STATE ADVANCES LOAN

Hawke's Bay Herald-Tribune, Issue 28, 17 February 1937, Page 11

STATE ADVANCES LOAN

-Press Afliociation.)

Suitable For Small and Large Investors INTEREST 3i PER CENT,

(By Telegraph-

WELLINGTON, Feb. 15. A new issue of stoek and debentures is being placed on the market by the State Advances Corporation. The loan will be guaranteed by the New Zealand Government. Interest has been fixed at 3J per cent. for seven years, the date of maturity being June 1, 1944. No limit has been set to the aggregate of applications. The Corporation will accept all money offering. Cominenting on the issue of the "B" series of stock and debentures. the Prime Minister (Mr Savage) as Acting Minister of Finance said today that, since the Corporation commenced lending in the latter -part of 1935, there had been a continuous demand for advances both for re-finaneing on rural and urban securities and for erection of new dwellings. The total value of the loans sanctioned up to December 31, 1936, was approximately 26,000,000. "Having xegard to the present commitxnents and the steady fiow of new applications, it has been decided to place on the market this new loan issue, with interest at 3i per cent., and having a "maturity date of June, 1944." Mt Savage coutinued. fIn terms o£ the amending Act passed last session, the loan will be State guaranteed. The securities to be issued under this authority will be in denominations to suit small and large investors and the comparatively shoxt term of seven years should make it attractivle to |fchose people who are disinclined to take up long-dated issues, whilst the eontinuous instalment repayment of xnort-. gages enables the Corporation to cope with the maturity of the loan. In addition to the State guarantee, investors will have a floating charge over the assets of the Corporation, which, when the transfer of the whole of the Bischarged Soldiers Settlers mortgages has been eompleted, wiU include some 70,000 mortgages amountiug in a total to approximately £50,000,000. The general reserve fund whieh is invested in a wide xange of sound local body debentures now exfieeds £3,000,000, The Corporation 's lending rate is 4 3-8 per cent, and, under the ordinary business section, advances are made on a two-thirds , margin basis. A wider margin is available to applicants for building and eertain rural loans who can eomply with the special conditions laid down by the Minister of Finance^ Such excess over the normal lending margin is made with the apprdval of the Government, which guarantees the amount by which the .loan . exceeds the two-thirds of. the value of ,the property. "For some years prior to. the advent of State Advances Corporation, stated Mr Savage, the mortgage market in the Bominion had been somewhat dormant. The Corporation 's xeduced lending rate of interest of 4 1-8 per cent. for terms up to 45 years in the ease of rural properties and of 35 years in the ease of house properties, introduced a new era of mortgage nance which borrowers were not' alow to recognise and thonsands of mortgage obligations have, through this channel, been placed on a much sounder basis than formerly existed, With the recent substantial increase of funds arising from improved prices for some of our products, with the general improvement in trade and industry, and the repayment in cash of part of the Government 4 per cent. 1937-40 loan, the State Advances Corporation issue now provides a safe means of investing such funds in a gilt-edged security at par. The issue will take the form of over the counter sale of securities — either stock or debentures at the option of investor — and although no closing date has been fixed, due notice will be given to the. public prior to the closing date.