RURAL ADVANCES ACT

Dominion, Volume 21, Issue 124, 23 February 1928, Page 10

RURAL ADVANCES ACT

INITIAL ISSUE OF BONDS ANNOUNCED

HOW FINANCE HAS BEEN PROVIDED FEATURES OF LEGISLATION EXPLAINED L>r Telegraph.—press Association Dunedin, February 22 In announcing the initial issue to the public in New Zealand of bonds under the Rural Advances Act, 1926, the Minister of Finance (Hon. W. D. Stewart) directs attention to the main features of the legislation governing the issue, which is to provide funds for financing farmers on the long term instalment mortgage system as recommended in the report of the Roval Commission on Rural Credits. The bonds are by statute secured on the assets ot the rural advances branch of th* State Advances Office, which assets embrace all first mortgages in respect of loans granted under the Act. and the bonds are not chargeable on the publie revenues of the Dominion An important provision for investors is that the principal moneys secured by the bonds, and all interest accruing iii respect thereof are in the first place by Section 8 of the Rural Advances Act, 1920, made payable out of the Consolidated Fund, and are recoverable in the terms of the Act mentioned from the rural advances branch, account of State Advances Office. Finance for the initial loans granted to applicants under the scheme has been provided from departmental sources, and the impending issue of bonds will be more than covered bv way of security in the aggregate value of first mortgages duly registered and certified as held by the State Advances superintendent. Ample Security. For the information of investors, the Minister draws attention to the ample margin of security over moneys advanced, the loans being granted up to two-thirds only of Government valuation, and by reason of instalment the system of repayment margin is proportionately increasing throughout the currency of advance made to the mortgagor. Thus holders of bonds issued by the State Advances superintendent, under the Rural Advances Act, 1926, which securities are countersigned by the secretary to the treasurer as being covered by mortgages duly registered and held, should have readily realisable investment. The experience of the State Advances Office, under both Se* tiers’ and Workers’ branches, assures with a greater margin of security provided for under rural advances scheme, sound and safe business stability of. the office. Administration over considerable period is well established, and the public can have every confidence in the new system being run on the satisfactory basis hitherto maintained. Interest at Five Per Cent. Investors are being offered bonds bearing interest at 5 per cent, and having currency to September 15, 1947. The issue price of the bonds has been fixed at 194 10s. per 1100, and at this price interest only on capital employed returns to the investor £5 ss. lOd. per cent., and with redemption at par (1100) at the end of the period the return is £5 19s. Id. per cent. The Minister states that he had accepted some offers from overseas, and he relies on the local investing public to subscribe to this attractive issue, the terms of which compare favourably with current market returns from sound investments.