Evening star., 1926-05-16
|NVESTMENTB BOND
DEMAND IS Strong
Feature of Week of Financing
of New England Tel. and
Tel. Company.
BY GEORGE II. HUGHES.


Special Dispatch TO The Star.
NEW YORK, May l5.--Week by
week the line which divides invest
ment and speculative activities Is
more clearly drawn, This has beer
truc of the difference between the
bond and stock markets for long
time; this week it showed within the
bond market itself. The supply OF
he strictly high-grade utility ant
tailroad obligations is increasingly IN
adequate 10 meet the demand, but
anything of a speculative nature mas
TO go seeking "a purchaser.
The feature of the week was the
prompt sale of the New England Teie
phone and Telegraph bond issue, car
rving q Az per cent coupon. the sec
und long term utility obligation 10 pt
put out at SO low rate since the
war. The first, marketed in January
was for the account of the Common
wealth Edison Go. Success OF botr
offerings is significant not only OF tht
progress toward refundlng outstahd
in. obligations on a loWer-yleld OASIS
Something which has been going or
with Interruptions for four or fVe
4aarS-but of the advance the more
PHOSPHORUS public utilities are making
10 the point where they can finance
their needs on Il basis as adNdIi
tageous as that open to the fallroaos
in the same class.
Insurance Firms Buyers.
The market for the utility bonds is
still closed TO the savings banks III
some Eastern states. notably New
York, but the insurance companies
are constant buyers of these obliga.
ions and the demand is fully equal
10 the supply.
Government bonds and the high
.rade rails shared favor with the
utilities. one of the Libertys reached
2. new high for the year and several
# the first mortgage railroad oonds
did the same. New financing III TINS
grade is on a small scale. lnstitu-
fional bond buyers have difficulty IN
meeting their requirements and 1t IS
only q question of time before lndi-
>.idiial investors will be forced to take
obligattons not quite SO well secured
if they wish to keep up the average
Weld on their holdings
Outside the gilt-edge class bonds
most sought for have been some OF
The second grade rails and some OF
the oils. In both groups the demand
has been selective. Probably tnere
,han in the railroad group. At any
rate, the good showings in the an
nual reports of many oil producer
now being published have made an
impression on investors who 90 not
usually accept securities having 10 90
with the oil industry
Good Rail Issues.
The search for railroad issues sell
ING out Of line is more difficult. 10
he successful the buyer must over
look some technical defects which
have held back the price of par
ticllar issue up till now. For exam
nle. one of the leaders this week was
4 iunior railroad bond amply protect
cd bv property value and earning
mower. but Handicapped by the fact
that there was an open mortgage
ahead of it under which new financing
will be done.
Termination Of the great British
strike had only Il momentary stinu-
latinG effect upon foreign bohds:
United Kingdom obligations improved
somewhat. but the continental coun-
frins' obligations were not helped.
probably the break which the Italian
honds sustained a week ago, follow
ing the dissolution of the syndicate,
was a. disturbing influence. 1t is IN
tereSting to note that there are now
listed and dealt in on the New orK
Stock Exchange bonds of three large
continental European countries, all
with per cent coupons ana an pay
able, principal and interest, in dollars.
French rs and Italian IS sell at
practically the same price to yield just
nnder ner cent. German rs sell 13
points higher to yield about SO per
rent. The discrepancy is striking.
As to the break in the French and
italian exchanges, that has. hardly
been q market influence with the
bonds. AS a matter of fact, the de-
line in the italian bonds came be
fore the slump in the exchanges.
Polish Bonds Sold OFF.
The revolutionary disturbances in
Poland were reflected i'll a selling
movement in Polish bonds. 1nforma-
riou as to the meaning of the trouble
was too vague. however, to allow
.f any intelligent conclusions. Polish
bonds have long sold on 1t higher
xiMA basis than any other listed for
eian issue, and SO they We're suscepti.
BILE 10 adverse news. Considering all
The uncertainties of the European sit
lation, the surprising th1ng Is not
hat. the bonds sell down, but that
1t iS still true that, outside OF Rus
SIa. Mexico and one or two smaller
south American municipalities, there
are no defaulted foreign issues active
lv bought and sold IN this market. In
cidentally, the South American bonds
meet increasing favor at the expense
nf the European descriptions. Al
least two new high records were
reached this week. one in a Brazilian
and one in Colombian bond.
There is no change in the money
situation or in the trend of commod.
iLv prices, the two factors which gov
ern long-term movements in bonds.
The moderate business letdown which
he stock market apparently expects
is not pronounced enough to have
any influence on the bond market.
The only result is a falling off in the
Iakings of money for commercial pur-
poses, all of which works to the adj
vantage of bonds. Nor, notwithstand-
ing another surplus Of imports. is
there any indication of an outflow
.f gold which would diminish the still
overwhelming supply Of money seek
ing investment.