CREDIT OF DOMINION.

New Zealand Herald, Volume LXV, Issue 19958, 29 May 1928, Page 10

CREDIT OF DOMINION.

HIGH STANDING ABROAD. FAVOURABLE .LOAN RATES. TRIBUTES TO ADMINISTRATION. [BX TELEGRAPH. —SPECIAL MiPORTEK. ] - MORRINSVILLE, Monday. ''lt is difficult to understand why anyone hero should take pains to decry a state of affairs that is not only creditable to our Administration, but actually profitable to the country," said the Prime Minister, Mr. Coates, this evening, when commenting on attempts which lie said had been made in New Zealand to belittle the high financial standing of the Dominion as proved in recent London loan transactions. The criticism, he said, had not been made abroad. While it was undesirable to refer specially to other States, it might be mentioned, Mr. Coates continued, that an Australian statement was recently published showing that there was raised in London during the last 12 months by the Commonwealth and Australian States about £38,000,000, all on interest yielding rates higher than the New Zealand 1927 loan of £6,000,000, which was quickly oversubscribed. Of the • £38,000,000 offered by the other borrowers, and on more attractive terms, about 72 per cent, was left with the underwriters. Principles of Treasury. The London Financial News, in an article reviewing New Zealand finances last year, said:—"Those who have knowledge of the financial administration of the Dominion are well aware of the excellent conservative principles that have always governed the actions' of the New Zealand Treasury. Actually there is no Dominion who has been more scrupulously careful over her finances than New Zealand." Quite recently, Mr. Coates continued, the Commonwealth Treasurer, Dr. Earl Page, in an important speech dealing with public debt, was reported to have said"lf the credit of Australia was as good as that of New Zealand, and it was possible to convert all the Commonwealth debts, Australia should be able to save 3s per cent, per annum in interest, which would mean an annual saving of £1,500,000 in interest alone on existing debts." As regards our recent - 1928 loan of £5,000,000, the Prime Minister said, it was decided to offer this at per cent., discounted at £94 10s, with a 20 years' currency, equalling an interest yield, with redemption, of £4 19s 8d per cent. At the same time we successfully canverted £5,000,000 of 4 per cent, stock, £29,000,000 of which matures next year. Tbifl £5,000,000 was converted to a 4 2 per cent, basis on terms yielding the holder £4 16s 10s per cent. Stabilising Mortgage Rate. The Commonwealth a few days afterwards issued a New York loan at 4J. per cent., discounted to £92 10s, with a currency of 28 years, the interest yield, with redemption, being 5* per cent. The real test of these two loans, allowing for the different currencies, will be what are the ultimate proceeds to the borrowers, and in this connection a leading financial Australian publication said: —"Actually the New Zealand loan was more favourable that the 4 per cent, difference because tho cost of raising loans was from 1 per cent, to 1£ per cent, cheaper in London than in New, York." A Melbourne stock circular stated that the long run of 5 per cent, issues was broken by tli9 New Zealand Government and was followed by the Commonwealth 4£ per cent, loan in New York. Tho New Zealand loan was such a proi nounced success that talk was now genp eral of tho likelihood of Austra- • lian Governments being able to ar- > range 4£ per cent, issues in London. > '"Hie claim of New Zealand's high , credit is not only based on actual gains in the lower cost of loans," Mr. Coates ! added, "but in the views also of British ; and Australian finance authorities which ' have been unmistakably definite over 1 the recent loan. It is of further interest ; to observe that a few days ago a leading New Zealand investment company 1 quoted our credit abroad in securing the cheapest money as a 'factor in the improved stabilisation of the New Zealand 1 mortgage rate—a most important consideration for this country."