NEW ZEALAND LOAN.

Waikato Times, Volume 100, Issue 16815, 5 June 1926, Page 7

NEW ZEALAND LOAN.

SUCCESSFUL ISSUE. £110,000,000 OFFERED. PREFERENCE SMALL INVESTORS(Australian ami N.Z. Press Assn.) LONDON, .TUne 3. The subscriptions to the New Zealand £6,000,000 lean total £110,000,000. Applications from £IOO Lo £4900 receive, £IOO each. Applications from £SOOO to £9900 receive £2OO each. The larger applications arc allotted about 4 per cent. Dealings in the stock opened at a premium of 1 per cent., and reached 11 per cent, when the “stags” began to sell. The premium was maintained, and When the exchange closed quotations were unchanged. WIDE PARTICIPATION. UNDERWRITERS’ HARVEST. (Times Correspondent.) WELLINGTON. Friday. Though the New South Wales 5 per cent, loan of £4,000,000, return lo lender £5 2s 4d, was left with the underwriters to the extent of 70 per cent, in March, the New Zealand 5 per cent, loan of £6,000,000, return to lender £5 2s 6d, is heavily oversubscribed in May. To-day’s cable news is to the effect that the over-subscription of the New Zealand loan is so heavy that largo applicants will receive only 4 per cent.; it is also announced that dealings in the loan commenced at a premium of 1} per cent, and rose to 14 per cent. This latter statement means dealings in the loan at par, the loan being issued at £9B 10s. Underwriters’ Gain.

The underwriters’ ordinary commission is 1 per cent. An underwriter who applied for the loan, and who now unloads his allotment at par, would apparently make 14 per cent, in addition. _ . But when a statement like this is made, it should be added that the underwriters have on a number of occasions in recent times been left with huge percentages of loans they have underwritten. To look on both sides of Hie position, it is necessary to couple with the premium sales of New Zealand’s £6,000.000 loan the experience of the underwriters with New Zealand’s last loan of £7,000.000 (44 per cent., £94 10s) in May of last vear, when 85 per cent, of the loan (which Offered the lender £4 ISs c h\ was left, with Hie underwriters. That loan has never reached a premium. As recently as April 22, it was quoted in London at £93 12s 3d, a discount of 17s 9d. . So if there lias been a harvest, for underwriters, it lias followed various droughts. “ One Cause of Success.

It is conceivable that underwriters of a loan might apply for some of it either lo help its success or for thenown profit, or for both reasons. The former motive seems to be implied in the following sentence cabled from London the other day: “One of the principal causes of the success of the New Zealand loan is the subscription of very large sums by firms who have already underwritten the loan. But later particulars of Hie over-subscrip-tion seem to indicate that success would have come without that particular cause. It is important in this connection to note that, judging by the cabled advices published to-day, it, would appear that small applicants up to a given figure have received allotment in full, and that large applicants (including no doubt the underwriters) have received a percentage only, thus assuring wide public participation. As it is cabled that the large applicants —some of them “ very large ”—received only 4 per cent., it follows that the loan must have been very largely over-subscribed. Tendency of the Market. As was pointed out last Tuesday, this loan offers to lender 3s 9d more than last year’s New Zealand loan, and has gone quickly to a premium of 14 per cent. On a first glance at that fact it might be remarked that the lender has been offered too much. But compare again the New Zealand success in May and the New South Wales failure in March and only twopence difference in the amounts offered lo lbc lender. It is unsafe to dogmatise, even after the event. If Hie investing public have liked the New Zealand loan so well as the cablegrams indicate, the fact seems lo be in part due to New Zealand’s good name (of which the country can be pardonably proud) and in part due to the failure of certain gloomy predictions as to the soaring price of money. If money in London is tending to keep round about 5 per cent., Dominion borrowers, while glad that it is no higher, will need to think carefully as to whether in the expenditure of the borrowed money they arc getting 5 per cent, back. RAILWAY PROJECTS. ALLOCATIONS FROM THE LOAN. (Times Correspondent.) WELLINGTON, Friday. In vim of tiic allocation of half the E0.000.n00 loan for railway additions and imiV’ovcmcnts, it is probably the Government's intention, although no official i.vlimalion to Hint effect lias been male, that tile Department intends lo proceed with various new works set out in the programme submitted to Parliament in 1924 by the Minister of Railways. Included in the schedule of tbeso works were ttie Palmerston North deviation, estimated to cost £390,000, and the Tawa Flat deviation, to cost £950,000. It was announced recently that the Government intended to electrify Hie Lyttelton tunnel, the expenditure for which is expected to run to over £198,000. Work- on the Palmerston North deviation lias already been started in order to assist tbe unemployed, but nothing has so far been announced about the work lo bo carried out at Tawa Flat, which, it is slated, would help to a very great extent to relieve Hie unemployed question in Wellington if started without further delay. No doubt the piercing of tbc two tunnels involved in the work will be carried out by contract, and some lime is likely to eventuate, before llicso lenders can be dealt witb, but it is possible that a certain amount of preliminary work could bo carried out almost at once. The programme of railway improvement outlined by the Minister is expected to cost a liLtlc over £8,000,000, but the expenditure is to lie spread over a period of eight years.