AUCKLAND CITY LOAN.

New Zealand Herald, Volume LXIV, Issue 19809, 2 December 1927, Page 10

AUCKLAND CITY LOAN.

The terms on which the Auckland City Council has arranged for the underwriting of a loan of £450,000 are justifiably claimed to he a substantial testimonial to its high standing in the London money market. The Bank of New Zealand has undertaken to issue its per cent, debentures at par and, judging by previous experience, is probably confident of a favourable reception. In October of last year the bank sponsored a loan of £500,000 for the council in 5$ per cent, debentures maturing in 1959, the price of issue being 99, so that ihe yield to the investor was slightly over £5 6s per cent. That loan was over-subscribed within a few hours. By negotiation with its financial advisers, the council has now secured an improvement on those terms, reducing the yield to the bare 5i per cent, Whether the price has been shaded too finely for British investors will appear pres ently. It will certainly be gratify ing to the city if full subscription is again secured, for it is only a few weeks since the underwriters of a £2,000,000 loan, bearing the samp rate of interest, for the City of Sydney, offered it at 99| and had 74 per cent, left in their hands. One consideration which partly accounts for the apparently advantageous terms is the long currency of the debentures, since an assured return of a relatively high rate of interest for over 30 years must appeal to conservative investors. On the other hand, borrowers of greater pretensions have recently offered loans yielding interest within a few pence of that rate, and have had the discomfiture of their loans being neglected by the market.