GOOD SALE FOR CITY DEBENTURES.

Star (Christchurch), Issue 18643, 21 December 1928, Page 10

GOOD SALE FOR CITY DEBENTURES.

INVESTORS ACCEPT LOWER INTEREST RATE.

the Finance Committee of the City Council adopted a wise course in deciding to make an effort to sell its debentures for its roading loan of £220,000 at 51 per cent interest instead of the rate of 54 per cent -which had been paid for previous loans, -has been borne out by the results obtained. The first instalment of the loan, amounting to £56,800 has been authorised to be raised as from January 5 next, and already debentures amounting to. £37,100 have been sold, and several inquiries from other investors have been received. The City Treasurer (Mr J. Anderson), on whose suggestion the committee decided to offer the lower rate of interest, stated to-day that he expects to sell the balance of the debentures without any difficulty. The debentures, which are now being offered for sale are for the following periods: £IO,BOO for a term of seven years. £38,000 for a period of fifteen years. £BOOO for a period of thirty-six and a half years. The whole of the debentures for a term of seven years have been sold, and £26,100 worth of those for a term of fifteen years have been taken. Those for the thirty-six and a half years period have not proved so popular, only £2OO worth having beon disposed ot. The City Council was the first public body in Canterbury to offer 51 per cent interest on its l6ans, and investors at first were inclined to hold off in the hope that the council would be compelled to pay the higher rate of 54 per cent. However other local bodies quick 1y followed the example set by the City Council, with the result that 51 per cent is now regarded as the standard rate of interest for local body debentures. Shortly after the war when investments were numerous and money was comparatively scarce the rate of interest on local body del>entures rose as high as 64 per cent. The City Council sold £98,000 worth of Electricity Department debentures at that rate, but these will be paid off in full on September 1, 1929. During the past few years the interest rate has been steadily declining, and it is thought that within a year it may be as low as 5 per cent. It is hardly likely, however, that it will become any lower than that, one of the factors against a small rate of interest being the increase in the Government debenture tax from 3s to 4s 6d in the pound. An interesting feature of the City Council’s latest issue of debentures is that the bulk of them have been sold to Timaru and Dunedin investors. Apparently the Christchurch investors have been reluctant to accept the lower rate.