FEW DAYS TO GO.

Star (Christchurch), Volume XLIV, Issue 714, 18 March 1933, Page 9

FEW DAYS TO GO.

Conversion of Government Stock. ADVICE TO BONDHOLDERS. (Special to the “ Star.”) WELLINGTON, March 18. This morning’s return from the Treasury shows that over three-quarters of the Government’s internal debt has been offered for conversion to the lower rates of interest. Yesterday’s mail yielded applications covering £2,234,215 worth of stock and debentures and the total now accounted for is £86,591,237 or 75.3 per cent of the whole debt. Including Sunday, there are now only six more days before applications close. Although they might have been expected to follow the shrewd and instructed opinion represented by insurance companies and large commercial undertakings, correspondence received by the Treasury during the last few days indicates that many of the smaller bondholders are delaying conversion of their stock, either because they do not understand fully the terms of the Conversion Act or because they fear that by converting they will tie up their money longer than they anticipated. The first difficulty can be overcome with the assistance of any stockbroker, banker or official of the Post Office, all of whom have undertaken to give free advice about details of the scheme. If a bondholder is not in a position to consult one of these experts he need merely send in a signed form to the Treasury and they will do the rest. Values Maintained. On the other problem, which arises from the alteration of the maturity dates involved in the scheme, the Minister of Finance (the Rt Hon J. G. Coates) issued the following statement this morning: “The fact that conversion has brought practically no change in the market values of Government stocks in New Zealand should reassure bondholders who are frightened that they will not be able to get their capital when they need it. Reports from the different exchanges show that Government securities are still readily marketable; during the last week, in fact, they have been changing hands freely. If these securities can fully maintain their values and their marketability even under unsettled financial conditions temporarily produced by the conversion itself, it must be obvious that bondholders who wish to redeem their holdings at any time in the* future will be able to do so easily and without loss through the agency of the Stock Exchange. “ Both in Britain and Australia conversions raised the capital values of Government stocks and there is every reason to believe that the same result will follow in New Zealand. Part of Bigger Scheme. “ As for those investors who contemplate realising on their Government stocks immediately in the hope of reinvesting at higher rates of interest, they should remember that the conversion of Government stock is only a part of a wider scheme to reduce all classes of interest rates in the Dominion. If they are wise I think they will accept the interest reduction of 20 per cent as being inevitable in these times and remember that they are still better off than either British or Australian investors. “ I must appeal to the smaller bondholders to put their fears on one side and help to make this national enterprise a resounding success.”