NEW ZEALAND LOAN

Otago Daily Times, Issue 21358, 11 June 1931, Page 9

NEW ZEALAND LOAN

THE LONDON ISSUE DISAPPOINTING RESPONSE (United Press Association.) (By Electric Telegraph—Copyright.) LONDON, June 9. The underwriters receive 68 per cent; of the New Zealand loan. FACTOR AGAINST THE LOAN PROXIMITY OF AUSTRALIA. LONDON, June 9. The Daily Telegraph’s financial editor says: “ Since the underwriters are left with 68 per cent, of the New Zealand loan, dealings in the scrip were inevitably unsatisfactory, opening at 1 per cent, dis-' count. As there was no encouragement, for the market to take the stock it went, to 2 per cent., closing at 1| per cent, discount. Although New Zealand has always a high reputation in the financial world, the close proximity of Australia does not help the Dominion when borrowing.” DEAR MONEY COMPARATIVELY SMALL SUBSCRIPTION (Per United Press Association.) WELLINGTON, June 10. The Prime Minister and Minister of Finance (Mr G. W. Forbes), when approached to-day, cpnfirmed the report that the underwriters had been left with about 68 per cent, of the loan and also that dealings in the bonds on the Stock Exchange yesterday commenced about 98 per cent, and closed about 97J per cent. Commenting upon the result, Mr Forbes remarked that it was 4uite evident that New Zealand was the victim of a variety of unfavourable circumstances operating in the London money market. “It is well recognised,” he said, “ that the Dominion’s loans are generally favourably received on the London market, and it is an unusual occurrence for any portion to be left with the underwriters. In this connection it may be of interest to note that the last occasions on which this occurred were in 1921, when the underwriters were left with 58J per cent., and in 1925 with 85 per cent.” The Prime Minister concluded by saying that the cost of the loan to the taxpayer, including expenses and redemption of the discount over a three-year period, worked out at approximately £6 Is 3d per cent. This rate certainly represented dear money, but the result clearly showed that new capital was not obtainable at a lower price. BRITISH PRESS COMMENT. REASON FOR POOR RESPONSE. i LONDON, June 10. (Received June 10, at 9 p.m.)

The Financial News, in an editorial, says; “ The failure of the New Zealand issue has given an unpleasant hint that the quarters which usually take up large blocks of such issues are at present somewhat overloaded. The response was surprisingly poor, but this was not so much due to dissatisfaction with the yield as to general disinclination to shoulder new .commitments overseas.”

Following is a summary of New Zealand loans issued in London in recent years, excluding conversion loans, the net yield to the investor including redemption of the discount at the end of the respective loan periods;—

Last year’s loan, which was issued on May 6, was oversubscribed in a few hours; there were 21,852 applicants for a total of £10,577,800. It was a longterm loan, the stock being repayable at par on December 15, 1940. The present is a short-term issue, five years being the limit for an official “ short.”

Rato Issue Net Amount. P.c. price. yield. 1923 , . ,£4,000.000 4 92 £4 12 6 1921 . . 5,000,000 444 95 4 18 1 1925 . 7,000,000 ' i’A 9444 4 IS 10 1920 . . 6,000,000 5 9844 5 2 6 1927 . . 6.000,000 5 9944 5 0 10 1928 . . 5,000.000 444 9444 4 19 2 1929 . . 7,000,000 444 05 4 16 5 1930 . . 5,500,000 5 99 5 1 8 1931 . . 5,000.000 5 99 5 7 6