THE LONDON LOAN.

New Zealand Herald, Volume LXV, Issue 19939, 7 May 1928, Page 8

THE LONDON LOAN.

The sevenfold subscription of the New Zealand public works loan in London is convincing evidence of the excellent reputation in which the Dominion is held by British investors. Year after year its new issues of stock have commanded the best terms available to Colonial borrowers, and on several occasions the required money has been furnished on slightly lower terms than other overseas Governments of the Empire have been able to command.' Last year's list of Colonial Government loans comprised 5 per cent. stocks at varying discounts, with one at 5j per cent., and previous issues this year have been at the former rate, with one exception. Mr. Stewart has described the decision to offer 4.J per cents, as a definite break from the 5 per cent, rate, and so far as the issue has been experimental in this respect its success is both interesting as indicating the tendency toward cheaper money and gratifying to the Dominion. The market was tested with stock of this class in January, when the Government of India

offered £7,500,000 of 4| per cents, at 9IA. It was the first Indian loan in London for nearly five years and, recalling that not many years ago India had to borrow on a 7 per cent, basis, financial observers remarked that the enjoyment of a period of peaceful economic development and wise handling of the State finances had enabled her Government to borrow on a basis not much above the level of British Government securities, for the effective yield over the full 40 years of the loan was just 5 per cent. It was over-subscribed, large applications receiving only 60 per cent. New Zealand has raised the price of 4$ per cents, to 94i, giving a yield of perceptibly less than 5 per cent., and the loan has been in such great demand that applicants have received only 14 per cent. The remarkable recovery of India's credit in London is the most striking evidence in recent times that British investors do watch the domestic affairs of borrowing Governments, and it is not an idle boast that the recurrent success of New Zealand loans is due to British confidence in the Dominion's peaceful economic development and wise handling of the State finances. That confidence is undoubtedly susceptible to any disturbing influences, as appeared in the comparative failure of the loan issued immediately after Mr. Massey's death. The Dominion's credit in London is, indeed, an asset of very high value, and, especially in view of the exceptional conversion operations to be undertaken within the next 18 months, there should be scrupulous care to avoid jeopardising it by any action likely to arouse apprehensions in the minds of British investors.