HARBOUR BOARD LOANS.

New Zealand Herald, Volume LVII, Issue 17652, 13 December 1920, Page 4

HARBOUR BOARD LOANS.

EXPERIENCE OF OTAGO. INTEREST RATE INCREASED. BETTER RESPONSE EXPECTED [by telegraph.—OWN CORRESPONDENT] DUNEDIN. Saturday. The following statement has been made by Mr. J. Loudon, chairman of the Finance Committee of the Otago Harbour Board, with reference to the payment of the loan of £200,000 maturingon January 1 next, and the information given should prove of interest to the Auckland Harbour Board. He said the Prime Minister, as Minister for Finance, originally refused to sanction a greater rate of interest than 5£ per cent, at par, and the board had no option but to issue the prospectus with this condition. The result was that approximately £50,000 was applied for by the public, nearly the whole being subscribed by Dunedin people, no doubt actuated by provincial loyalty to their own institution. This left £150.000 to provide for. Further representations were then made to the Prime Minister, and he has agreed to increase the rate to 5| per cent., so that the unapplied for portion is now available at this rate. The two factors which militated against a larger subscripuon were:—(l) The rate of interest (5j per cent.) was considered by investors to be too low in the face of the State loan at a like rate of interest; and (2) the uncertainty as to the taxation proposals with regard to local body debentures generally. This latter point has now been made clear. Temporary arrangements have been made enabling the loan to bo paid in London on the due date, January 1, pending the flotation of the balance "not taken up. It was anticipated that, with the increased rate of interest and the relief afforded by the new tax provisions, it would be applied for readily. The board decided at its last meeting that 5} per cent, should be paid on the amount applied for as a result of the prospectus already issued.