THE CONVERSION LOAN.

Taranaki Daily News, 20 September 1929, Page 8

THE CONVERSION LOAN.

Further analysis of the conversion operations in regard to the balance of the loan November 1 make it clear that New Zealand has had to pay a fairly heavy price for the fresh accommodation. Holders' of the maturing stock are offered 5 per cent, interest instead of 4, and a cash payment of £2 in every £lOO worth of stock held. Authority has been taken for the repayment of the loan in 1045, and assuming that this is arranged for the total cost of the new loan during its currency will be £5 7s 8d per cent., a considerably higher rate than has been paid for conversions or for new money for some years. Judging from Australia’s experience there was no escape from the higher rate, and the best has been made of a difficult position. The position appears to be that conversions have accounted for £21,729,496, while £3,700,000 will have been redeemed, leaving slightly over £4,000,000 to be provided in cash by November 1. This sum, according to the Prime Minister, is to be drawn from “cash temporarily invested in London.” It seems evident that these temporary investments must be portion of the £7,000,000 loan for public works which was raised last January. It may be the Government’s intention to float a local loan to restore the depletion of the January loan, but there is no information in this regard so far made public. The transaction as it stands seems scarcely to bear out the impression created in London that a considerable amount of the outstanding debt was being paid off with funds drawn from domestic resources. If the repayment is to be met entirely by funds already borrowed in London, the position is not nearly so satisfactory from the lender's point of view. An early intimation of how the Prime Minister intends to carry out his stated policy of “applying our local resources to the utmost” seems particularly desirable.