Evening star., 1926-11-07
CLIMB IN FOREIGN
BONDS IS FEATURE
Belgian Issue Stimulus for
All Except South Ameri-
can Obligations.
BY BYRON SELLER.

~ DIRV.N SCh1IKIns
Special Dispatch 10 The Star
NEW YORK. November 6.-The
bond market has been active and
strong all the week. At first it was
foreign issues on which the buying
converged. and later 1t was second
grade and semi-speculative railroad
loans. The advances In both groups
were sharp and dealings on larger
scale than in long time. High grade
investment issues held their ground
very firmly, but activity was restricted
by lack Of offerings.
New bond financing totaled $50, ,945,-
900, compared with 1925 100000 in the
preceding week and $56. SS6 900 in the
corresponding week a year ago. Prac-
ticaly all the new issues were we'll
taken.
Undoubtedly the rise in the foreign
group, principally in the obligations
Of continental European countries,
was the most interesting development.
1t could hardly have been based upon
anything in the news. Stabilizing for
the Belgian currency and the rise In
French francs that followed were
helpful. Of course, but the market for
dollar bonds for a year back has
moved independently Of the fuctua-
tions In the exchanges. For that mat
ter, II has moved without regard to
the progress or lack of 1t In settling
the war debts.
Belgian Loans Reception.
The controlling influence was the
unexpectedy favorable reception ac-
corded the new Belgian stabilization
loan, the dollar portion Of which was
so eagerly absorbed by American In.
vestors. 1t was this that gave conf
dence to the buying Of French 0bliga-
tons. which was so striking an In
Cident Of the week.
The controlling influence was the
gian bonds. which resulted In their
selling at one time four and one-half
points above the offering price, was a
surprise even to the bankers. No such
public response had been anticipated.
The sequel was the bidding up, first
of French bonds, some Of them-nota-
bly, the French government 7s-to
the highest point in their history,
and second, of the older Belgian obli-
cations, also to the best prices on
record great deal of this buying
was purely speculative in character.
No investment demand would have
any such result on quotations.
The reaction. slight as 1t was,
toward the close of the week was a
fair indication of the source of buy
ing orders. When the movement was
at it's height there was diligent search
ing for issues selling out of line. re-
suting in an advance in the market
for the railway and industrial obliga-
tons of the countries concerned to a
parity approximately with that Of
government bonds.
French Issue RumOred.
How much of the weeks gains will
he preserved permanently remains to
he seen. At one time during the week
the story went the rounds that a new
French loan was under negotia tion
when everybody knows, or ought to
know. that the attitude of the admin
istration at Washington is that no
credit of any kind may be extended
to France until the Mellon Berenger
agreement has been ratified in Paris.
Once that Is effected, if it ever is, new
French financing on this side may be
expected to follow as matter of
course, and unless it is to he done on
terms onerous to the borrower. there
will have TO he some strengthening Of
the market for outstanding French
dollar loans. But that is a matter not
of the immediate future.
1t was noticeable all throufh the
weeks trading that the strength in
certain foreign issues did not extend
to the entire list. There was no ad-
vance in the South American group.
Some of the Australian bonds were
distinctly reactionary. There is an
increasing disposition to inquire close
ly into the purpose for which new
FUNDS are to he used in the case of
South American borrowers on this
side and of Australian borrowers in
the British market. AS a matter of
fact. new Australian loans in London
nave not gone we'll and this has had
an effect on the New York market for
dollar loans. indicating that notwith.
standing the progress since the war
We are not entirely independent of
London opinion on these matters.
Rail t'pturn Notable.
Tn its way the sudden upt,1rn in tho
second grade rails was as important
as the happenings in foreign bonds.
interest In the railroads did not be-
come acute until late in the week but
then IL was very pronounced AL
though the railroads have been re.
porting consistent increases in gross
and net earnings for months mast
speculation in these Junior railroad
ponds has not been particularly active
Tor some weeks. The outlook is that
ioAll'o' Vdi lltlSS dS a Wn0le VIII eS-
tahlish new high record for all time
when the 1926 accounts are finally
closed. Railroad stocks have discount
ed good deal of this. hut there are
plenty Of railroad bonds which have
not. 1t was these which We're the oh.
tects of animated buying during the
last few days. and the movement
might go much further and still he
justified.
AS far as strictly investment issues
so, demand At prevailing prices was
greater than the supply all week. This
was particularly true of those selling
on per cent yield or thereabouts.
Few desirable bonds of this kind are
obtainahle under par. Whenever the
yield is above 5 per cent. ii Is because
In most cases the coupon rate is 5ls
or s per cent and the bond Is selling
at premium and al or above the re.
denption price. In this connection il
IL interesting to note that a total OF
over S16 900 900 par value of corpora
tion bonds has been called for redemp-