CONVERSION LOAN.

Manawatu Standard, Volume LVI, Issue 141, 16 May 1936, Page 8

CONVERSION LOAN.

The conversion loan issued in London last week was for £4,000,1)00, bearing- interest at 0 per cent, wiik the issue price at £9B 10s per cent. The loan was to replace a loan raised in London in 1921 and bearing- interest at 0 per cent. The British Treasury through the Bank of .England controls all outside loans issued on the London money market, and as no fresh capital was involved the loan was allowed admission. The issue price of £9B 10s means that holders of every £IOO of the old stock would exchange it for the new stock and receive scrip for £IOO and cash for £1 10s besides whatever interest may have been due. On Monday, May 4, cash subscriptions opened and closed on the one day, but the applications for conversions extended to May 11, a full week- The position works out as follows : £ Total loan 4,000,000 Cash subscriptions 1,240,000 Amt. for conversion ... 2,760,000 Amt. converted 1,400,00 b Left with underwriters 1.060,000 The amount that the underwriters have to carry is 84 per cent of, the total, but is equal to nearly 50 per cent, of the amount that was available for conversion. In connection with this loan the Minister of Finance was congratulated by the Governor of the Reserve Bank, Mr Leslie Lefeaux, who said:—“New Zealand may well regard the issue as a success achieved in spile of adverse market conditions.” The underwriters apparently did not thiulc the conditions adverse; on the contrary they appear to have been too optimistic and believed that the issue would appeal to investors. They were mistaken and have to “nurse the baby.” The real position was disclosed by the cash subscriptions which were just a btlle more than 25 per cent. An issue that yields £3 2s per cent is rather attractive to investors in London just now, and yet the cash subscriptions were very small. The fact that holders of £2,G00,00U worth of stock declined conversion is not very encouraging.