EXTERNAL LOAN POSITION

Otago Daily Times, Issue 20101, 18 May 1927, Page 6

EXTERNAL LOAN POSITION

The price at which New Zealand was able to underwrite her loan when placed side by side with the price of the recent Commonwealth loan (says the Sydney Morning Herald), shows to what extent Australia, as a borrower, has fallen from favour in the London market. For a conversion from a 5$ per cent, to a 5 per cent, loan, Australia can only obtain underwriting at 98. New Zealand for new money at 5 per cent, obtains 99|. In the interval, the bank rate has been reduced by half of one per cent., but this would account for only five shillings in the price. New Zealand has got at least one per cent, better terms for a new loan than Australia was able to procure for a conversion. New Zealand pays interest to the lender at the rate of £5 Os lOd per cent., Australia at the rate of £5 3s 2d per cent. Why is it that New Zealand obtains her requirement more easily than does Australia? Then there is the case of New South Wales. Wo are told that wo cannot get money at all in London except on terms that the Government will not accept. We asked for £4,000,000 more than New Zealand, it is true. Wc go to New York, and it is put on the market there at £3 2s 5d below what the Now Zealand loan is placed on the London market, [n the world market, our credit stands at £3 2s 6d below that of Now Zealand. Why? Wo have a larger territory than New Zealand. We have a larger population. Wo believe that our resources are greater. Evidently, those whom wo invite to become our creditors believe that our economic conditions are not so favourable as those of New Zealand, or that our politics will hinder our development. Some explanation, too. is required about the raising of the New York loan. Mi Lang explained in the Legislative Assembly that the Morgan group offered no more than 91, whereas, subsequently the group to which he gave the loan offered 93.227. Mr Lang did not say whether he received another bid from the Morgan group. From the statements which have been cabled out from New York, the belief is there that ho did receive an other bid. What was the price stated in that bid?