The New York herald., 1922-01-16
BUYERS TURN TO
OLD BOND ISSUES
Interest Switches From New
Financing to Outstanding
Securities.

New financing slowed down and in
vestment interest was switched last
week to outstanding bonds. In the mar
ket for new bonds the luli was accom-
panied by offerings of less than half
the aggregate OF the preceding week,
but a suggestion, at least, that the
cause had been only temporary was
contained in the week end news OF
forthcoming issue of $3o,oO0.oO OF the
Southern Railways development and
general mortgage u per cent. The bond
market, as a whole, indicated resump-
ton of broad demand halted in mid
December.
The advance In bond prices was the
natural outcome of a further easing IN
the local money market. Time funds
were In freer supply than they had
been since the money situation first
started to loosen up and the rate de-
clined to AZ per cent. in contrast 70
AZ to per cent. in the preceding week.
At the same time call money declined to
per cent, the lowest quotation since
September, 1919. The sharp advance in
the local Reserve Banks reserve ratio
likewise helped bond prices. as 1t was
assumed that another cut in the redis-
count rate would be made.
The bond markets main feature was
the large increase in demand for Lib
erty bonds and Victory notes. Both
Victory issues advanced to new high
records the 4%s touching 100.S0 and the
SMs 100.24 Specialists in United States
war bonds declared that the demand for
Libertys came from all parts Of the
country and that institutions and banks
were compelled to compete with individ-
ual investors for them. At current
prices the investment yields on Liberty
and Victory issues are $40 per cent. to
q little more than $50 per cent The
Victory AIS sold in May, 1920, as low
az e4.7o, at which their net yield was
about 1853 per cent. to their maturity.
Virtually all sinking fund purchases by
the Treasury are now confined to Vic
tory notes. The optional redemption
date of the Victory notes is June 10.
The total subscription to the Victory
loan amounted to S5,249.90S.00o. Its
total outstanding on October 81 was
s.. COS. .30S.550
Trading in bonds on the New York
Stock Exchange was exceptionally heavy
and there were two days when the total
sales for five hour session were more
than $27, 900, 900. The record trading for
a single day in 1921 was S2S,000,0OO.
Observers were struck by the breadth of
characterized as the broadest bond mar
ket In the history OF the exchange. The
demand was spread generally over the
list and was not confined to any single
group as is frequently the case.
Sales of bonds on the exchange last
week were extraordinarily large. their
total running well above S12S.000,00o.
In the preceding week their sales totaled
only s76,093.00o. Last weeks sales or
Liberty and Victory issues alone were
equal to the complete total in the pre-
ceding week and were about sS0,S62,OOO.
AS an example of last weeks heavy
trading in bonds on the exchange, 1t is
cited that the bond ticker did not COM
plete it's record Of transactions on Sat
urday morning until 12:45 p. NJ, which
was forty-five minutes later than usual.
Sales of bonds for this year to date
ere well ahead of the corresponding 1921
period. For instance. in the second week
IN January. 1921, sales totaled only $751;
$4,000. Bankers declare that big
bond market can be expected to last as
long as the credit situation continues in
its present liquid state. New demands
for funds are considerably less than the
supply and corporations are steadily
paying off old loans and they cannot be
expected again to turn borrowers until
business shall revive.
Offerings of new securities totaled last
week about s4s. 0o0,0 In the week
previous the market was called on to
take more than $115.000.000 OF new
bonds. The largest new issue OF last
week was a s12,00o.00o one Of the Ed
tson Electric Illuminating Company Of
Boston 5Ihs The balance of the total
was made up of several comparatively
small issues of State. municipal. railroad
and Industrial issues. The avalanche OF
new issues which has inundated the mu-
nicipal market for many months ap-
parently has been checked and dealers
are enjoying a breathing spell. II is un-
derstood that the supply OF State and
municipal bonds on hand is sufficient to
ffil orders being received. II Is esti-
mated that approximately s13,000,000,-
600 of tax exempt bonds are outstanding
IN the hands of the public and of that
total 50. 600. oo0, 900 are bonds OF States
or cities
Offerings OF bonds by municipalities
will not be very heavy for considerable
time as there Is usually seasonal lull
In borrowing about this time OF the year.
The overthrow of the French Cabinet.
with It's unsett1ing effect on European
politics, may block further European
loans In this country, according to best
opinions. II had been expected that
there would be very important foreign
financing in this country In 1922.