Evening star., 1925-09-13
REVIVAL AMAZING
IN FOREIGN BONDS
Confidence In Conditions Is
Clearly Shown by Buying
Wave of Past Week..
BY GEORGE T. HUGHES.
Special Dispatch To The Star.

Special Dispatch to The Star.
NEW YORK. September 12.-The
feature of the week in the investment
market has been the remarkable re-
vival of interest in foreign obligations.
Not at any time this year hitherto
has there been such a demonstration
Of confidence in the foreign situation
as was evidenced by the buying OF
foreign government and industrial Sc
curities the past six days. The move
ment has not been confined to any
one geograp phical group. South Amerl-
can, as we'll as European, bonds have
been in vigorous demand.
Buying Is Impressive.
Without doubt, the bulk of this buy
Ing has been for professional account,
but 1t was impressive, nevertheless.
It would not have taken place If those
concerned had not been convinced
that this was an opportune time TO
gain a following in this part OF the
investment field. There is, OF course,
a good deal OF new foreign financing
to come. some of 1t dependent upon
successful conclusion OF the interna-
tional debt-funding negotiations and
some of 1t to be attempted regardless
OF these negotiations. Moreover,
better market for outstanding foreign
dollar loans will help all these new
offerings. but that is hardly convincing
explanation OF the weeks develop
ments.
1t has a long time been true that
nowhere outside foreign securities
could anything like the income there
obtainable be had, and yet only Ian
guild interest was manifested. Some
thing may be attributed to the pre-
vailing ease in money and the pressure
R..y. H. ALL ~ n
ment.
Chief Factor In Advance.
Perhaps this Is the chief factor
and the wide scope of the activity
would indicate that this was the case.
At any rate, whatever the reason,
the fact remains that the average
price of listed foreign bonds is now
at the high Of the year and only
small fraction below the record high
of 1922.
In support of the conclusion that
1t was not new conditions in any
one country that were responsible for
the Improvement in the foreign bond
list, it has only to be pointed out
that bonds of two governments. as
widely separated and in as different
positions as those of France and
Brazil have participated in the weeks
advance. There has been no i'm
provement in the financial affairs of
France. The success of the new gold
guaranteed loan is still in the bal
ance and, meanwhile, outstanding
bank circulation of the Bank of
France is at the highest point in
history.
The French finance minister is
about to sail for the United States
personally to conduct debt negotia-
tions, but the outcome Is just as un-
certain as it ever was. Still, buying
of French bonds has gone on as
though the matter were already set
tied and as If there had been real bet
ter1nent in the French financial out
look.
Improvement in Brazil.
Take the other case, that of Brazil.
Here there has been actual improve
ment the course Of the exchange
testife For several weeks past the
Londol market has recognized this
conditiC = in higher prices for Brazil
ian securities, but 1t Is only this
week that there was any response in
our own market.
It must not be understood that the
net advance in any Of these quota
tions for foreign bonds has been
large, or that they do not still sell to
bring large yields.
French obligations, for instance,
return around tx per cent, Brazilian
issues well over per cent and the
German rs, the loan f1oated prepara-
tory to the putting into effect Of the
Dawes plan, at least z per cent. Ar
gentine securities return around 6A
per cent. Argentine issues always
have been regarded as more conserv-
ative than the bulk of South Amer
lean obligations. Nor is 1t here sug--
gested that the present favor shown
to the entire foreign group is pernia-
nent. No one can be sure about that.
It may be only the traditional flash
in the pan" That is a question that
only the future can answer.
Domestic Bonds Steady.
Strictly high-grade domestic in
vestment bonds have been steady but
dull all week. Money continued in
abundant supply. The fixing of sA
per cent as the rate on the Govern
n1eut's September 18th financing, and
the fact that nine months certificates
OF Indebtedness were selected instead
OF long-term bonds, shows that the
Secretary of the Treasury, who has
proved himself an accurate Judge of
money market conditions. has no ex-
pectation of any substantial rise in
rates in the near future. This has
contributed to the firm tone of the
general bond market.
Copyright. 1880