable to the borrower than any that has been submitted on behalf of an Australasian Government for a good long while. As the Minister explained at the beginning of the week, the loan bears ar face rate of interest of 5 per cent, and the purchase price of the £lOO bonds having been fixed ut £99 10/-, this gives investors a yearly return ci £5 0/10 on every £lOO invested. The yield to the Government is one per cent, better than was secured last year when a like 6 per cent, issue was put out at £9B 10/-, thus giving investors a return of £5 2/6 for every £lOO of cash they paid out. But when we compare it with recent Australian issues the difference in our favour is still more marked. Both the Commonwealth £12,000,000) and South Australia (2| million) were content to get £9B for their £lOO bonds, while West Australia (1} million) got only £97 10/-. As for New South Wales, forced onto the New York market, it could get only £96 10/- from which, too, had to be deducted flotation expenses very much heavier than those ruling in London. It is certainly something of a feather in the cap of this little Dominion that we can borrow in London on better terms tflan even Australia’s Federal Government, whose latest issue was mainly in the way of renewal, and for which the new cash subscriptions amounted to something under 3J million. Even at that the underwriters were left to find something more than a fourth of the whole twelve million issue after the loan had been before the public for a fortnight, while our six million has been ovei subscribed in .. good deal less than a week. Both the South Australian and West Australian loans were also left partially on the hands of the underwriters. All these circumstances snow very definitely how high our credit stands not only with the British investing public, but with the captains of finance who take the risk of underwriting. No doubt the fact that the 1 whole of the new loan moneys ar© to be spent on public works directly or indirectly productive railway construction, hydro-electric development, telegraph extension, and the like—will have weighed, with the subscribers. [Since the foregoing was put into type a message has been received stating that applicants for the New Zealand loan received 80 per cent., so that it would seem to have been 25 per cent, over-subscribed.]