INVESTORS CHARY

Otago Daily Times, Issue 23706, 13 January 1939, Page 8

INVESTORS CHARY

LOCAL BODY LOANS DIFFICULTIES INCREASING TENDENCY SINCE ELECTION (Special to Daily Times) AUCKLAND. Jan. 12. Because people with money to invest are either withholding it form investment pending more settled conditions for finance or have found a better market for their money, Auckland local bodies are finding it increasingly difficult to raise public money for short-term loans. Some are more fortunate than others, the most fortunate of all being those who at present have no need of loan money, but even the Auckland City Council, which is satisfied with the response to its large works loan, has noticed that since last September sales have not been so good as they were before then. For a number of months before the election sales averaging from £16,000 to £17,000 a month were made, but now only spasmodic sales are being made. That this experience is general, although the Auckland City Council anticipates no difficulty in obtaining the rest of its money as it is needed. Is shown by the sales of a loan for £245,000 being raised by the Timaru Harbour Board. Since last March only £95,000 has been obtained, of which one parcel was for £65,000, apparently from a sinking fund. Before September substantial individual amounts were being taken up, but since then they have tailed off to a few hundreds at a time.

For suburban local bodies the raising of short-term loans from the public has for months been an almost impossible task. It has been found, for instance. that the competition of Government stocks, which are returning from 4J to 4J per cent, on a market price of about £2 below par, has been too severe for local body loans that are generally quoted at about par ahd are returning only the original 3J per cent, interest rate which is allowed by law for local body debentures. The market response to both these types of loans draws attention to the projected internal loan of the Government for public works. In addition to the general tendency of investments to be withheld pending more settled conditions, this loan will have to compete with other Government loans that are returning up to per cent. Suburban local bodies, however, seem to have reached the far worse stage of beinfl unable any longer to consider the phblic as prospective purchasers of hew loan debentures. Instead they have come to rely upon the assistance of the State Advances Corporation, this avenue being opened to them as the result of strong representations made some time ago by the local bodies concerned.