NEW LOAN

New Zealand Herald, Volume LXXII, Issue 22149, 1 July 1935, Page 9

NEW LOAN

CONVERSION ISSUE DOMINION IN LONDON SUM OF £8,000,000 INTEREST 3 PER CENT FAVOURABLY RECEIVED By Telegraph—Press Association —Copyright LONDON, June 28 A New Zealand -conversion loan of £8,000,000 at 3 per cent, redeemable 15)52-55, at £9B 10s, has been underwritten. The New Zealand Government, is providing the other £2,135,800 of the £10,135,800 of 5 per cent stock, 1935-45. The loan was favourably received on the London Stock: Exchange. The list fnr cash subscriptions will be opened and closed on July 1. The final instalment of 93J per cent will be payable on October 1, and the conversion will close on July 8. The converters will receive 30s per cent in cash. The New Zealand Minister of Finance, Mr. J. G/Coates. in a statement to-day, said he was clad New Zealand's credit standing in London enabled her to borrow at the lowest rates in the present century. The Dominion's credit was fully deserved. " We not only succeeded in closing 1934 with a satisfactory surplus but liquidated the whole of the deficits accumulated in the recent difficult years," said Mr. Coates. The prospectus points out that 43 per cer.t of New Zealand's public debt is held in the Dominion, compared with 17 per cent in 1914.

FORMER MINISTER COMMENT ON RESULT QUESTION OF PUBLIC DEBT [BT TELEGRAPH —OWN CORRESPONDENT] DUNEDIN. Sunday In an interview on the result of the London loan negotiations, Mr. Downie Stewart, formerly Minister of Finance, stated that it was satisfactory and would effect a substantial saving in overseas interest payments. Part of the loan —namely £2,135,800 —had been paid off in cash and the balance of £8,000,000 would now carry a nominal interest rate of 3 per cent, althonp;h the actual rate would work out at slightly above that owing to the discount. Cheap money was a marked feature of the last three years as compared with the years 1927-1929, which were known in England as the three dear-money years. Asked' if he had any comment to make as to the public debt statement issued ■ by the acting-Minister of Finance, Mr. A. Hamilton, Mr. Stewart said that the explanation as to the sudden increase of more than £20,000,000 in 1933-34 and its disappearance in the next year was correct. It was a temporary increase when the Government purchased the sterling assets from the trading banks and paid for them by Treasury bills issued in New Zealand. When the Reserve Bank took over the sterling assets it paid off the Treasury bills owing to the trading banks. A recent New Zealand writer in the Economist had stated that the undervaluation of the New Zealand pound, which is greater than that of any other currency in the sterling area, " gives rise to the presumption that unless external circumstances become much less favourable there will be a distinct inflationary tendency in the Dominion." " However," Mr. Stewart observed, " this opens up too large a question to discuss now. My policy was to taper off external borrowing, but this led to political repercussions in 1928 which upset the Government. I hope, however, that in future we shall be able to dispense with overseas borrowing except in very special circumstances."