LOAN CONVERSION OPERATIONS

Hokitika Guardian, 20 September 1929, Page 2

LOAN CONVERSION OPERATIONS

EXPLAINED IN HOUSE. NEW ZEALAND’S CREDIT IN LONDON ENHANCED. WELLINGTON, Sept. 17

In the House of Representatives this afternoon, Sir Joseph Ward made a statement on the subject of loan, conversion.' He said the conversion and redemption of four per cent stock maturing- on November 1 next was now practically completed, and was the largest a.ml most important financial operation in tho Dominion’s experience. Stock Outstanding amounted to £29,490,852. Of this sum five millions was converted in May, 1928, on. the basis of £lO4 10s new four and a half per cent stock for every £IOO of four per cent stock maturing in 1929. ‘The interest cost of this conversion to the State, taking into consideration the expenses of conversion and redemption of premium over the period of the new loan worked out at £4 18s 3d per cent. Following on the conversion of May, 1928, further stock was purchased from the proceeds of additional sales of four and a half per cent 1927 stock amounting to the nominal value of £572,000 of four per cent" 1929 stock. These private sales were made at different prices, the interest cost to the State in respect of sales working out at approximately £4 18a per cent. In January, 1929, a sum of twelve millions was converted on the basis of £lO4 6s new four and a half per cent stook for each £IOO of maturing four per cent stock. The interest cost to the State in this case amounted to £4 16s lid per cent,

The Prime Minister continued: “In addition to these transactions public debt repayments moneys were used to the extent of £502.500. During the financial year 1928-29 moneys raised in New Zealand amounting to £1,925,500 'at rates not exceeding five and oneeighth per cent, have also been utilised in further redemption of maturing stoek. Purchases of this stock on the London market have-(been made from these local sources, from time to time as opportunity offered, and the stoek so (purchased, amounting . to ’£1,925,500, was bought at an average of £99 10s per cent.” ' Sir Joseph Ward added that the amount of. atoqk outstanding was. therfore, approximately £9,700,000. A further conversion to the extent of five millions was at present under consideration, and under the terms proposed the cost to the State would be £5 7s 8d per cent over a period of sixteen years, this ' being five per cent stock to mature., in 1945. Including the figures relating to the conversion offer now. being made the annual interest cost to the State on the total stuck,-issued in conversion or redemption worked out at an average..of less than five per cent. In regard to the balance of approximately £4,700.000 it was proposed to pay off holders at maturity in cash.. Sir Joseph Ward read a cable from the High Commissioner stating: “Once agalin the English Press is very favourable towards New Zealand’s credit in London and the present conversion offer.

“ ‘The Times’ congratulates New Zealand on ipnying off virtually 50 per cent of the outstanding amount, and it also refers to the .position as regarding finances contained in the prospectus, and after commenting on the surplus public debt and other assets, says: ‘lt will be seen that the financial position of New Zealand is satisfactory.’ The ‘Daily Talegraph’ refers 'to New Zealand’s good record as to debt management.

“The ‘Financial Times’ states, that New Zealand’s high credit will certainly not jbe diminished by paying over half the amount of debt.

“The ‘Dalily Express’ states that New Zealand has found money to repay part of the old loan in cash, an event which has created a very favourable impression in the city. “The ‘Evenjing iStandard’ states: ‘New Zealand is to be congratulated on' having found a way out of the difficulties arising from the present monetary position.’ ”