The Ashburaton Guardian. Magna est Veritas et Prævalebit. WEDNESDAY, OCTOBER 2,1889. IMPORTANT FINANCIAL OPERATION.

Ashburton Guardian, Volume VII, Issue 2242, 2 October 1889, Page 2

The Ashburaton Guardian. Magna est Veritas et Prævalebit. WEDNESDAY, OCTOBER 2, 1889. IMPORTANT FINANCIAL OPERATION.

Our readers have already learned I from our Wellington telegrams that it is intended by the Colonial Treafurer to issue m or about November next, a loan for 1\ millions at Z\ per cent, and it may be as well to explain that that operation will not mean an increase of the indebtedness of the colony, but rather the reverse, inasmuch as it will effect a considerable saving on the annual outgoing for interest. For the new 3£ per cent loan is not intended to raise money for expenditure, but to pay off debentures of existing loans which either mature or are capable of being paid off within the next six months. It is indeed simply » " conversion" operative similar m its effect, though applying comparatively to an infinitesimally small sum, to the great conversion scheme bo successfully carried out by Mr Goschen m respect of English consols. It seems that of the five million, 5 per cent loan of 1879, £4,612,000 has been converted into 4 per cent inscribed stock, leaving unconverted 5 per cent debentures to the amount of £388,000 which mature m November next. As this sum had to be raised, the treasurer proposed to take advantage of the improved credit of the colony by issuing 3£ per cent debentures to the necessary amount, and while he is about it he also deems it advisable to pay off £2,207,300 of the loans of 1876 and 1877 (also 5 per cent) which iB redeemable at par upon notice given. Accordingly (as vre learn from the "N.Z. Times") the Government directed the Agent-General to give formal notice, on the Ist ultimo, to the holders of these Ten-Forty debentures to the amount of £2,207,300, that they would be paid off at par on the Ist Maroh next, ' and this notice has been duly given. The next process was to announce a new loan at 3£ per cent, of sufficient amount to pay off these two sums of £2,207,300, and £388,000— £2.595,300 m all— and to defray the expenses of floating. And this, too, has been done, Writing of the prospects and effect of the proposed financial operation the paper above referred to aays :— " Kow come two important questions. First: What are the prospects of the new 3£ per cent loan ( going off ;' and, secondly, what will be the results to the Colony ? Both questions may be favorably answered. The most capable judges believe that an issue of New Zealand 3£ per cents will be very well received just now Indeed, there is a tendency m the London money market rather to distrust Government loans on which a high rate of interest is offered . It is actually a fact that the more announcement of New Zealand's intention to offer a 3£ per cent loan sent up our securities like a shot. We find on examination of the Home papers that a Keuter's telegram notified the intention of the Government on this head several weeks back, and from the stock lists we notice that an immediate rise took place m New Zealand stock, and the 4 per cents, at the latest adviceß by mail, stood as high as 107. Then, New South Wales 3^ per cents were at 105 ; Victorian, 103 ; Queensland, 102. There is no apparent reason why New New Zealand Three-and-a-halfs should nob realise par, or very near it, m the present state of the colonial credit. If so, this colony will save between £30,000 and £40,000 a year m interest alone, besides a further small lump through the alteration m the dates on which the interest will be payable. This will be a very grateful windfall, due, moreover, entirely to skilful financing, and not to what is commonly called ' luck.' It is always dangerous to ' count the chickens before they are hatched/ and it is seldom safe to predict the fate of a Government loan. In the present instance, however, there do appear to be solid grounds for anticipating a complete success for the important financial operation which is to be essayed next month. If so, the benefit to the .colonial taxpayer will bo very substantial, and the Colonial Treasurer will be fairly entitled to claim a cordial recognition of the financial skill which has planned an operation so materially advantageous to this «olonj and its people."