THE NEW ZEALAND LOAN.

Otago Witness, Issue 3117, 10 December 1913, Page 80

THE NEW ZEALAND LOAN.

L NDERWRITERS GLUTTED. It KOil WUK UVv.\ >.HHHI£SIOSUENI.I LONDON, October 17. It is just by chance that the New Zealand loan happens to be the one at which the market hero cries "Halt.” In fact, it looks as if we got in just in time to get the money. Only a week or so earlier Alberta tried to raise a million or two at 4i per cent., with a discount of a pound or two, and only 12 per cent, was taken up by the public. But tins does not altogether indicate the scarcity of money. The public has become more knowing now than it once was, investors realising that if they will only hold off until the lists are closed they are practically certain at such a time as this to get their scrip a point or |two cheaper.

'.lho city editor of the Daily Telegraph : —Tho experience of the underwriters in tiro New Zealand loan will probably effectually stop further issues for a while. “ Yet the loan was gilt-edged,” he adds, ‘‘and, offered, at with a valuable option of conversion, it looked tempting, and v'as indeed, run after by underwriters before its appearance. There have, however, been so many similar instances of lack of public response within the last three weeks that it seems doubtful whether the underwriters are really being saddled with such heavy liabilities as would appear to bo the case. Those with money to invest nowadays possess a good deal more inside knowledge than formerly, and there is reason to bolievo that they are frequently themselves the real guarantors of the so-called underwriters. It is beyond doubt that insurance companies and other big corporations with funds to employ bake advantage of the underwriting commission to secure the amounts they want at a cheaper rate. They ‘ underwrite firm ’ as it is called, and, as a rule, do so purely for investment purposes, and not for the sake of earning a commission if the subscriptions are large. Again, the largo firms of stockbrokers usually underwrite, after having arranged with such clients as fancy the new issue to give them a pro rata participation in return lor a brokerage which may represent g or i of the underwriters’ fee. Thus it may well bo that in this Now Zealand case the real liability of the guaranteeing firms is nothing like the 92 per cent, attributed to them. In any event, it is t,o bo hoped that there is some foundation for this view, for otherwise underwriters must be suffering from a serious congestion, as the following details of some of the sound issues which have appeared since September 26 show:— Publicly Left • subscribed. with Amount. Per cent, underwriters. Canada 4 per cent £11,000,000 50 £1,500,000 City of Edmonton 5 per cent. 900,700 43 513,000 City of Vancouver 4J per cent 481,000 14 398,000 Province of Alberta 4J per cent 1,000,000 12 880,000 Buenos Aires, Lacroze Tramways, 5 per cent. ... 500,000 10 450,000 Vancouver Power 4J per ceu t 650,000 30 455,000 Now Zealand 4 per cent. .. 3,500,000 8 3,220,000 Totals ... £10,011,700 £7,414,000