Evening star., 1925-04-05
INTEREST IS AGAIN
TURNING TO BONDS
Distinctly Stronger Tone
Noted in Past Seven Days
in Nearly All Classes.
BY GEORGE II. HUGHES.

BY GEORGE II. HUGHES.
Special Dispatch to The Star
NEW YORK, April 4.-Investment
interest is again centered on bonds
A week ago it look ed as though the
break in stocks had gone far enough
TO tempt investors to take on sea-
soned dividend paying issues. but so
far there has been little of that sort
of buying. Prices are indeed well
down from the highs of Midwinter,
but evidently yields obtainable at
present dividend rates are still too
low compared with those on bonds
of about the same rank. Possibly,
also, the we'll known principle that
no one wants to buy on a falling
market has something to do with it.
Whatever the cause, the fact is
that, as far as the investor is con-
cerned bonds. and not stocks, are in
demand. Perhaps demand is too
strong a word, inasmuch as there is
TO rush to buy even fixed interest
bearing obligations. 1t is true, how
ever, that the bond market shows
distinctly stronger tone than it did
seven days ago.
Liberty Bonds Higher.
The better feeling is manifest not
only in the high grade investment
obligations, but in those which have
semi mispeculative qualities as well.
Taking up the former classification
first, United States Government
bonds are higher on the week-not
very much higher. but enough to
show the trend Here the influence
plainly is to be found in the money
situation. Accommodations for six
months are in supply at 414 per cent.
and call funds have been obtainable
this week under per cent. AS far
as any one can see, higher rates are
not likely for some time to come.
There is no longer the early Win
ter demand for money from specu-
lators either in stocks or in grain.
Business is taking a fair amount,
but the supply is ample. Gold ex-
ports are not now looked upon with
the concern which so many professed
to feel in January and February
Under the circumstances, it would
be surprising if there We're any
weakness in investment bonds.
Business Conditions Stable.
To explain the slowly developing
strength in second grade and semi
speculative bonds. an entirely differ
ent set of considerations must be ex-
amined. In the first place, a return
of from to per cent, reasonably
well protected by earnings looks
very attractive in d bond when
stocks are selling TO give about the
same or less. There are MANY such
bonds scattered throughout the list
The business outlook may not be
glowing enough to persuade investors
TO accumulate partne ership shares in
an enterprise with an idea to capital
appreciation, but the business situa-
ton is able enough to assure fixed
charges being earned and paid if
capitalization is conservative and
management efficient. In other words.
there is no slowing down in industry
which would put creditor in
Jeopardy even while a partner might
find profits not so high as he could
wish
Buyers COnsbinE Market.
Acting on this reasoning shrewd
buyers have been combing the bond
list to find obligations which meet
their required tests. Selections are
not being made indi Discriminatory nor
by groups. For instance, there are
few railroads and few fractions and
few industrials in doubtfou financial
position in recent years but the
earnings of which now show definite
upward trend, not sufficient yet TO
justify directors in Inaugural ting
dividends but enough to remove doubt
as to uninterrupted interest payments
1t is the bond issues of these corpora
tions which are now in favor among
those who like to combine some spec
ulation with their investments.
Opportunities Overlooked.
For the most part, these opporturi-
ties were overlook ed by the same
speculatively minded buyers while
the, stock market upturn was in pro-
gress. Bond movements in bonds are
generally slow and spectators want
what they call action" A month or
two ago they found this quality in
stocks. but not now
so they are taking up bonds as
yet in a small and tentative way
with the idea that although profits
may not be large. neither is the risk,
and ideas of what is adequate profit
have undergone considerable modifi
cation in recent weeks. Doubtless.
we shall have some such similar
development in preferred stocks
sooner or later. These, too, are
neglected at the heights of the boom
In the general stock market.
Low Marks i'm Foreign Bonds.
The week in foreign bonds has
been marked by new low records for
French issues. that is, new lows for
this year. Prices have not by any
means gone down to the point where
they were at the time the French
hrst occupied the Ruhr. There has
however, been a great deal of selling
by those who were concerned over
the French financial crisis as revealed
in the dispatches from Paris The
fact that these bonds ara PAYABLE
principal and interest. in dollars and
so, theoretically at least, ought not
to be responsive to fluctuations in
exchange quotations, has not served
to allay this concern.
With the situation changing as
rapidly as it is, predictions as 10 the
outcome would be foolhardy. This
much, may be said. The French situa-
tion is unique. Temporarily it may
prove disturbing to holders of other
foreign securities Logically il should
have no such effect
Copyright, 1925