Difficulty With Several Auckland Local Body Loans

Press, Volume XCV, Issue 28259, 23 April 1957, Page 15

Difficulty With Several Auckland Local Body Loans

"The Press'* Special Service

AUCKLAND, April 22. Auckland local and ad hoc bodies have more than £2m worth of uhsold debentures and at the same time are planning new issues of a further £2m. The biggest block of debentures unsold is held by the Auckland Power Board, which has offered £BOO,OOO -worth; the Transport Board has £60,000 worth, and the Drainage Board, Harbour Board and Harbour Bridge Authority each have more than £200,000 worth still unsold. Not. all local bodies are finding it hard to raise finance, and- some have received a good response from lenders. The Auckland Hospital Board has a surplus of offers of finance, and all the recent loans of the Auckland City Council have been underwritten and fully subscribed. In the other cases lasted: — The Harbour Board has raised only £257,000 of its current £500,000 loan. The Harbour Bridge Authority which regards its position as “good compared with what others are getting,” has sold about £175,000 of its present issue of £375,000. The authority has successfully borrowed £l.2m in the last two years. The Transport Board still has £443,000 available of a £700,000 issue put on the market in January, 1956, and of £400,000 offered last December, debentures for £193,000 only have been sold. Drains and Power The Drainage Board has an unfilled, balance of £BO,OOO in loans that nave been on the market since 1954. It has had a new £250,000 loan on the market since the middle of March. Although £175,000 of this has been underwritten, the board has received in cash so far only £38,000The Auckland Electric-power Board has £BOO,OOO in debentures still outstanding from loans on the market. The short term debentures have been sold from these issues and authority has been given to consolidate the balances into a new issue. The vFaitemata Power Board has so far received £26,600 of a loan

of £75,000 opened on March 1 and completely underwritten. This rate of application is regarded by the board as the “slowest ever.” 'The Manukau County has had a £50,000 issue on offer for about a fortnight and the sales have been “next to nil.” Mr E. Ashcroft, the county clerk, said this week: “The market has dried up again. Local bodies as a whole have been left lamenting.” The Papatoetoe Borough sold its current loans reasonably well until. early in March, but this month has had “absolutely nothing.” 1$ has about £lO,OOO outstanding irr two loans. No Lack of Money Fears that the money is not about, however, are not shared by a leading Auckland sharebroker. He said that the difficulties of various authorities still seemed to lie in the return offered investors. Although new issues were tied below this, blocks of almost any Auckland local body debentures could be bought recently on the stock exchange at prices which would return more than 5 per cent. These sales at discount might be caused partly by the credit squeeze, he said. The effect was that nobody would invest in a local body loan at par with maturity 10 years or more when they could buy almost equivalent stocks and get better yields. But, broadly speaking, there was quite a lot of money about if the interest rate was right.