WELLINGTON NEWS

Hokitika Guardian, 3 April 1926, Page 2

WELLINGTON NEWS

A NEW ZEALAND LOAN. (Special to “ Guardian.”) WELLINGTON, March 31. Jt is now known that the Government intends to go upon the London market for a loan of £4,000,000. It was stated when the embargo on foreign loans was lifted that New Zealand would require £5,000,000 in Alay, and now the amount is reduced to £4.000,000, although the Government actually requires a good deal more. But the money market is quite unfavourable for the reception of loans on the Trustee list which carry a, low rate of interest.; The taxation is very heavy in Great Britain, and when this is met the return on gilt-edged securities is extremely small.

Investors, other, than trustees who have a wider choice, are snapping up the foreign loans on which 7 per cent and more is obtainable. Jims the Sail Paulo waterworks loan of £2,500.000, on which 7 per cent is payable, was quickly subscribed, and the scrip immediately began to change hands at a premium of If. The New South Government loan of £4.000.000 at o per cent, a trustee investment, failed to receive the support of the market, and 70 nor cent was left with the underwriters. Presumably, the subscriptions received were entirely from trustees, the other classes of investors, who are free to loan their, money as they please, holding aloof from the low interest hearing trustee security. On Alav 13th last year New Zealand placed a loan for £7,000.000 in London. This limn was issued at 94) and carried 4J per cent interest. The underwriters wore rather venturesome in this, at all events they were saddled with (55 per cent of the amount. It is hardly likely that New Zealand will he able to borrow on such generous terms this year, for although New Zealand’s credit stands high in the London market, investors are not disposed to lend at a low rate of interest. It is probable that New Zealand will he obliged to pay 5 per cent or a shade more for the money required. However, the facts will he known in the course of a week or two. The amount to he borrowed falls far short of the total required, and this suggests that the Government will he hard pushed for funds ill the coming financial year. All the overseas Dominions are being forced to curtail their loan programmes which is a very good thing, for it will force upon till the need lor that economy to which, at present, they are entire strangers. The exports from New Zealand during the current year are expected to show a shrinkage of approximately £12.000,000, and this loan will go some way towards relieving the situation, for it will mean an export of Government securities to the nominal amount of £4.000,000. While there is this relief, it is not to be 'supposed that New Zealand will escape monetary stringency, on the contrary, a shortage of credit will he experienced (torn the Government downwards. Economy and thrift are therefore very essential WOOL SEASON 1925-fi.

The wool selling season in New Zealand has now ended, and when . the statistics are finally issued it will he found, according to the opinion of experts. that about. 95 pore cent ol the total dip has been marketed locally, if so this goes to prove that the local sales met the requirements and conveniences of both buyers and sellers. This is a. natural and not a forced development, and it is to be hoped that no attempt will be made to interfere with this market by any system of Government control. Tile prices this season are of course a loiig way below the level of the 1924-5 Henson, hut last season’s prices were absurdly high, and the buyers paid dearly for their unwarranted optimism. Bradfor is said to have lost between £lO,000,000 and £12,000.000. When the season opened Bradford showed considerable caution, and it was the active buying of C'ontinential representatives that maintaintd the market. In December prices bad reached a level enabling Bradford to operate, and since then prices have remained at a. reasonable level with a few minor fluctuations. Bradford is again the dominant factor in tiie wool market, which meins ithiVfc Yorkshire has regained confidence, and the wool market is now a safe one. It is believed that the average prices of the New Zealand clip this season will work out at about a shilling iter pound, which is much less than was obtained last season, but nevertheless satisfactory.