N.S. WALES FINANCE

Otago Daily Times, Issue 20087, 2 May 1927, Page 9

N.S. WALES FINANCE

NEW YORK LOAN MARKET. DISSATISFACTION ON WALL STREET. COMPETITIVE OFFERS IGNORED. (Press Association —By Telegraph—Copyright) NEW YORK, April 30. (Received May 1, at 5.5 p.m.) Recent New South Wales financing here, which caused considerable dissatisfaction among at least three banking houses, who, during the last few years, have sent representatives to Australia in the hope of obtaining business, has resulted in more discussion on Wall Street. It is pointed out by a good authority that the reason why New South Wales was awarded a second 25,000,000-dollar loan by the Equitable Trust Company was a clause in the contract for the first loan providing that the Equitable Trust should be given any flotation of the State’s Joans that might occur here within three months after the first.

It is understood that the general circumstances surrounding the entry of New South Wales on the New York Joan market are as follows: —The State, finding that it was unable to negotiate any loan in London on favourable terms, it being intimated that the best it could realise would be in the neighbourhood of 92, New South Wales made inquiries here, and the financial houses connected with the largest banking group in America offered 91. This was considered so unsatisfactory that for the time being the idea was abandoned of entering the New York market. It was then that a' newly - formed syndicate in Australia with connections in New York informed the Government that the Equitable Trust would bo ready to advance the necessary 25,000,000 dollars at a rate giving the State an ultimate return of 93.227. Three banking houses at the same time cabled to New South Wales asking that they should be permitted to bid. It is alleged that one house was advised not to act at that time, while the bids of the other houses were ignored. One of these firms now claims that it was prepared to offer terms better than those of the Equitable Trust, and it asks why the loan was not open to competitive bidding in some form. It contends that if the provision in the Equitable contract had not made it necessary for the State to return to the Equitable for the second loan of 25,000,000 dollars this loan could also have been raised here on better terms than those obtained. It is contended that while the usual charges made on foreign loans in New York provide for 2 per cent, underwriting fees and 2 per cent, commission the keen competition which exists and the plentitude of funds makes it wholly likely that the combined charges for Australian financial needs can be reduced to 2i per cent., and failure to invite competitive bidding means a loss to the borrower. — A. and N-Z. Cable.