CITY LOAN

New Zealand Times, Volume L, Issue 11436, 5 February 1923, Page 5

CITY LOAN

SUM OF £340,000 TO BE USED TO PAY OFF ANTICEDENT LIABILITIES. QUICKLY OVER-SUBSCRIBED. Information came to hand on Saturday that the loan of £340,000 required by the City Council for the purpose of paying off the city’s antecedent liability, outstanding as at March 31st. 1922, has been raised in London The rate of interest is pi per cent., and the price of issue is £99 per cent. The loan has a currency of twenty years.' The new legislation placed on the Statute Book required that the antecedent liability should be wiped off before the end <>f the present financial year, and the successful floating of the loan has relieved the city from a situation which, if prolonged, would have caused » good deal of anxiety. The' Mayor says that tho loan was floated through the Union Bank of Australia. The brokers quoted at intervals 5 per cent, at 96, 51 tier cent, at 98. and 5J per cent, at par, with the chance of a premium. After going carefully into the matter, the Mayor asked the hank to telegraph to the brokers, asking if the money could not be secured at Si per cent, at 99. This was agreed to, with the result as stated above. "There can he no, doubt,” said ,Mr Wright, “that this is an excellent proposition for the city. The interest on our bank overdraft has been 7 per cent, until just recently, when it was reduced to 6J per refit. When allowance is made for discount and flotation expenses, the (interest on the present loan will not amount to much more than 5i per cent. We have now to provide, of course, a sinking fund of 1 per cent. With this addition to the 5} per cent., we are almost in the same position as we were carrying on with a bank overdraft, but, of course, we shall be getting the benefit of the 1 per cent. , sinking fund year by year to extinguish the loan. We are therefore practically 1 per cent, better off than we were. The raising of the £340,000 loan on 6uch satisfactory terms will clear up our financial situation, and place our civic affairs on a much sounder foundation. T am extremely pleased at the result of our negotiations. I think we have done very well, and that the citizens have every reason )o be satisfied with the transaction.” The Mayor added that it was arranged bv the brokers-that the subscribers .should not receive interest on their deposit of five pier cent., which is paid on application, and they will receive no interest until the end of March. OVER-SUBSCRIBED. Australian and N.Z. Cable Association. (Received February 3, 2.30 p.m.) LONDON, February 2. The Wellington Oity 5J per cent. Loan of £340,000 at 99 was over-sub-soribed within an hour.