AUSTRALIAN AND NEW ZEALAND LOANS.

New Zealand Times, Volume XXXIII, Issue 5422, 13 August 1878, Page 3

AUSTRALIAN AND NEW ZEALAND LOANS.

(From the Sydney Morning Herald, J uly 25). Xu the latest broker’s report from London on the Australian and New Zealand Government securities it is prominently announced that “the public debt of Victoria is in regular process of a relative reduction by a yearly appropriation for some time past of £200,000 of proceeds of public lands, to be applied either to repayments or to further railway construction. In this way the railways and other public works have come to represent a value exceeding the amount of debt. The position of South Australia is still more favorable, for since the change from cash to credit land sales a large balance of money is always due to the Government, and amounts to as much as £2,957,029, payable over 1877 to 1882.” "Was it for want of information that a similar explanation was not given respecting the public debt of New South Wales ? The balances owing by conditional purchasers in this colony already exceed tho whole amount of railway capital sunk in lines open for traffic, and tho annual interest on these balances, when the. three years’ grace has {expired, will be nearly : equal to the interest now payable on the whole of our public debt. If such a reserve of credit in tho case of South Australia was worth quoting as a collateral security, .might not New South Wales' be the better for the recognition of her three times greater reserve i lb is several years since she appeared as a borrower in the London market, and the price of her securities proves that investors appreciate her abstention ; yet, now that debentures for a new loan are on their way thither, her-financial agent should take full credit for her assets, and not permit her to appear at a disadvantage. From the quotations of Colonial Government securities in the report cited above, we have prepared the following comparative view of the position of the several colonies for all their debentures that had been placed on the London market up to the 7th of June, 1878 ; Principal and Interest Payable in London.

Debentures Outstanding.

The provincial and municipal debts of New Zealand are not included in these figures, nor any part of the debentures of any colonypayable elsewhere than in London, The total debt of Australasia up to the present is about sixty-seven millions, one-third of which belongs to New Zealand, and only one-sixth to New South; Wales, although the population of the former colony ,is equalto only two-thirds that of the latter. Including Tasmania, about fifty-eight millions of our total Australasian debts are on the London market, so that the figures hero cited' may 'bo taken as fairly representing tho credit- of the- respective colonics in the financial capital of the world. In comparing them we have reduced the different rates of interest to an average rate for each colony, both nominal and actual, 'calculating tho latter on the net price realised by tho various loans floated at different times. Tho various prices realised by the different stocks, ’ and the ruling quotations of sellers on the 7th' of last June, have been treated in a similar mariner for the, average price, and the only material point not' represented above is the length'of time the several debentures have to run, which would require to bo given separately for each loan. With those explanations, such of our readers as may not bo very learned in matters of finance may be able to understand ’ the significance of the preceding figures. . The average rate of interest paid by New South Wales to all her London stock-holders is a little below 5 per cent, on the average net price realised by.her loans. They were floated : at an average of nearly 97, and they command an average now of 109}; at tho seller’s price, or 107 at ; the buyer's, a rise of over 10 per cent, at the lowest estimate, representing over a‘million sterling in .a very few years. Tho average interest paid by Victoria is a little over 5.1 per cent, on the average net price, which was 99}, most of her loans being 6 per cents. Yet the average quotation for her debentures is 2} per tent, lower than for ours, a difference mainly owing to the fact that seven millions will mature between 1883 and 1885, while wo have none maturing for ten years, and even then only half a million. Her 4 per cent, loan, completed in 1870, was for four and a half millions, and realised a little below 95 not. It will mature in twenty-throe and

twenty-five years, and is now quoted at 99, sellers' price. Our 4 per cents, of the previous year closed only 92£ ; they will mature four years later than the Viet uiui 4 per cents, and they are quoted at 101. For the same class of security, and running for nearly the same term, these quotations give a difference of five per cent, in favor of New South Wales. This was an unprecedented price for a colonial security unguaranteed by the mother country. On her national debt of nearly eight hundred millions, Great Britain is now paying at the rate of 3*5*26 per cent. At present quotations, New South Wales cau borrow at 3*846 per coot., although she pays much more than that on her old loans. The colonies that have gone recently into the market as borrowers reap the benefit of this improvement in colonial credit. The most daring borrower of all, 1 New Zealand, is paying for her accommodation precisely the same actual rate of interest as New .South Wales, although her securities', are at a higher nominal rate of interest, and command an average price less by seven per cent, than ours. The fact is, we have never yet taken the benefit of our own credit ; Jor all the while the cash surplus has been making four per cent., even when on special deposit, the colony has been paying five per cent, on its loans, and the rise in its securities lias gone into the pockets of the fortunate stockholders. The last Queensland loan of £1,200,000 at 4 per. .cent., maturing in 1915, waa brought out on the ,28th ofMay, and was subscribed for twice over. It realised 92and is now quoted at 93—a much higher figure than her sixes commanded ten years ago. Tho New Zealand 5 per. cent, loan of three and a half millions, payable in forty years, or after ten years, on six months’ notice, at the option of the Government, was fixed at par, and was subscribed for twice over on the first day it was open. The allotments were only 40 per cent, on the amount applied for, the price net was and the stock now stands at a premium. Taking the latest quotations for the latest loans of the respective colonies, New South Wales can borrow at 3*846 per cent., Victoria at 4*041, South Australia at 4*ool, Queensland at 4*301, and New Zealand at 4*92o—ail at par. The difference between the highest, which is the last named, and the lowest, which is our own, is I*oß per cent., which is equal to a difference of nearly a quarter of a million per annum in the interest on the total amount of the New Zealand colonial, provincial, and municipal debt, and to. much more than half a million on the total debts of all the colonies. Between the rate we are actually paying on our present debt and the present price of our securities, tli3 difference is I*l4 per cent., which would represent a saving of £133,658 per annum in interest, or about one-fourth of the whole charge. The practical question arising out , of all this is how can the colony best secure for itself the benefit of its high credit ?, We cannot redeem our securities at par till they mature ; and none of them fall due for ten-years. To buy them upas they are offered in tho open market would be to raise the price against ourselves. Our five per cents., of which London holds about nine millions, might be converted into fours, with the consent of the holders, but they would require some premium to tempt them to make the exchange, and that might absorb most of the advantage of the conversion, leaving tho colony, little.. better than before. A favorable condition: of the money market would enable ns to consolidate the whole of our debt at a considerable saving, but that is an opportunity to be waited for, not created by any means at our command.' Whether the present be such an opportunity or not,' at least the; new loan should be placed, on the market in, such, a manner as to secure the best terms a colonial loan has yet realised. It is almost covered by railway works executed in advance, out of the proceeds of land sales j it will be used in further extensions of a character to render our whole railway system quite, as it is already almost, self-supporting, and these are facts which British investors will not be likely to overlook.

Colony. Rate pet Inle cent, of rest. Average £100 Price of Stock. Norain’l Aver’ge. Actual Aver’go. Realised, on Issue. Sellers’ Present Quotatin's N*. S. Wales.. Victoria S. Australia Queensland.. New Zealand £ a. d. 4 1G 8 5 4 7i 4 15 Gi 4 15 04 4 17 Of £ s. d 4 10 84 5 5 14 4 16 44 5.811 4 10 8J £ a. d. 9G 10 8 DO 10 74 100 2 10| 01 10 ill 97 16 7i £ s. d. 100 10 0 107 3 3i 105 0 0? 102 5 l| 102 10 1?

: £10,872,100 .. 4,672,000 Queensland.. 8,345,040 Nevr Zealand ■ 18,039,700