AUSTRALIAN FINANCE.

New Zealand Herald, Volume LXVII, Issue 20536, 10 April 1930, Page 9

AUSTRALIAN FINANCE.

INTERNAL BORROWING.

EARLY LOAN COUNCIL ISSUE.

MUNICIPAL REQUIREMENTS.

[FROM OUR OWN CORRESPONDENT.] MELBOURNE, April 3. The volume of the applications for conversion of the 6 per cent, stock maturing in December has considerably ligßened the Government's task in connection with conversion. However, there are still substantial State loans maturing during the current year, and, in addition, of course, new money loan programmes of the Government have yet to be financed. The various State Treasuries are accepting money over the counter at 6 per cent, for seven years, and, while somo fair sums may bo obtained by this method, it wouid appear inevitable that tho Loan Council will have to go on the local market again in a month or six weeks for £6,000,000 or £7,000,000.

The Melbourne and Metropolitan Board of Works offered 6£ per cant, at par for 10 years for the conversion of a loan of £250,000 which matured on April 1. Conversions were made totalling £126,840, and new cash amounting to £167,550 was subscribed, a total subscription of £294,390. Tho lists are being kept open a little longer to obtain as mucn extra cash as possible for expenditure for urgent works. In addition to the amount subscribed to the present issue, the board requires money for its immediate works programme. In comparison with the present returns obtainable from Commonwealth bonds, considering that the Board of Works issues are subject to both taxes, a 6£ per cent, rate is not particularly attractive to investors, but the full subscription of the loan 'is not necessarily a true criterion of the present money market, inasmuch as the offer was a conversion one and the amount was small in comparison with the full amount of money required by the board and with the amount of money required by other semi-governmental authorities. The City of Sydney has obtained a large portion of its loan requirements from America, and at the end of January £850,000 was obtained for the Sydney Water Board. The Water Board is now obtaining further sums from New York, but tho Brisbane City Council will be requiring about £1,000,000 and the Sydney City Council requires extra funds. There is a steady demand still for municipal loans, and some lenders are now quoting as high as 7 per cent, for this class of security, and also closely questioning the purposes for which the money is desired. At the same time several Victorian suburban municipalities have covered their needs at 6| per cent. The Commonwealth bond market for the past few weeks has been comparatively firm, but the average return is now a fraction higher, and one or two issues have shown signs oE reaction from the recent recovery. The 'share market has continued fairly steady, but the volume of turnover is more'restricted than for a couple of weeks. The recent firmness has already passed away to a large extent, although probably no further pronounced weakness will be immediately shown. Further heavy realisation of shares is quite a possibility, as income tax payments are now falling due and will continue to do so until the end of June, and, as overdraft facilities ara now so restricted, taxpayers may find it necessary to. realise upon stocks and shares to provide funds to meet the Taxation Commissioner's demands.