NEW ZEALAND BONDS

Taranaki Daily News, 23 July 1931, Page 2

NEW ZEALAND BONDS

AN UNDERWRITING DEAL. SHORT-TERM BONDS UNATTRACTIVE. London, June 12. That the underwriters should be left with 68 per cent, of tho £5,000,000 five per cent, bonds offered by tho New Zealand Government wae a contingency which was not unexpected. A short-dated loan at 99 appeals to a very limited number of people. In the first place the law of the land forbids that trust funds should be used for the purchase of short-dated bonds. Thus that very large rcscroir of funds was entirely ruled Out. This left among the general pubhe such investors who wished to carry _on Certain investments for a limited periOq. No difficulty was found in obtaining underwriters, and no doubt they took the responsibility at a price which left them a fair margin to sell later at a discount. EnOir effort to transfer some of tho responsibility on id the smaller man at the full price has not been very successful from the point of view of tho outsider, but no doubt the underwriters are quite satisfied with their 'deal. New Zealand h?s the money it requires. Dealings in the loan began at 1 per cent, discount and fell later 16 11, nt which twice tho bonds gave the attractive yield of about <j per cent. Later a recovery took place to U discount. “The Times’’ remarks that the result Was not unexpected, “for the loan, being a short-term issue, appealed almost exclusively to financial institutions.” “STILL CHEAP.” "Disappointment was felt in the market,” says the “Dail Mail,” “at the official announcement that underwriters of the New Zealand Government issue of £5,000, 000 5 per cent, bonds (1932-34) at 99 were left with 68 per cent, of their commitments. “This means that the public only applied for £1,600,000 of the bonds. ‘The poor response was in part due to the general state of the investment markets and in part to the nervousness of investors regarding conditions in that part of the world, even though the difference between the position of New Zealand and Australia is not to be overlooked. “An alert jobber,” says the “Financial Times,” ’ “suggests that New Zealand’s new fives, 1932-34, are still cheap, even after yesterday’s sharp recovery from Igto 1| discount. He is convinced tpey will not long remain under the issue price of 99, especially in view of the revival in Australian stocks.” GOVERNMENT STRAIGHTFORWARD Various newspapers in referring to. the prospectus make complimentary comments regarding, the financial state of the Dominion. - , . T ‘The Times’’: Although the debt of New Zealand is large in relation to the population, and though the country in cotnmon with other primary producers has suffered severely from the fall in prices, the management of the country’s finances inspires more confidence than that of Australia. The New Zealand Government have tackled ♦ heir problem in an impressively straightforward manner, and as a result thfe Dominion’s credit has not suffered from the economic crisis to the same extent as that of the sister Commonwealth. “Dailv Express”: For the third time since 1892 last year’s budget of the New. Zealand Government resulted in a small deficit, but drastic economy measures are being taken to ensure a balanced Budget in the current year. Last years deficit was duo to exceptional circumstances, particularly the world-wide fall in prices. The credit of New Zealand has always stood deservedly high in the London market, and to-day’s issue should meet with a favourable response. - “Financial Times”: For such a firstclass security the terms are attractive, and incidentally a considerable proportion of the money raised Will be sent in this country in the purchase of material and plant. UNBLEMISHED REPUTATION. “Morning Post”: It is a short-dated issue, obviously designed by the borrower to tide over until general conditions are better. New Zealand’s credit, as measured by the prices of her Government securities, has doubtless suffered by her proximity to Australia, and she is confronted, to some extent, by the same problems, but not in the same degree, and the latter was con firmed by Sir Otto Niemeyer after the brief visit he paid to Now Zealand follow ing upon his examination of Australian finances. , “Manchester Guardian”: The bonds arc suitable for temporary investment purposes. New Zealand’s reputation as a borrower is unblemished, and though the Dominion, like other raw material and agricultural countries, is at present suffering severely as a result of the world-wide fall in prices, drastic economy measures are being taken in order to ensure bugetary, stability.