“EXCEPTIONALLY CHEAP”

New Zealand Times, Volume XXXVII, Issue 8559, 23 October 1913, Page 6

“EXCEPTIONALLY CHEAP”

Onr cablegrams yesterday included the report of a reference made by the London “Daily Mail” to the latest New Zealand loan of £'3,500,000. It will be remembered that the loan bears interest at the rate of 4 per cent. Tho Hon. James Allen stated in the House of Representatives tho other day, during a brief discussion initiated by Sir Joseph AVard, that the loan is being raised at £93 10s. Tho first cable message published in tho newspapers, however, gave tho price of issue as X'9B, and subsequent information from London suggests that tho expert opinions and calculations are based upon £OB rather than £9B 10s. However, leaving this point in doubt, it is admitted that a further discount of £1 per cent, is offered to holders of stock who will convert within a given time to long-dated 4 per cent stock, so that the Dominion is really offering the investing public 4 per cent, debentures at either £97 10s or £97 (out of which wo have to pay the flotation charges). Yet this alluring offer was so ignored by tho public that the underwriters wore left with 92 per cent, of the loan on their hands. They began to unload at a discount of 17s 6d, then at 10s, and now wo are informed that the loan has “Tallied” and is quoted at 5s per cent, discount. The “Daily Mail” describes the loan as “exceptionally cheap,” since it enables investors who avail themselves of the conversion terras to secure a 4 per cent, investment at a trifle over £9O per £IOO. A transaction of this kind that is “exceptionally cheap” to the lender has, of course, a very different complexion from the point of view of the borrower. In plain terms, Mr Allen has once more permitted the British investor to get considerably the better of the bargain. A\ T e are quite prepared to admit that our Minister for Finance has done his best, but if this is the result of the arrangements which the honourable gentleman travelled to London to conclude, we can only regard tho sequel with sincere disappointment. AVe shall also, unfortunately, have to abandon any lingering hopes of the confirmation of the Hon, AV. F. Massey’s assertion that the advent of his party had enormously appreciated New Zealand’s credit in London.