LONDON SECRECY

Gisborne Herald, Volume LXVI, Issue 20012, 10 August 1939, Page 5

LONDON SECRECY

CONVERSION LOAJSJ DOMINION OBLIGATIONS GUARANTEE BY BANKS LEFT WITH BIG PART FEW PUBLIC DEALINGS (Elec. Tel. Copyright—United Press Assn.) (Reed. August 10, 11.15 a.m.) LONDON, August 9. Dealings in the New Zealand loan began on the Stock-Exchange at a premium of 2s 6d. ■Contrary to the general procedure, the result of the issue was not officially announced and the market was left guessing as to how much of the loan had been taken up by the cash and conversioa applications. .

It is believed that the Bank of England and the big five.banks who underwrote the issue have been'left with over half of the loan.

The Associated Press says that officialdom has drawn a veil of secrecy around the conversion loan, which when opened, was quoted at one-eighth discount to one-sixteenth premium. Very few dealings toolt place and no information was forthcoming. It seems that the ultimate response of the public will be preserved a close secret. Unusual Guarantee Method - . Because of the unusual method of guarantee, interest centred' in the New Zealand loan, in which dealings were expected to begin at about par. the issue; was not underwritten in the usual way. The Bank of England called on banks to guarantee to the maximum of £6,000,000 any part of the loan not covered byconversions or cash applications. The Bank of England itself guaranteed the balance of £10,000,000. without commission. . , •

It was stated that the banks would be unlikely to disclose how much stock they tbok up. It was anticipated that a fair. amount of the maturing stock would be converted,' but it was thought unlikely that the public subscriptions would he large. It was understood that the clearing, banks had converted hbldings in the existing loan, but all discount houses were not willing to convert,, chiefly because of the possible difficulty of obtaining call-money loans against the new loan.

The London funds of New Zealand banks are so low that they are not in a position to advance substantial amounts at call, while the London clearing banks are not anxious to accept the new loan as collateral for day-to-day loans.