MATURING LOANS

Timaru Herald, Volume CXLIX, Issue 21963, 15 May 1941, Page 4

MATURING LOANS

Holders Invited To Convert Three Issues Affected (P.A.) WELLINGTON, May 14. The conversion of Government loans totalling £21,000,000 of debt domiciled in New Zealand is to be attempted in the near future according to an announcement by the Minister of Finance to-day.

Mr Nash said the offer to convert was addressed to holders of the following Government securities—Three per cent, stock and debentures maturing July 15 this year, 3S per cent, stock and debentures maturing November 15 this year and 3i per cent, and 4 per cent, stock maturing March 15, 1943. These holders were invited to apply forthwith and in any case not later than June 14, for the conversion of their holdings in any or all of these loans into new 3i per cent, stock maturing 1957-60 at the rate of £lO3/0/0 of new stock for every £lOO of old stock surrendered or, alternatively, into shorter dated 3 per cent, stock maturing 1946-48 at par. Applications for conversion, said Mr Nash, were required now but would take effect in respect of each of the three loans as follows—Three per cent. July 15, 1941, on July 15, 1941; 3S per cent. November 15, 1941, on August 15, 1941; 31 and 4 per cent, March 15, 1943, on September 15, 1941. Interest on the old loans would be paid up to these conversion dates, and interest on the new loans would commence from those dates. The Minister explained that the first mentioned date was the final maturity date of the loan, while in the case of the other two loans formal notice had been given of intention to repay them on August 15 and September 15 respectively. This meant that if the offer of conversion was not accepted by June 14 the holder would be repaid In cash with interest to date of settlement.

A Valuable Concession Mr Nash added that a valuable concession was being offered to those accepting conversion by which they could stipulate that the whole or any portion of the new conversion stock should be available at par for payment of death duties In the estate in the event of death occurring before the loan matured. The return to Investors from the new securities, allowing for the premium, was £3/9/3 per cent, in the case of the longer dated issue and 3 per cent, from the short dated securities. These terms were practically the same as the national development loan now on the market “Taking all the relevant factors mto consideration,” continued the Minister, “the Government felt that the conversion terms were straightforward and fair and it confidently anticipated that holders of the securities affected would accept the offer and so ensure the success of what was one of the largest conversion operations ever undertaken in the Dominion.” Mr Nash added that success in these operations would clear the decks of maturing debt for the probable duration of the war and be a material factor in securing the financial stability which was so essential a factor in a sustained war effort. He urged all holders of stock affected to give the matter of conversion urgent consideration, and added that conversion did not involve any cash applications for investment. Such investments were invited for the national development loan which would remain open for subscriptions to the 3i per cent. 1956-59 issue at £97/5/- per cent. This gave a return of £3/9/3 to investors, the same as the longer dated conversion offer. The short dated 3 per cent, national development issue had been withdrawn. Replying to a question as to the likelihood of another war loan, Mr Nash said that the preparatory work for the financial programme for the Sear for botff the war and the ordinary udget was .now in hand. There was no doubt but that a war loan would be necessary, and it would be issued as soon as a review of requirements and resources generally had been completed. He could say that the war loan for this financial year would be purely voluntary.