Evening star., 1926-05-30
INVESTMENT BOND
LIST MARKS TIME
Activity ss Week Centers in
Speculative sssueS-Mar-
ket DeadIocsed.
~ GEORGE T. HUGHES.
to The Star

~ GEORGE T. HUGHES.
Special Ujsaatos3 to The Star.
IfE.I% YORK, May 29.-The bono
market marked rirse this week as
far as the strictly investment issues
are concerned. There was the usua
amount Of activity, but 1t centered
In speculative and seni!-speculative
obligations.
xhe relative quiet that prevailed ir
Ihe other part OF the list Is explain
able by the high level Of existing
quotations. Buyers see little oppor-
tunity for further appreciation In the
market price Of high grade secu-
rites and the yield is no longer at
tractive. United States Government
bonds sell to return 3.75 per cent
or less. The first mortgage railroad
issues will average little better
than $50 per cent. The best of the
public utilities return considerably
less than 8 per cent. except those
higher coupon obligations which are
quoted at or above the caiiaple
price.
There is nothing in this situation
to encourage a trading interest.
There is always more or less buying
on the part of savings banks ana
financial institutions, but even these
purchasers are shopping around ana
putting in their orders cautiously.
End OF Deadlock Vague.
When the existing deadlock will
be broken is uncertain. something
will depend upon the terms OF and
the reception accorded to the Treas
urys June Is financing. That the
main advance in the investment
market has been permanently
checked very few authorities believe.
There would have to be radical
change in the money situation TO
hiring about any such result. Mean
while. there has been a turning to
higher yielding bonds, even those
with a certain speculative quality,
and the list has been thoroughly
combed in the search for issues SELL
ing "out of line
Probably as striking feature OF
the weeks trading as anything else
has been the renewed interest in the
fractions. The fortunes or these
companies are dependent. of course.
upon local conditions. But II Is AZ
least significant of an improved
sentiment toward these transporta-
ton securities that they should nave
been so prominent in recent traoing.
The difficulties which the traction
companies have faced in the past
decade have been in the main OF
two kinds, one political and the
other the competition of bus and the
private motor car.
The political obstacles can oe
overcome. If surface car transpor-
tat,on is essential it must be al
lowed to earn enough to attract cap.
ital. If this is denied, operations VIII
come to a standstill and slowly this
axiom is beginning to be admitted
even bv politicians. The other naz-
ard to which the fractions have been
subjected, that of motor car compe-
tition. is being minimiZed In part by
the substitution of busses for trolley
cars by the traction companies
themselves, and in part by the use
of busses to supplement the surface
cars. SO far the results as trans
lated into earnings statements have
not been particularly impressive, but
the market for the traction bonds as
a whole is distinctly better than at
any time this year.
Oils Attract Attention.
In much the same way the funded
obligations of the oil companies have
been attracting favorable attention.
Here, too. there have been improve
ment in the conditions within the
industry. an improvement adequate
to explain the better prices which SO
many Of these securities have
recorded. There are all grades OF oil
bonds, from the most conservative
down to the extreme speculat1ons,
but 1t is not the higher grade which
have been the objects of the buying
40 much as those which because of
x.;ti 1tY1o 1-iI a.
sponsive to changes in the financial
condition Of the corporations repre-
sented. 1t Is characteristic of the
present market to give the preference
10 a. security which does have this
possibility of price appreciation.
Curiously enough, the lower priced
railroad bonds have not responded
nearly as much to the better rail
road outlook as have the stocks. In
this group investment demand has
centered about the seasoned dividend
paying railway shares rather than on
the bonds of the, relatively weaker
roads, even though the latter have
presented just as encouraging finan-
cial picture. In other words. when
the choice laid between a junior rail-
road bond Of a road which has only
in recent years achieved prosperity
and the common stock of a road with
a. long and unbroken record Of dfvi-
dend payments, and when the bond
and the stock return approximately
the same yield at the market, buyers
have been turning to the stock.
Irregularity in the foreign list has
been the rule just as it has among
domestic obligations. French. Bel
gian and Italian bonds are just about
where they were a week ago. One
Of two Of the South American issues
have enjoyed considerable advances.
More attention is being paid to for
eien industrials as distinguished from
governments. Buyers are learning to
discriminate among these offerings
Just as they do among those put out
at home.
One or two Of the new issues along
this line have gone very poorly,
others have been readily taken. 1t is
a. good sign when the American in
vestor begins to select his securities
on their Individual merit and not &C.
cept or reject simply because they
happen to be domestic or foreign in
origin.