LOCAL BODY DEBENTURES

New Zealand Herald, Volume LXIX, Issue 21250, 2 August 1932, Page 5

LOCAL BODY DEBENTURES

CONTRAST IN EXPERIENCES FACTOR OF INTEREST RATE The attractiveness o! debentures bearing interest at 5i per cint appears to differ as between Auckland and Christchurch. It was reported yesterday that the North Canterbury Hospital Board had found it almost impossible to sell debentures at per cent, and, as it was imperative that the money should be raised, it was decided to make further representations to the Government for permission to increase the rate. It is understood the money is required to finance work in connection with the nurses' home. The Auckland City Council recently decided to raise £50,000, being the first issue of tlio 1930 drainago loan of £115,000, by means of debentures bearing interest at 5i per cent and maturing on July 1, 1965. "We are selling the debentures over tho counter, so there are no brokerage charges," said tho town clerk, Mr. J. S. Brigham, last evening. "The good response to the issue is seen by the fact that since July 1 wo have disposed of £II,OOO worth." It is generally conceded that the debentures of a large municipality, all other conditions being tho same, are more attractive than the debentures by a local body without such wide rating powers. The opinion was expressed by an Auckland stockbroker yestorday, when commenting on the North Canterbury Hospital Board's difficulty, thai; tho issue did not compare favourably with many investments quoted on the market to-day. "For instance," he said, "there was a recent sale of Christchurch City debentures, 5£ per cent, maturing in 1967, at £96 15s. After allowing for brokerage and the recently-enacted stamp duty the return is £5 3s 3d. The duty, however, is only for three years, after which tho return will be £5 14s 3d for the remainder of the term. From the purchaser's point of view that is a much more attractive investment than a new issue of 5£ per cent debentures at par, not subject to the stamp duty."