653
created under this operation will have to be met for 36 years after these 13 years and these charges may be provided for by the purchase, out of the above saving, of a 3 per cent Annuity for 36 years, which will absorb £138,919, leaving £1,069 as the net saving to the Colony.
6. There is, however, another element of economy in this operation. The Sinking Fund of the Debentures must be invested at 3¼ per cent in order to extinguish the debt at the end of 13 years from now, the date fixed for its redemption. But this is not possible. The investments hitherto made are yielding only £3.6.2 per cent and, looking to the increasing difficulty of maintaining the yield of Trust investments, the utmost that can be expected is that the average yield of the Sinking Fund investments of the Debentures would, if the currency continued to the redemption date, be 3¼ per cent. This would result in a deficiency of £5,066 which the Colony would have to provide for 13 years hence. The Conversion and Redemption relieve the Colony from this liability and this amount of £5,000 may consequently, with complete fairness, be added to the £1,069 already credited to the transaction, making a total saving of £6,135.
7. This is, it appears to us, a moderate estimate of the results of the scheme. If the rate for Capitalisation and investment had been taken in paragraph 5 at 3¼ per cent instead of 3 per cent, the saving which the calculation in that paragraph shows would have been no less than £11,792, or, with the disappearance of the Debenture Sinking Fund Deficit, a total saving of £16,858. At present we are investing our Sinking Funds to produce £3.12.0, considerably more than the earlier investments of the Debenture Sinking Fund and it appears to us probable
(4.)