OVERSEAS LOANS

Southland Times, Issue 22038, 10 June 1933, Page 6

OVERSEAS LOANS

PAYMENT OF INTEREST WHICH CURRENCY? PRONOUNCEMENT MADE (Per United Press Association.) Wellington, June 9. Since the recent advance in the rate of exchange on London there has been much 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. As a general statement this does not correctly define the position. The defining factor in fixing in what currency the interest and principal shall be paid is that of domicile. It was ascertained in official quarters to-day that where a loan was raised in London, prospectuses were issued there, subscriptions were invited there and if people bought there before the high ex.change 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 the loan was raised in New Zealand and prospectuses and subscriptions invited here the deben-ture-holders would naturally expect to be paid in New Zealand currency. If by the terms of the contract they had a right to ask for payment in London the local body would pay in London, but in New Zealand currency. With Government loans the position was different, for it is specifically stated in the contract in what currency the interest and principal shall be paid.