CONVERSION LOAN

Otago Daily Times, Issue 23884, 11 August 1939, Page 9

CONVERSION LOAN

THE NEW ZEALAND ISSUE LACK OF PUBLIC INTEREST UNIMPORTANT DEALINGS (United Press Association) (By Electric Telegraph—Copyright) LONDON, Aug. 10. (Received Aug. 11. at 1 a.m.) The lack of interest in the New Zealand conversion issue is unique in the history of the Stock Exchange. Apart from the market’s general disinclination to deal in bonds, the conversion issue was launched at a most inopportune time, in the middle of holidays. There were only four unimportant dealings yesterday—one at £99 for converted stock, another at £99 Is 3d for fully paid cash stock, and two at 4| for cash stock £5 paid. All involved only a few thousands. It is assumed that these deals are intended to provide a basis for a market quotation, for which public interest is nil. The market tends to regard the secrecy surrounding the extent of the conversions with academic interest in view of the unusual method of guaranteeing. If, as is believed, the conversions of cash subscriptions do not cover more than a quarter of the total, the balance is well guaranteed, for which reason there is no question of necessitous selling. The strength of holders is reflected in the artificial character of the opening.” The Financial Times says: “ The denouement and the abnormal culmination of the exceptional transaction by which New Zealand is being helped out of a difficult situation, and the official reticence over the extent of the assistance necessary, casts no reflection on the stock’s merits. The terms of the issue make the loan attractive to investors who favour short term issues, but they are a minority, so the new stock cannot be expected to enjoy the same free market as those of longer date. This . defect might well be remedied by the time there are signs of growing realisation that New Zealand’s programmes of social reform must be governed by income and the effect upon national economy. This adds to the importance of the conversion rights attaching to the new loan and the demand foi it is likely to broaden if the country shows that it has really taken to heart the lessons of its recent experiences.”