YANKEE DOLLARS FOR AUSTRALIA.

Timaru Herald, Volume CXXIII, 2 May 1927, Page 9

YANKEE DOLLARS FOR AUSTRALIA.

Banks Bidding for Business COMPETITIVE OFFERS SUGGESTED. By Cab’a—Press Association —Copyright. Australian and N.Z. Cable Association. Received May 1, 5.5 p.m. NEW YORK, April 29. Recent New South Wales financing here, which caused considerable dissatisfaction among at least three hanking houses, who during the last few years have sent representatives to Australia in the hope of obtaining business, has resulted in more discussion on Wall Street. It is pointed out, by a good authority, that the reason why New South Wales was awarded the second 25,000,000 dollar loan by the Equitable Trust, was a clause in the contract for the first loan, providing that the Equitable be given any flotation of State loans that might occur here, within three months thereafter.

It is understood the general circumstances surrounding the entry of New South Wales to the New York loan market are as follow': The State found it was unable to negotiate any loan in London, on favourable terms, it being intimated that the best it could realise would be in the neighbourhood of 92. New South Wales had inquiries here, and the financial houses connected with the biggest banking group in America offered 91. This was considered so unsatisfactory, that for the time being the idea was abandoned of entering the New York market. It was then that a newly-formed syndicate in Australia, with connections in New York, informed the Government that the Equitable Trust would be ready to advance the necessary 25,000,000 dollars at a rate giving the State an ultimate return of 93.227. Three banking houses at the same time cabled New South Wales asking that they be permitted to bid. It is alleged one house v r as advised not to act at that time, while the bids of other houses were ignored. One of these firms now claims that it was prepared to offer terms better than the Equitable Trust, and asks why the loan was not open to competitive bidding in some form. It contends that if this provision were made by the Equitable for the second loan of 25,000,000 dollars, this loan could also have been raised here on better terms than those obtained. It is contended that while the usual charges made on foreign loans in New York provide for 2 per cent, underwriting fees, 2 per cent commission, the keen competition which exists and the plenitute of funds, make it wholly likely that the combined charges for Australian financial needs can be reduced to 2£ per cent., and the failure to invite competitive bidding means a loss to borrowers.