Evening star., 1926-10-10
INTEREST CENTERS
IN FOREIGN BONDS
Hamburg Loan With Low
Rate Attracts Attention in
Security Market.
RY BYRON SELLER.

NEW YORK, october 9.-The event
Of the week in the investment market
was the renewed interest In European
government bonds following the Offer
ing and sale on this side of the state
Of Hamburg loan with a coupon rate
lower than any German bond Sod
here since the war.
The amount of the Offering was
comparativelv small. $4,000, 900, but
the interest rate and the price were
more favorable to the borrower than
any of it's predecessors. In fact. there
are only few continental European
dollar loans of countries participant
in the war with 6 per cent coupons.
The French cities of Bordeaux, Lyons
and Marseilles have a 6 per cent bond,
hut that was put out in 1919 when the
French financial difficulties were not
commonly foreseen. There is Bel.
gian per cent loan, offered in 1925,
hut that was originally marketed at
discount of points greater than
the new Hamburg offering.
Testify to Germany's Credit.
Each successive German bond issue
testifies to the improvement in Ger.
manys credit with American in
vestors, and each incident of this
kind has been followed by a CORE.
spending marking up of the older
German obligations. That Is what
happened this week. Three or four
Of these sold this week at the highest
prices in their history, and there was
active trading in all Of them.
To a very moderate degree. feeling
extended to other foreign bonds. The
French railway loans probably re.
ceived more attention than any other
group. French government obliga.
tions themselves ruled practically un-
changed and so did the Belgian issues,
notwithstanding cabled reports that
a decision had been reached to sta.
hliZe the Belgian franc at approx
mately its present value with relation
10 sterling.
In this connection a large new loan
was mentioned as necessary prelim.
mary to stahilzation. 1t will be in.
teresting to see. if and when this new
tina ncing is affected. whether it can
he done on any better basis than Bel.
gian bonds are now selling. AS a mat.
ter of fact our market makes little
distinction as far as the dollar bonds
are concerned between Belgium,
which has ratified the refunding war
debt agreement with the United
States, and France, which has not.
Nor does the matter of currency sta.
biliZation seem to be much of fac
tor. although doubtless any renewed
collapse in French francs would be re-
fiected in the French bond list.
Looked On With Misgiving.
Coming back to Germany, the ease
with which loans for German prov
inces and municipalities are floated is
not looked upon without misgivings
in certain quarters. For instance
the Midland Bank Limited, one of
the largest of the British institutions,
in a review published this week. takes
the position that these large foreign
borrowings may impair Germany's
ability to meet the Dawes plan re-
ouirements during the next few years.
1t points 10 the difficulties in the way
of securing exchange to meet the
constantly mounting service on these
foreign loans at the same time that
transfers on reparations account are
increasing.
No one has ever offered convinc-
ing answer to this question of how
the exchange obstacle is to be over.
come. but bond buyers are not dis.
posed TO borrow trouble on that score
now. They see simply reviving Ger.
many. an attractive return on Ger.
man securities and q ready market for
German dollar bonds. That Is enough
for the present.
Outside the foreign list, trading in
dome site issues has been very dull.
The average price is just about where
II was a week ago. Large institu.
tional buyers, which are the main
support of the market 80 per cent Of
the time, are inclined TO hold off, and
traders find Scant pickings in fluctua-
tions as small as they have been
lately. Comment Is heard over and
over again in the Street on how much
easier it is to interest an investor
In new issue than seasoned one
This is good for the bond salesman.
and he Is making the most of 1t, but
il is not TO the liking of the old-time
trader.
Silver At Low Mark.
The factors that govern the long
range swings of the bond market
present no new aspect. unless 1t be
the outlook for commodity prices.
Silver has made another new low
q nd. while specific reasons can be as
signed therefore, most of them con-
nected with currency reorganization
in India, attention has again been
called to the fact that in the past de.
preston in the price of silver has
heen coincided with or preceded gen.
ersl commodity price declines.
Any effect upon the general level
Of bond prices is apt to be experienced
so gradually that only an academic
interest is taken in the subject now.
hut ii is point that ought not be
overlooked.
If we are in for a long period cf
falling commodity prices, no matter
how slowly. there can be no perna.
nent reaction in the highest grade Of
investment bonds