7

8.—14

The other details of the issue do not appear to require special remark. We beg to enclose the Bank prospectus as finally published on the 18th instant, together with a copy of the telegrams we sent you that evening, and on the 25th, informing you of the loan being brought out, and of the result. The announcement was well received by the market, the scrip of the new stock being immediately quoted 2J per cent, premium, and rising next day to 3 per cent, premium, which promised well for the average price of issue. Unfortunately, this expectation was not realised. There were 344 tenders, amounting to £4,942,100 ; but the prices were very poor, the result being that tenders at £95 Bs. 6d. received 17 per cent., while the average was only £95 16s. Bd. We beg to enclose copy of a letter from the Bank containing a list of the allotments made, from which it will be seen that an issue of £2,700,000 of stock has only realised £2,587,538 17s. in cash. We cannot doubt that you will have received the news of this result with much disappointment. It hardly seems worth while now for us to account for the adverse turn which the market so suddenly took. At the same time we ought, perhaps, to mention two points which had to be taken into account in placing a new stock for the first time upon the market. In the first place, the price of the day for the inscribed fours was 106-J-7 —that is to say, for a quotation of a £500 stock, not for a large issue. Boughly speaking, the minimum for such an issue could not safely have been put higher than from 1 to 1-J- per cent, below the quotation of the day; for instance, if we had been making a further issue of inscribed fours, instead of new 3-J-per-cents, we should certainly not have been able to fix the minimum higher than from 105 to 105|-. Now, the Actuaries' table enclosed shows that, if existing fours were at 105, the equivalent in a new 3-J- stock, with fifty years' currency, would be £94 3s. 2d.; if at 105J, £94 Bs. 2d. ; if at 105_, £94 13s. 3d.; if at 105f, £94 18s. 3d. ; if at 106, £95 3s. 4d.; if at 106-J-, £95 Bs. 6d. ;if at £106_-, £95 13s. 7d.; if at 106J, £95 18s. 9d. ; if at 107, £96 3s. lid. Supposing, therefore, that the issue had been made in fours, it would have taken an average of close upon 106f to equal the average at which the three-and-a-halfs have been placed; in other words, £2,700,000 of new 3_-per-cents have been placed at a price which is as nearly as possible an equation of the market price of the day for £500 of fours. In the second place, a new stock must always be allowed some time to get established, and it would only be by exceptional good fortune that its starting-price should not be relatively a low one. The 3-J-per-cent. scrip is quoted to-day 1-J- premium, or 96J, and may reasonably be expected to improve before long. There were two things to be clone —one to relieve the colony from having any longer to pay an excessive interest, the other to close the 4-per-cents and establish the 3J-per-oents; and though it has not been clone without a disappointing diminution of 1 per cent in the issue price, still both objects have been attained, and a good market created in what for many years to come must be the stock in which any new operations will have to be made. We have, &c, B. G. Julyan, F. D. Bell, The Hon. the Colonial Treasurer, Wellington. Loan and Stock Agents.

Enclosure 1 in No. 21. New Zealand Goveenment Debt.—Table showing the Equivalent Issue Price of a 3_-per-cent. Stock, redeemable at par at the end of Fifty Years, corresponding to the undershown Market Prices (ex div.) of the 4-per-cent. Inscribed Stock, redeemable at par at the end of Forty Years.

Enclosure 2 in No. 21. Gentlemen,— Bank of England, London, 8.C., 26th October, 1889. I am directed to inform you that, in accordance with the terms of the advertisement dated the 18th October, 1889, tenders were received yesterday at the Bank of England for the issue of £2,700,000 New Zealand Government 3_-per-cent stock. The applications amounted 4o £4,942,100, at prices varying from £100 to £95, the minimum. Tenders at £95 Bs. 6d. receive about 17 per cent, of the amount applied for, those above that price being allotted in full. I forward herewith a statement of the amounts allotted, at the various prices. I shall be glad to receive instructions as to the payment of the 5-per-cent. deposit on the accepted tenders. I have, &e., Sir P. G. Julyan, K.C.M.G., C.8., and Sir P. D. Bell, K.C.M.G., C.8., P. May, Chief Cashier. Agents under the N.Z. Loan Acts 1882 and 1888.

Market Price (ox div.) of £100 4-per-cent. Inscribed Stock [redeemable 40 years hence). Equivalent Issue Price of a 3eJ-per-cent. Stock (redeemable at par 50 years hence). Market Price (ex div.) of £100 4-per-cent. Inscribed Stock (redeemable 40 years hence). Equivalent Issue Price of a 3.-per-cent. Stock (redeemable at par 50 years hence). £ 102 102J 102. 102J 103 103_ 103. 103} 104 10 _ 104} 104} 105 £ s. d. 91 4 7 91 9 4 91 14 2 91 18 11 92 3 10 92 8 8 92 13 6 92 18 5 93 3 4 93 8 3 93 13 2 93 18 2 94 3 2 £ 105J 105,} 105* 106 106J 106} 106} 107 1071 107_ 107} 108 £ s. d. 94 8 2 94 13 3 94 18 3 95 3 4 95 8 G 95 13 7 95 18 9 96 3 11 90 9 1 96 14 4 96 19 7 97 4 10 A. H. Baieey, Ralph P. Habdy. 31st Jul; 1889.