RATE FIXED FOR LOCAL BODIES

Southland Times, Issue 23818, 16 May 1939, Page 8

RATE FIXED FOR LOCAL BODIES

Mr Mason Mentions Difficulties

AUCKLAND TRANSPORT BOARD (Special to The Times) AUCKLAND, May 16. The difficulties faced by local bodies in raising loan money at 3| per cent., the rate of interest fixed by the Local Government Loans Board, were mentioned by the chairman, the Hon. H. G. R. Mason, at the annual meeting of the Auckland Transport Board. He said it was to be hoped that the early future would see money available. Much attention was given by the board to the Auckland city tramway loan of £1,250,000 and particularly to the fact that the sinking fund would be insufficient to meet the full outstanding liability under this loan when it fell due on July 1, 1940.

Mr Mason said that with a view to meeting this deficiency the board set out to redeem as they became available debentures having a total face value equivalent to the amount in sterling of the deficiency. In this respect the results had exceeded the most optimistic expectations. At the present time only a comparatively small number of debentures required to be redeemed in order to dispose of the sinking fund deficiency. . To meet the expenditure involved by this action the board had taken the necessary steps to obtain authority for a loan of £500,000 in New Zealand. Very little success, however, had been met with in attempting to raise moneys under that loan. The rate of interest approved by the loans board was 3J per cent., while local body and Government securities could now be purchased on the stock market to return rates of interest exceeding four per cent. There' appeared little possibility of the board, even with the unexcelled security its debentures possessed, being at present able to raise a loan at the rate prescribed. “This position is not peculiar to ‘the board alone,” Mr Mason added, “but it is shared by local bodies generally. The position has been represented to the Government and it is to be hoped that the early future will see money made available for all local bodies requiring to raise loans.”

RAISING OF RATE INDICATED PRIME MINISTER TO MAKE STATEMENT (United Press Association) WELLINGTON, April 15. “The rate will have to be lifted to meet the position of local bodies,” said the Prime Minister (the Rt. Hon. M. J. Savage) when asked this evening if it were intended to raise the maximum interest rate of 3| per cent at which local bodies are permitted to borrow in view of the fact that the Government was offering more than 4 per cent, for its internal loan. Mr Savage added that he would make a fuller statement in a day or so, probably tomorrow. SUCCESS EXPECTED FULL DETAILS AWAITED BY BUYERS (United Press Association) AUCKLAND, May 15. Following consideration of the preliminary announcement of the new Government loan on the Auckland Stock Exchange, officials of the exchange made the following statement: — “The issue should be favourably received by the investing public and the flotation should be successful. The longer-dated issue would appear the more attractive to the ordinary investor and the provisions in the event of the market selling price falling below the price of the issue should appeal as a safeguard against capital loss. The issue will be advantageous to those wishing to make provision for death duties. “The immediate effect upon the giltedged market was the withdrawal of buyers pending receipt of full details of the proposals. Sellers, who have not been plentiful during the past week, were even fewer.”