GERMAN LOAN IN U.S.

Wanganui Chronicle, Volume LXXXIII, Issue 19988, 3 November 1927, Page 2

GERMAN LOAN IN U.S.

FINANCING EXPORTS

! BEGINNING OF NEW INDUSTRIAL SYSTEM . BERLIN, Oct. 22. A fresh and copious stream, of for- : eign capital will shortly pour its fcr--1 tihsing waters upon the German exI port trade. That industry hero is alI ready blossoming is patent to all the • world, and the big financial transaction now announced shows that the process is still far from being at an end. The deal presents the further point of interest that it is an innovation in German finance, and is expected to be merely the inauguration of a vast system of developing German prosperity with other people’s money. Briefly stated, the immediate transaction in question is the floating of a loan of 25,000,000 dollars (about for the Deutsche Bank by the American firm of Dillon Read, in conjunction with the International Acceptance Bank and the Equitable Trust. The interesting feature of the business is, however, that the borrowers arc taking the money avowedly on behalf of a specific group of their customers, namely, the “middle industrial ■ lists.” This firm is defined as comprising those firms whose repute is beyond i challenge at home, but is not suffieientj ly known abroad to enable them to i acquire foreign credits on terms grantad to the big German undertakings of world fame.

It is not stated at precisely what figure the exporting customers of The Deutsche Bank will receive the loan, but a hint is given that the conditions will not be materially more onerous than those which first-class borrowers have had to satisfy abroad. According to the computations of the newspapers, that means from 8 to 8j per cent, interest, inclusive of all charges. On the world’s money market the issue will appear as a 6 per cent, loan redeemable at par in five years. The price of issue will be 991. A portion of the loan will be placed in Europe, though the papers are not quite in agreement as to the countries which will participate. England is mentioned as the possible centre of issue, but at the same time doubts are expressed as to the present receptivity of the English money market for German loans.

It is also announced that the Frank-fort-on-Main municipality has deeidjed to seek 60,000,000 marks (about £3,000,000) abroad for the extension of electrical works, streets, andi markets. Evidently the recent warnings from London against German municipal borrowing abroad have not received much attention here.