Evening star., 1926-01-24
H|GH-GRADE BONDS
IN GREAT DEMAND
Actual Shortage in Some of
Best lSsues-TTend Ap-
pears Upward.
By GEORGE T. HUGHES.
Special Dispatch to The star

By GEORGE T. HUGHES.
;. Special Dispatch to The star.
NEW YORK, January 23.-The con
dition of the investment market at
the end Of the week can he sunonar-
1Zed In the statement that the average
price Of high-srade bonds is at the
highest since 1917. and that the de
mand for the best secured and the
most thoroughly seasoned OF these
issues is greater than the supply.
The story is not fully told by quo
tations on the Stock Exchange. These
are, ii is true. higher. but the record
of prices does not reveal the strength
of the market. II is only when buy
crs go out for substantial blocks, and
most of this sort of trading Is done
over the counter, that the situation
is made plain.
Shortage In Bonds.
Take, for instance. the case OF bonds
carrying 5 per cent coupons selling
arouuu par. " hereas ouu iotS can be
secured on the board around recent
prices, that is not true when the pur-
chaser wants anywhere from - to
100 pieces at a time. Gradually, Sc
Curities of this grade have been taken
out of the street and put away by
the financial institutions and other
large investors for perma noio
inSS.
What this demand means Is that
the experienced buyers who represent
these institutions are convinced that
the trend ot the bond market is up
ward and that prices now nrerailns
do not fairly measure values as they
will be III the next half year.
close observers Of the market nave
become strengthened in this conVlc-
.i,,cr aus.
This week money brokers were or
ferins 10 bond houses funds for four
mouths at Az per cent. whereas few
weeks ago these same houses we're
bidding AS per cent Tor the same
accommodation. This is not any great
change in the quotation. but II does
signify a. tendency.
Reserve Bank Ratio.
The weekly statement OF the Fed-
ersl Reserve banks conhrms TINS oe
ductton The reserve ratio or the New
York hank rose this week from el-6
per cent to s. per cent. ana the CORE
s,ponding figures for the system as
whole are at 72.7 per cent, as or jan
parv "a and 74.4 per cent as OF Jan
uary 90. Total gold holdings Tor all
the IL banks are now at the high OF
the month. while rediSCountS secured
Nv Government collateral ana note
circtlla ton are at the lowest In
part, ar least. this Is seasonal
phenomenon, but 1t is effective just
the same.
One result Of this satisfactory mar
ket condition will doubtless De an IN
crease in new financing. Corpora
fions in a position TO do SO VIII take
ADVANTAGE of the opportunity TO re-
fund outstanding obligations at low
er rate Of interest.
II was even predicted this week by
one of the leaders in the power and
light industry that within u very
snort time a Az per cent power ana
light bond would pe offered in the
American investment market. some
thing hitherto unheard Of
New Rating Move Pushed.
There is no reason why electric
light and power compa MES should not
he able TO borrow money on as Ia
vorahle terms as the railroads COM
Y,arahle in financial strength, except
the fact that the utility issues are not
in the larger Eastern States, New
York being the most conspicuous In
stance, legal investments for savings
hanks.
The power and light interests are
again backing a movement TO nave
their bonds put on a parity with rail-.
there appears no valid objection. Ger
tainly with the smaller investor power
and light securities have an invest
nent standing that the railroads have
so far been unable to command.
Renewed Foreign Buying.
Along with the advance in the do
mestic bond market there has been
renewed buying Of foreign issues. but
here purchasers we're more seective
and the list did not move as a. whole.
Still the feeling toward foreign in
vestnents is better than in a long
time, and to a. certain extent this SEN
firnent has been reflected In prices.
As time goes by and the investor sees
that the political and financial dan
gers are not as formidah BILE as they ap
peared to be a year or two ago, he
gains confidence and the high return
on his money obtainable in foreign in
vestments becomes more and more
tempting.
AS a matter OF fact outside of the
Mexican issues no foreign bonds listed
on the New Yor.; Stock Exchange are
in defa ult. and of those put out in
recent years only the Russian and one
South American provincial bond are
not paying Interest among those dealt
in In the outside market.
Status of Foreign Bonds.
French issues still lag behind, but
they are a case by themselves. Even
the French bonds are far above their
record lows and show rema rkable
price resista ance to the unfavora BILE
factors which bear down go strongly
on franc exchange. If there are no
new untoward Developments abroad
and money remains reasonably easy,
the foreign bono list may be expected
gradually to work higher.
Copyright. 900