LOAN CONVERSION

Hokitika Guardian, 27 June 1935, Page 3

LOAN CONVERSION

NEW ZEALAND OPERATION. London advices' suggest that a New, Zealand loan conversion, affecting £10,000,000 of 5 per cent 1935-Jo stoc <, is pending. The exact amount outstanding, as shown by the Lmt Budget, is £10,135,800. Though all the stot’k is the same in terms, it really consists of two blocks. One-half idpresents a £5,000,000 loan raised in 1922, the interest at that time being very’ reasonable. The remaining £5,000,000 is a portion of the stock issued in connection with extensive conversion operations conducted in 1928 and 1029. , A block of 4 per cent consolidated stock, totalling £29,191,000, fell due for repayment in November, 1929. It was dealt with during the two years mentioned and the portion now available for conversion was issued and subscribed in September, 1929. Its cost to the Government was given in the 1930 Budget as £5 7s '3d per cent. These, then, are the securities available for conversion. London comment suggests that market conditions are very favourable, in which case a substantial saving in interest cost should be possible. New Zealand has had two conveisions in the recent past. The,first operation, successfully conducted in October, 1933, concerned the £5,000,000 loan raised in June, 1931, at 5 per cent, 1932-34, the issue price being £99. It was converted into 31 per cent stock, 1949-54, the issue price being £97. The issue was oversubscribed sevenfold 35 minutes after the lists were opened. It was officially stated that the net cost of the now stock to the Government, including redemption and expenses of issue, was £3 17s 5d per cent, and the annual saving £67.000.

Last year a further £4,000,000, bearing interest at 4 per cent, was dealt with, being converted into 34 per cent stock, maturing 1955-60. The new issue, which was at par, was fully subscribed, though there was not the rush which characterised the offering of the previous year. So far as these two operations are indicative, and assuming conditions to he as favourable as reported, a substantial saving in the cast of debt service should lie in prospect. Following this operation, there will be nearly £6,000,000 available for conversion next year, and then nothing substantial until £17,000,000 becomes open for redemption or conversion in 1939.