Evening star. [volume] (Washington, D.C.) 1854-1972, 1927-01-30
FOREIGN BOND LIST
MARKET LEADERS
Buying on Even Larger Scale
i Than Earlier in Month
Evident L4teIy.
BIZ GEORGE T. HUGHES.

By GEORGE T. HUGHES.
NEW YORK. January 29.-This has
been an unusually interesting week IN
/. the investment market. Among the
striking developments have been:
ID Buying on even larger scale
than earlier in the month or the TOT
eiRn dollar loans with record highs
scattered literally throughout the hst'
(2) Continuance of the heavy new
A financing which has eStabhsheu Jam
airy, 1927. as the month in when ne"
bond issues have broken al recotus,
the previous record month h"N'"6
been June, 1925. .
(N Further pronounced ease in
money. notwithstanding the large
amount of fresh financing. WINE
there has been no change in the re-
h discount rates of the Federal reserve
= Ranks, the reserve ratio is at me
highest of the year and more ina u
Az points above what 1t was the same
period a year ago.
Presentations To Refund.
fN More preparations by corpora,
tions to refund outstanding bonded
Indebtedness by obligations carrying
a lowe,. interest rate. The proposed
Missouri Pacific 500. 900 financing
is the most important proposltloh
pending under this head.
(5l Announcement that American
bankers have completed negotiations
for a S25,000.000 loan TO New SCUM
Wales, Australia. This is the nrS'
\ time this state has come to TINS mar
ket for funds, previous financing nav
ing been done in London. Under
nresent conditions New York is able
To offer better terms than London.
The strength in the foreign dollar
loans was a continuance OF the move
ment under way ever since the nrst
of the wear. The advance. however.
has gone farther than even the most
optimistic expected. and yields all
along the line at prevailing prices at
the end of the week are much lower
than at any time since trading IN
foreign bonds became an important
part of the New York market. There
fis still a wide spread between the re-
I turns obtainable on domestic and on
foreign obligations, but it is steadily
lessening.
Other Bonds Are Strong.
French. Belgian and Italian bonds
have been leaders in the upward
. swing. but they have not been the
only ones Brazil descriptions In the
South American group and City OF
Yokohama bonds in the Japanese list
have been prominent. Any foreign
bond selling at a discount and rea-
sonably below the redemption price
has been under continual accumuia-
ton. Experienced observers have
been expecting a reaction daily, but
it has not appeared.
The ability of the market to absorb
the flood of new offerings without
materially weakening the general list
or bringing about any hardening in
money is not the least surprising ele-
ment in the situation. 1t does not
seem possible that this sort of thing
4 can GO on indefinitely at the present
rate There must be saturation
point, even to this market. and when
it is reached the long-awaited reac-
ton ought to be near at hand. Prob
ably this Is the one feature that
needs the closest watching.
AS far as money goes. much DE-
ponds upon the way in which the
Spring business develops. Just now
demands upon the banks are at the
seasonal low. Should there be any
pronounced increase in trade or rise
in commodity prices, 1t might change
the whole outlook. But nothing of
the kind is in sight now. Bankers
say that gold imports such as have
been coming from France will not
affect conditions here, but the fact
lremains that gold reserves Of the
Federal Reserve Banks are more than
$l65. 0O0. 900 above the figure Of year
ago. Summing up, so long as capital
is as abundant as 1t is today, bonds
must be in demand on an advancing
price scale, interrupted only by the
realizing sales OF traders.
mr. nof-&z ~.
= There are two points to be made
about the refunding of 6 per cent and
higher coupon-bearing bonds by 5
per cent issues, now so popular with
railway and utility corporations. One
is that 1t has caused the investor
closely to scan his holdings to see
whether any of them are selling above
the price at which they might be re.
tired. and to cause him TO give the
preference, whenever possible, to non
callable issues. The other is the Cd.
portunity bankers find for acquiring
desirable short-term investments in
these very high coupon rate bonds
that have been. or are likely to be.
called. Take the Missouri Pacific case
I for instance.
Both series of Missouri Pacific S.
are callable only upon 80 days notice
and both sold at the close OF the week
around the callable price, where they
give a straight income return over
6la per cent. making them a highly
attractive short maturity investment;
that is. providing the plan to retire
them goes through.
Australians are not newcomers in
the American market. The State of
Queensland has two bond issues and
1.-THE Commonwealth of Australia has
one listed and actively dealt in on the
New York Stock Exchange The
significance of the New South Wales
loan Is in the evidence that American
bankers can successfully compete with
the British In field which naturally
belongs to the latter
II only remains TO add that the
market for domestic bonds has made
Z little progress during the week. There
has been a period OF hesitation not
unnatural after so extended an ad-
vance and probably connected with
the greater popularity of foreign in
vestnents already referred to.