THE NEW ZEALAND LOAN.

New Zealand Herald, Volume LXIV, Issue 19625, 2 May 1927, Page 8

THE NEW ZEALAND LOAN.

The announcement by the Minister of Finance of the terms and the purposes of the loan which is presently to be issued in London marks a very welcome breach of the long-estab-lished custom of withholding this | information from the people of New Zealand until it came through other channels from London. There is no valid reason for secrecy, and there are very good reasons for publishing the facts immediately the arrangements for the flotation have been completed. In view of recent events and expressions of opinion regarding the advantages offered by rival money markets, probably the most satisfactory feature of the present transaction is that there is no suggestion of departure from London. The terms upon which the loan is to be issued are additional cause for satisfaction. Last year's loan of £6,000,000 offered at 98| created a record among colonial issues with subscriptions totalling £119,600,000 in two hours. It was preceded and followed by other overseas loans, of which substantial amounts were left in the hands of the underwriters. On this occasion, no doubt with the full agreement of its financial advisers, the Government has apparently decided to ask a higher price than has been obtained for recent issues. In doing this, it seems to have relied upon the Dominion's high reputation in the London market to ensure success, for recent tendencies have been toward higher rather than lower rates for new money. Toward the end of January, the Government of Nigeria offered £4,250,000 of 5 per cents, at par; that issue was over-subscribed. it was followed by a South Australian loan of £2,500,000 of 5 per cents, i.t OSgiving an effective yield of £5 2s 3d per cent. —and this was subscribed threefold in two or three hours Early in April, Western Australia, for a loan of £1,500,000, reduced the issue price to 97i—the yield being improved to £5 2s 9d —but more than half the amount was ieft with the underwriters. Only last week, the Commonwealth conversion loan—s per cents, at 98—which should have j had a favourable reception as it was not a demand for new money, failed ; to secure immediate subscription, 27 j per cent, being left with the under-! writers. In spite of these experi- j ences, the Government of New Zea- j land has asked the London market to take its stock at 99i, giving a return of only a shade over 5 per cent. The result will be awaited with interest though, in view of the Dominion's long record of highly favourable loan transactions, not without confidence.