RURAL ADVANCES

Evening Star, Issue 19798, 23 February 1928, Page 5

RURAL ADVANCES

FINANCING FARMERS ON LONG TERMS FEATURES DF NEW LEGISLATION The Hon. W. Dowmo Stewart (Minister of Finance), in announcing the initial issue to the public in New Zealand of bonds under the Rural Advances Act, 1926, directs attention to the main features of the legislation governing the issue, which is to provide funds lor financing farmers on the long-term instalment system. As recommended in the report of the Royal Commission on Rural Credits, the bonds are by statute secured on the assets of the rural advances branch of the State Advances Office, .which assets embrace all lirst mortgages in respect of loans granted under the Act, and the bonds, are not chargeable on the public revenues of the dominion. An important provision lor investors is that tlie principal moneys secured by the bonds and all interest accruing in respect thereof are in the lirst place, by section 8 of the Rural Advances Act, 1926, made payable out of the Consolidated Fund,' and aro recoverable in terms of the Act mentioned from the rural advances branch account ol the 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 bo more than covered by way of security in the aggregate value of first mortgages duly registered and certified as held by tile State Advances Superintendent.

For the information of investors the Minister draws attention to the ample margin of security over moneys advanced, loans being granted up to twothirds only of the Government valuation; and, by reason of the instalment system of repayment, the margin is proportionately increasing throughout the currency of the advance made to the mortgagor. Thus holders of bonds issued by the State Advances Superintendent under the Rural Advances Act, 1926, which securities arc countersigned by the Secretary to the Treasury as _ being covered by mortgages duly registered and held, should have a readily realisable investment.

The experience of the State Advances Office under both settlers’ and workers’ branches assures, with the greater margin of security provided ior under the rural advances scheme, sound and sale business. The stability of the office administration over a considerable period is well established, and the public can have every confidence in the new system bcin grun on the satisfactory basis hitherto maintained.

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 £94 10s per £IOO, and at this price the interest only on capital employed returns to an investor £5 5s l()d per cent., and with redemption at par (£100) at the end of the period the return is £5 !)s Id per cent;

The Minister stated that be bad accepted some offers from overseas, and ho relied on the local investing public to subscribe to this attractive issue, the terms of which compare favorably with current market returns from sound investments.