FIVE-MILLION LOAN.

Otago Witness, Issue 3869, 8 May 1928, Page 13

FIVE-MILLION LOAN.

SUCCESSFUL FINANCIAL OPERATION. WELLINGTON, May 5. The 4-, Minister of Finance (Mr W Bownie Stewart) announced this after' noon that .he has been advised that the £5,000,000 cash loan, which was issued in London yesterday, vvas oversubscribed and that 'the list closed at 11 o’clock. The success of this 4| per cent, issue, he said, would not only benefit us directly, but gave good colour to the authoritative statement recently made that British finance and trade were moving towards improved conditions. STATEMENT BY MINISTER. WELLINGTON, May 3. New Zealand’s £5,000,000 loan, issued in London on Wednesday, has been oversubscribed. Public works are to take the lion’s share of the proceeds. Referring to uhe matter to-day the Minister of Finance (Mr W. D. Stewart) made the following statement: —•“ The London loan to provide the additional capital required for carrying on the public works programme is for an amount of £5,000,000, hearing interest at 4J per cent., with an issue price of £94 10s per cent., including redemption of the discount over the period of the

loan. This will give a return to investors of about £4 19s 8d per cent., as compared with £5 0s lOd from last year’s loan, which was 5 per cent, at £99 10s. This issue at 44 per cent, is a definite break from the 5 per cent, rate which has obtained in London for sojne time, and indicates a distinct tendency towards easier conditions. “Combined with the issue for new moifey, there is an offer to holders of our 4 per cent, consolidated stock, £29,000,000. of which matures in November, 1929, to convert their holdings up to a limit of £5,000,000 in the aggregate into 44 per cent stock at the rate of £JO4 10s of the new stock for £lOO of the*old. This is equivalent to an issue price of about £95 14s for the new stock, giving a return to investors, with redemption of the discount over the period, of £4 16s 10 per cent. The terms are regarded a., satisfactory in view of the ruling rates of interest, especially when it is borne in mind that the market will have to bear such heavy calls in dealing with our 4 per cent, maturing stock. The policy of offering portions of the £29,000,000 before maturity, while costing some additional interest for the 12 months, should have the result of placing the whole stock on a more favourable basis than if left to be attempted in one sum at maturity da' I.” . The Minister said the proceeds would be allocated as under: —Public works, £3,000,000; hydro-e’ectric power, £1,000,000; railway improvement, £1,000,000.