LOCAL BODY BORROWING

New Zealand Herald, Volume LXX, Issue 21458, 4 April 1933, Page 10

LOCAL BODY BORROWING

EFFECT OF RECENT ACT LOW INTEREST RATE "It appears that it will bo impossible for local bodies to borrow money overseas at a greater rate of interest than 4£ per cent," said tlio chairman of the Auckland Electric-Power Board, Mr. W. J. Holdsworth, at a meeting of the board yesterday, when a letter was received from the Local Government Loans Board. The Loans Board stated that under the Local Authorities Interest deduction and Loan Conversions Act, the unraised balance of the board's redemption loan of £224,500, amounting to £12,100, could not bo borrowed at a higher rate of interest than 4£ per cent. The rate authorised by an Order-in-Council issued on January 12 was 5J per cent, which was now reducible by 20 per cent, and tho Act laid it down that either this reduced rato or 4i per cent, whichever was tho higher, should bo the ruling rato. Tho latter was tho greater rato and would therefore bo effective. Mr. Holdsworth remarked that tho board and other local bodies would b© compelled to borrow at 4i per cont. Mr. H. T. Goldio: Provided they can get money at that rate. Tho chairman said the British Government had recently gono ou tho loan market with two issues totalling £34,000,000 at 2£ per cent, and it had been offered £72,000,000 by investors. "These would bo short-dated issues," remarked Mr. E. H. Potter. After agreeing that the loans wero probably of short-term, the chairman said it appeared that 4i per cent would bo acceptable to investors in England at present.