STATE LOANS

Wanganui Chronicle, Volume LXXXIII, Issue 19829, 2 May 1927, Page 7

STATE LOANS

MR LANG’S FINANCING Considerable Discussion on Wall Street. BANKERS DISSATISFIED BETTER CONDITIONS COULD HAVE BEEN OBTAINED (By Telegraph—Per Press Assn.—Copyright.] Received May 1, 7 p.m. (A. & N.Z.) NEW YORK, April 30. The recent New South Wales financing here, which caused considerable dissatisfaction among at least three banking houses, who during the last few years 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 New South Wales was awarded the second 25,000,000 dollar loan by the Equitable Trust Company was a clause in the contract for the first loan ,providing that that company would bo given any floatation of State loans that might occur hero within three months thereafter. It is understood that the general circumstances surrounding New South Wales’ entry into the New York loan market are as follows: The State, finding it unable to negotiate any loan in London on favourable terms New South Wales made inquiries here and 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 tho State an ultimate return of 93.227.

Three banking houses at the same time cabled New South Wales, asking that they bo permitted to bid. It is alleged that one house was advised not to act at that time, while the other houses’ bids were ignored. One of these firms now claims that it was prepared to offer terms better than the Equitable Trust, and asks why tho loan was not open to competitive bidding in some form. It contends that if the provision in the Equitable Trust contract had not made it necessary for the State to return to that company for the second Loan of 25,000,000 dollars, this loan could also have been raised nere on better terms than those obtained. It is contended that while the usual charges made on foreign loans in New York provide for two percent underwriting fees and two percent commission, the keen competition which exists and the plentitude of funds make’s it wholly likely that the combined charges for Australian financial needs can be reduced to two and a-half percent, and the failure to invite competitive bidding means a loss to the borrowers.

NEW ZEALAND LATEST MINISTER GIVES DETAILS LOAN FOB PUBLIC WOBKS [Per Press Association.) WELLINGTON, May 1. The Minister of Finance announced to-day that the New Zealand loan on the London market is for £6,000,000. It is a 5 per cent, issue at £99 10s, compared with a similar issue last year at £9B 10s. The return to investors, with redemption, will be £5 0s lOd per cent., compared with £5 2a 6d per cent, on last year’s loan, and the proceeds will be allocated as follows: Railway construction & improvements £3,000,000 Hydro-electro developments 900,000 Telegraph extension .. 750,000 Other public works .. 1,350,000 Other colonial loans recently issued on the London market were the South Australia £2,500,000, with 5 per cent, at 98; Western Australia £1,500,000 with 5 per cent, at £97 10s; Commonwealth of Australia (conversion loan) £11,000,000 odd, 5 per cent, at 98.