Evening star. [volume] (Washington, D.C.) 1854-1972, 1927-02-20
TRADING QU|ETER
. IN BOND MARKET
LuII in Public Offerings in
Past Week Welcomed
by the Dealers.
srec;a! Dispatch to The Star.

Special Dispatch to The Star.
NEW YORK. February 19.-In spite
Of the fact that money turned extreme
~ easy and rates low. the investment
market was quiet in all departments
during the week just ended. Dealings
j., old bonds were on somewhat
larger scale than the previous week,
hut continued moderate when meas
llred by really big markets. The VOL
anne Of new issues. when Tor weeks
no6 hne7, running into extraordinarily
large figures. dwindlcd TO compare
lively small totals. However, prices OF
bonds were firm and demand was eN~
renent. investment bankers continued
70 comment on the aStonishingiy large
annette for income bearing Secur!ueS.
The lull in public offerings of bonds
was really welcomed because the mar
ket had been called upon to absorb
staggering quantity of new issues IN a
phcnomenally short time. More than a
billion dollars of new bonds We're
offered for public subscription during
the first six weeks Of the new year.
As a result the market was threatened
with indigestion. notwithstanding the
enormous investment appetite. The
hull this week afforded the desired
breathing spell. during which invest
nent houses could make the secondary
distribution of securities to the uIu-
mate investor.
In Hands of Dealers.
Primary distribution of bonds, par
tfcuIarlv in the case of such volume as
in recent weeks is largely into the
hands of dealers That is inevitable
because the ultimate investor Is not
always ready to buy new BOND when
Il is first offered That is true even OF
such institutions as savings banks. II
is an interesting fact that few OF the
big savings banks in New York buy
bonds on the authority OF one lndi-
vidual Purchases are determined DE
action of the board of trustees, whlch
Of course, entails delay. That being
the case the dealer performs val
liable economic function in taking new
issues and holding them until the ultl-
mate purchaser takes them OH ms
hands
New issues this week were not only
smaller in volume, but were In most
cases somewhat inferior in grade as
compared with those of the previous
week. The biggest piece of new
financing was an offering of S2o.000,-
900 General Motor Corporation per
cent preferred stock at S120 share,
TO yield about $50 per cent on the In
NeSlIIlSItl. IlS price was dbOON oAa "a
par with the market for the per
cent preferred stock already outstand-
ing. Only strong company could
offer such a big block of additional
stock around the current market for
that already outstanding. This, by
the way, was the first public f1nanc-
ing the General Motor Corporation
has done in about six years.
Bore Per Cent Coupons.
The majority of the corporation
bond issues bore per cent coupons.
ONLY two bore a per cent coupon.
Three small foreign issues were sold
to yield from 7.20 to TO per cent.
The market for old bonds was OF
rather deceptive appearance. Total
volume of dealings was fairly large.
indicating increased activity. How
ever, analysis of the trading disclosed
that the activity was restricted to a
comparatively few issues, chiefly the
speculative railroad bonds. The list
ed bonds of standard investment
Grade were stagnant In the main,
transactions as a rule being limited
to a few bonds. The undertone OF
such issues was firm, however.
The active railroad bonds included
MANY which have been regarded as
in the so-called merger" group and
others which for various reasons are
selling at low prices. Favorites were
Erie convertible "Ds," Missouri Pa
cific general As, Denver & Rio Grande
Western 5s, Missouri, Kansas &
Texas adjustment SIS, a4he junior is
sues of the Chicago, Milwaukee & st.
Paul and Seaboard Air Line adjust
ment SIS. The Denver & Rio Grande
income SIS sold at a new high record
price. Interest is cumulative since
1924 and becomes a fixed charge of
the road in 1929.
Government Bonds Dull.
Dizziness continued to characterize
the market for United States Govern
mont bonds. There were two reasons
for that; one was the lingering hope
that the Federal Reserve Bank would
reduce it's discount rate. The other
was the imminence Of new financing
by the Government.
Contrary TO the hope of many invest
ment bankers specializing in Govern
ment bonds, no cut was made In the
bank rate. The trend the new Govern
ment financing will take, is the main
point of interest. Opinion in Wall
Street is about evenly divided on
whether it Will be a long term or a
short term issue. Regardless of which
it proves to be, the new financing will
probably result in further curtail-
ment of the supply of United States
Government short term issues. That
expectation was reflected this week
in good demand for Liberty second
~ bonds.
In the foreign list the feature was a
revival of demand for Italian bonds.
Italian government Z per cent bonds
were all bought and an industrial
issue, the Fiat rs, also were wanted.
French bonds of all types were well
bought. Some Improvement was
noted in the market for South Ameri-
can issues.
TIMBER TRADE SLUMPS.