NEW ZEALAND LOAN,

Dominion, Volume 4, Issue 978, 19 November 1910, Page 10

NEW ZEALAND LOAN,

Sir,—What is the'prico of issue of the New Zealand five-million loan how ..on the" market? In The Dominion on ! Saturday it was stated that .the cablo gave.the prico at and the Prime Minister tho evening, before, gave your evening .cipntempprary: to understand it . was - : 98f,' the cable oeing.in, >rrori' ' A subsequent-, cable message stated that the loan had beeniwell'received on tho Stock Exchange and was quoted nomin- : ally f at a quarter! premium. . Further, itj was calculated.that tho bonds would yield. 82s. per cent., and this, latter ir. tho. yield—is: questioned. 3s. it\ possible that two errors could have been , made in the cablo message? oi-' is .it. possible that tho messages are correct and tlio, .information obtained locally .. is incorrect? "Tlio loan has lxjeii ,; ivell received by. tho Stock Exchange" means a' good deal. Every security has to compete for tho favour of investors with all- other securities, and the .London Stock Exchange is not likely to regard the Now Zealand loan with favour on sentimental or patriotic grounds, it appeals to tliem because it gives a good return, and because the brokers can recoinmind it to their clients. Imperial' Consols are down to £78 155.,. and at this prico this giltedged security returns £3 3s. Gd. per cent,' and as a general rulo investors '.look-for'. 15?. -or 175.. Cd. more from colonial Government securities. Wo have also to remember that this is tho very worst time for appealing to tho London Money Market, because bank rate is at 5 per Cent., tho highest rate for tlio' year, and'the rate for short loans on securities as safe and sound as New Zealand Government bonds was lastiweck—l7-Bd. per cent. With these: facts before me :I .cannot bring myself to believe that tliero wore financiers in London ready to. underwrite our fivemiilipn.ioan at 98}. I think the cable . figures, 89£, are. right. . . . At the bonds would return the investor " about- £3, lis. Id., and.if we allow, for tho fact.that conversion at 102 gives him a further concession, the

yield would bo equal to £3 12s, .(3d., but tho London Stock Exchange calculates that the return will bo £4 2s. per cent., and this can bo arrived at easily enough. Taking tho issuo prico at 89J, and allowing for tho premium on con.yersion, and. for .tho present . 0f.,. six months interest'.: (£1 15s.)ion 2January to .-'.those iiiidertrSkiftg to Jppnvert bof6rp;t'ho first pr.ojimo— immediately, you will find th'atjho return is what the' London" Stoclf'Exchango calculates; namely, £4 2s. per.cent.—l am, ' BOND ISSTJE.*