LOANS TO AUSTRALIA

Hokitika Guardian, 11 July 1927, Page 2

LOANS TO AUSTRALIA

(Australian & N.Z. Cable Association.) NEW YORK, July L lion. William A 1 eCurmack. Die ()ueenslaml Premier and Treasurer, interviewed here, said that lie has been in touch with various leading bankers here, and has discussed the financial situation, but lie remarked that no new Queensland loan is contemplated at present. He felt it was inevitable, however, that more of the Australian financing wili* be placed in future with the New York market, which offered possibilities, provided that adequate arrangements were made to look after such loans when floated.

Referring to reports (if a Commonwealth loan flotation of seven million at Loudon, some hankers here claim that this issue could be floated on better terms in New York. Some keen observers, however, point out that only one hundred mili'ion dollars worth of new bonds lias been floated here during the past fortnight, compared with two hundred and three hundred millions in single weeks earlier in the year. These observers stress the fact that tliere is a tendency with many of tile underwriting houses to ali’ow the present supplies of bonds to be fully distributed among the ultimate purchasers before bringing out additional large issues. There is also some comment on the fact that the last New South Wales bonds were recently sold in the open market at three points below the price at which they were underwritten. One interpretation is that the lower price indicates that a considerable portion of these bonds were left in the underwriters’ hands, although this in no way reflects on excellence o! those bonds. Another interesting interpretation is that no i'oan can be considered a iinished business, even after being successfully underwritten. It is stressed that any fall in the price can quickly bo corrected by having the borrower buy on the open market any! offerings of the bonds concerned. This is termed “ looking after the issue after flotation,” and it is but one of the necessary manipulations in adequate financing operations.

One other important observation is being made in M’all Street, namely, that it is difficult to indicate at any given time just what nett return any given Australian loan would bring here. It is said that would depend wholly upon the condition of the market, which iust now is a little si’ow.

IX TK RXATI OX A L (OX FUR EXC E. XEM’ YORK, July 3. Mr Strong, the Governor of the Federal Reserve Bank, has issued a .statement that the meeting of hank heads (cabled on July 7th) has during the past week, devoted its time to an exchange of views on financial and economic matters, the policies of banks ol issue, and like subjects. These naturally include the relationship of tlieir respective rates of discount and tbe operation of the so-called gold exchange standard, which has had so extensive a development since tiie war in making of expensive shipments of gold, which where necessary affect the reserves of the bonds of issue. The purchasing power of gold and various proposal’s for promotion and closer co-operation were also discussed.