LOAN CONVERSIONS

Sun (Auckland), Volume III, Issue 771, 18 September 1929, Page 11

LOAN CONVERSIONS

(From Yesterday's Late Edition.)

SIR JOSEPH WARD REVIEWS DEALS £6.000,000 TO BE RAISED HERE (THE SUN'S Parliamentary Reporter J j PARLIAMENT BLDGS.. Tuesday, j A statement regarding the loan conversion operations on the London market was made in the House today by the Prime Minister, Sir Joseph Ward. He summarised the financial activities since April 1 regarding New Zealand maturing stock as follows: Stock outstanding on Anvil 1. 1925. £29,490,852, 4 per cent., less first conversion of £5,030.000: Ixmiion issue in redemption of £572,000; second conversion, £11.729.496: local issues in redemption, £1,925.500; public debt repayment moneys. £502,500: total, £19,759,496. Balance to be dealt with. * £ 9,731,356. “The amount of stock outstanding,” j said Sir Joseph Ward, "is therefore approximately £9.700.000. and a further conversion offer to the extent of | £5,000,000 having been underwritten, is now being made to holders, namely, 5 per cent, stock at par, to mature on July 1, 1945, with the option of the Government to redeem on or after July 1, 1935, together with a cash payment of £2 per cent, on November 1, or as an alternative the present conversion at the rate of £IOO of ngw stock for each £9s of 4 per cent. 1929 stock surrendered. Allowing for ; charges and expenses of redemption and premium, and interest, the cost to the State over the period of 16 years will be £5 7s 8d per cent. In eluding figures relating to the conversion offer now being made, the annual interest cost to the State on the total stock issued, in conversion or redemption, works out at an average of less than 5 per cent.” “In regard to tne balance of approximately £4,700,000 remaining, it is proposed to pay off the holders at maturity in cash. Funds for the purpose will be made available in London, firstly by an amount of £700,000 provided for redemption under the Repayment of the Public Debt Act, 1925, and secondly by utilising cash already temporarily invested in London, which will, as required, be replaced out of funds from local sources. The effect of this policy will be to bring the domicile of a fairly large parcel of the debt affected, approximately £ 6,000,- j 000, from London to New Zealand. “As pointed out in the Budget, by ! the time the whole of the 4 per cent. 1929 stock has been dealt with, it is calculated that the yearly interest cost will be increased by about £220,000 a year. The methods adopted for the completion of these conversions are regarded by our London advisers as a strengthening of our credit in London, and have considerably assisted them in their op-srations In a market very difficult for borrowers since the beginning of the year. As it became apparent that international finance was adversely affecting London’s resources I have pursued a policy of applying our local resources to the utmost in assisting to lighten the final conversion with the result I have outlined above. “Advices of the Press comments in London on the public conversion terms yesterday are very favourable and congratulate the Dominion on having found such a satisfactory way out of the difficulties arising from the present monetary conditions.”