Albuquerque morning journal. [volume] (Albuquerque, N.M.) 1903-1926, 1919-09-05
HIGHEST BID NOT
ALL THAT COUNTS
IN SELLING BONDS
Difference In Offers Some
times More Than Offset By
Fact That Low Bidder Has
Secured Legal Approval,

oeCul6u Legal approval,
Numerous school districts in New.
Mexico are offering bonds for sale and
are interested in knowing competitive
prices offered by dealers. Terms of
issues vary as to time before maturity,
dates when payment may become
I optional, and rates of interest are not
always uniform. Most issues now be-
ing arranged are to bear per cent.
The assessed value of a district and
the amount of previous issues out
standing are also factors weighing
with dealers, who buy In order to re-
SELL Practically every offer made,
even by a bank for itself or firm
dealing through 1t. is intended to 90
on the market. Banks In New Mexico
do not usually care to invest in bonds
bearing even 6 per cent interest which
is the limit.
The recent sale of $4,000 bonds by
school district No. 10. including SUI
burban schools of Albuquerque,
| brought above the average price. The
conditions were all favorable as to
assessment and credit. The bonds
bear per cent interest per annum,
| payable semi-anmally. They mature
in twenty years but after ten years
can be paid if the district desires and
is able. This is rarely done, however,
in New Mexico. Generally the sink
ing fund levy begins at the end of ten
years to accumulate the money for
payment, However, district may,
when option arrives, refund an issue
if lower rates can be secured for re-
funding bonds.
School boards do not always accept
II ha 9Th of
sale. In the sale by district No. 13
Denver firm, Bosworth. Chanute &
Co.. had taken time by the forelock.
The Denver house had its attorney
assist or advise in the preparation
proceedings and was therefore pre-
pared to bid unqualifiedly for the is
sue, knowing that proceedings were
valid. This course is often taken,
sometimes by agreement that in case
another firm gets the award, payment
will be made of stipulated sum for
legal assistance and expenses incurred
for printing the bonds. Thus accept
ance of a higher bid sometimes would
fail to secure the highest net sum.
In the case cited the Denver offer
was for 0,450 and accrued interest,
with condition that until such time
as the money is needed to pay con-
tractors the house will hold it and pay
back per cent of the current per
cent interest running against the
bonds The main advantage to the
| district, however was that IT was for
absolute purchase, upon which there
could be reliance and quick action.
The other bids submitted for dis
trict 10 bonds were by or in the names
of the following:
/ International Trust company Dem
yer, $S0,6O750. accrued interest and
| printed bonds. subject to attorneys
approval.
Occidental Life Insurance company.
Albuquerque, sS0.e50 and accrued
| interest.
DR.. David r. Boyd, Albuquerque;
$3O,560, and accrued interest.
First Savings Bank q Trust COM
pany. Albuquerque: $S1,061, ac-
crued interest and printed bonds, SUD
ject to approving legal opinion.
e. II. Rollins & Son, Denver: $780,
| 600 and accrued interest, subject 10
legl approval.
The highest offers all stipulated that
acceptance would be subject to APP
prevail of attorneys as to regularity
and validity of the bonds Even If no
objection should be found, some
|
would be advised whether the bonds
were satisfactory to the attorneys. 1t
| sometimes happens that falling
| market makes it undesirable to &C
/ cept the bonds at the agreed price and
a house that equivocates alleges dis
prevail by its attorney, or he may
be hard to satisfy under such condi-
tons. The better class of houses do
not resort to such practices, out
sometimes If heavily loaded they may
DELAY for better market by railing
to hurry the attorney.
| One invariable rule is not to take
and pay for an issue until approval
is given by some bond attorney
whose opinion is acceptable in the
general market in the east, II the Sc
curities are to go there. In case they
are to be sold to local clients, say in
Colorado, the approval of one or Two
certain attorneys in Denver Is sufti-
Gent to pass them Very large Issues,
However, generally must be ap-
proved by some special attorney IN
the large eastern cities in order 70 De
acceptable to banks and brokers there'
i when a bond firm prepares pro-
ceedings for an issue and makes the
advertisement require unconditional
| bids and the buyers be prepared 10
take and pay for the bonds immedi-
ately upon sale it is evident that the
] firm has an advantage and compeu-
ton is not practical. Dealers do not
make a practice Of securing expen-
siye legal opinions in advance at their
4 own cost When 1t is apparent that
| some one has done so, 1t Is evident 10
others that bidding will be well nign
useles and many buyers dealers de-
cline to offer, while others do bid,
i with conditions, merely to advertise
their house.