LOCAL BODY DEBENTURES

Otago Daily Times, Issue 21976, 10 June 1933, Page 12

LOCAL BODY DEBENTURES

THE PAYMENT OF INTEREST QUESTION OF WHICH CURRENCY. (Pee United Press Association.) WELLINGTON. June 9. Since the recent advance in the rate of exchange on London there. has been muen speculation as to the position in regard to the payment of interest on overseas local body loans. During the past week the impression has gained ground that this interest is payable in terms of New Zealand currency. 1 . As a general statement this does not correctly define the position. The determining factor in fixing in what currency interest' and principal shall be paid is that of domicile. It was ascertained m official quarters to-day that where a loan was raised in London the prospectuses were issued there, subscriptions were invited there, and if people bought there before the high exchange they would be entitled to expect their interest and principal to be repaid in pounds sterling. Were they not paid in .sterling it would interfere with the credit of- the country, and the prospects of the local body concerned being again able to raise a loan would be remote. , . • _ Where a loan was raised m New Zealand and the prospectuses were issued and subscriptions invited here the debenture holders would naturally expect to be paid in New Zealand currency. If, by the terms of the contract, they had the right to ask for payment in London, the local body would'pay in London, but in New Zealand currency. i. With Government loans the position is different, for it is specifically stated in the contract in what currency interest and principal shall be paid.