The New York herald., 1922-01-08

Company brought out per cent. ten
year notes. Later, from the eXigencies
OF a higher money market, it offered
second series with per cent. coupon
the latter being redeemable at pre-
MUM of one-half per cent. for every year
between the year Of redemption and the
year of maturity. With copper metal
advancing, interest rates declining, Ana
conda's capital stock enhancing In value
there is a possibility that the holder OF
the Is may have to accept the premium
which the company has the option TO
offer and see his notes Cancelled. on
the other hand, the holder OF the 6s mas
an unretirable obligation of the COM
pany until 1929, and the result is that
the latter are selling to-day on go
basis whereas the Is are quoted to yield
nearly $50 per cent Again, longer than
year ago the Kingdom of Denmark
sold in the New York market S25,000.0O0
of it's twenty-five year per cent. sink
ing fund bonds. Those bonds are re-
deemable as a whole on October 10,
1925, or on any of their interest dates
thereafter prior to their maturity at 10
if called for redemption on or before
October Is, 1885. ard at 1879 if called
for redemption thereafter
Advance of the Danes.
In the November advance in bonds
the Denmark So sold at 109 y, or for
slightly less than their ultimate redemp-
tion price. Last month the Kingdom of
Denmark again came into the New York
market as a borrower to the extent of
S30,000.000, but the coupon rate was
s per cent instead of S per cent, the
price to the public "a ", while emphasis
was made of the fact that the bonds
were callable only as whole at 105 on
any OF their interest dates prior to their
maturity. In that instance the pur-
chaser had protection of ten and
half points in case he should be COM
PEELED to give up his bonds before their
maturity, and the result was that of
switching from the per cent. issue into
the per cent. issue. The United States
of Brazil Ss of 1941, a bond not re-
garded as in the first rank of South
American investments, obviously owed
their popularity and distributive success
to the non-callable provision in their
indenture which means that until June
]. 1S41. Brazil must pay per cent. on
that issue of $50,000000 less such bonds
as may be retired by purchases in the
market for sinking fund.
The earliest consciousness by the in
vestor of 1921 that there might be a dis
tinct change in money conditions before
the year ended and possibly an era Of
relatively low interest rates after 1921
was revealed at the time of the Burling-
| ton financing in May. Once more there
appears an interesting contrast between
issues of the same family, so to speak
the one callable, the other non-callable
! the latter being the Great Northern
Railway general mortgage Is, due in
! 1885, which have become one of the
1o, 1s.+a 4
bonds and rising from the issue price of
961a to 110, whereas Northern Pacific
refunding 6s. due in zoos, but callable
after fifteen years at 110. have been
only moderately active. although they
also have sold at a high premium.
Turned From CaIlabIes.
The investors intuition exhibited last
May became an arbitrary principle six
mcrths later, when dealers in securities
discovered almost over night that there
! had sprung up a numerically important
/ investing public which would not listen
to any argument in favor of a callable
bond although it would buy non-callable
securities somewhat Unfortunately 1t
may be said that not little of the sue
/ cess that attended the recent issue of
the Canadian Pacifc's consolidated de-
benture stock was based on the ire
deemable nature of that security.
II appears certain that 1922 will see
fairly low average of interest rates.
Not a few persons expect to see weeks
OF 2 per cent. call money in the early
part of the year, and reserve discount
rate of 4 per cent. is the general antici-
patton. Even taking into account the
drain Of funds from the money market
by the numerous projected State. mu-
| nicipal and foreign government issues
and the fact that the last named must
by their nature command a rate of in
terest which will make competition by
the old standard. and per cent
coupon rate securities difficult. the
thought suggests itself that long term
bonds have more attraction just now
for the buyer than do short term bonds
or bonds covered by form of indenture
| prepared with an eve to declining inter-
est rates. We may say. therefore, that
from now on only about 25 per cent. of
| the prospective buyers will be interested
in short term callabe bonds in contra st
to the 75 per cent. who bought them with
avidity last year. The problem is.
| therefore. with those who have calla Bile
bonds and face the not far distant pros.
/ pect of having their bonds redeemed or
as bondholders be given the option Of
eXchanging for another type of security
| carrying lower rate of interest
Where the present price of such bonds
approaches. or. as it does i'm not a few
| instances. exceeds the redemption figure
! the course of the holder is plainly
marked out. namely, to exchange for a
| long term bond. On the other hand
there are still rewards in the way of
additional appreciation and a continuing
good income return in holding callable
| bonds that are at discount Of several
points from their ultimate redemption
! figures. Individual requirements of in
vestment and cash necessities, of course,
enter into the equation.
A very considerable part of che high
/ coupon bonds issued during 1921 were
| Of industrial or manufacturing COM
/ panies which issued notes or debentures
f.nA ti,,,n AZ, li1.nidnt.,