MISUNDERSTANDING

Evening Post, Volume CXIII, Issue 30, 5 February 1932, Page 7

MISUNDERSTANDING

AMERICA AND LOANS

COMMONWEALTH HELP

NEW YORK, 3rd February. A slightly incorrectly-worded Press dispatch from Melbourne reading "Interest payments on the bonds of New South Wales, due in London and New York, will be met by the Commonwealth Government, Mr. Lyons announced," caused a marked recovery in Australian issues to-day.

New South Wales 1957 bonds gained 6 points, and 1958 6i. Commonwealth 5 per cent., 1957, gained 2£ points; 1955 2 points; 4J per cents., 2} points. Brisbane 5 per cents., 1957, gained 2 points, and 1958 3 points. Sydney 5J per cents gained 1£ points. Queensland issues alone were not favourably affected, 7 per cents, losing 2 points and 6 per cents 4 points. Comment to-day showed that there had been an imperfect understanding of the position, the true position being that the Commonwealth will use the funds due from New South Wales to pay the bondholders, and will not meet the charges directly. If is learned, that Mr. A. C. Willis New South .Wales Agent-General, consulted the London agents of American holders concerning a year's suspension of interest payment, and that he received the reply that fiscal agents cannot give such an authorisation, this being the exclusive province of bondholders who do not exist as a consultative group.

It is understood that Mr Willis moreover, received an intimation that the action of the Commonwealth in arranging for interest payments made any consideration of his proposals purely academic.