Evening star. [volume] (Washington, D.C.) 1854-1972, 1927-12-18
MARKET ADSORBS
| LARGE NEW ISSUES
Public Utilities Biggest Bor-
roWers During Week-0ld
Bonds Hold Up.
rnocial pi.patch 10 rhe star.


s!Ew YORK. December 1.-THE
feature of the investment market this
week has been the absorption of new
offerings. Seasoned bonds have been
steady, but that was about all.
There has been some selling by
banks in preparation for year-end re-
auirements, as well as by other IN
vestors who desire to switch into the
new securities. This liqtidation has
prevented any advance in The general
list, the average for Which, now STANDS
substantially below the Ugh of the
first of the month. In thu face OF the
competition it is remarkable that the
old bonds have held up as well as they
have.
New offerings this week totaled
sl56. 7O5, 900. This compares with
S132 ,397. 900 a wee kago and 1888, 1867
900 in the same week of 1926. There
Is no indication of a let-up next week.
Specifically, a $4,000, 900 obligation of
the Associated Electric Co. is sched-
uled for early offering. Other impor-
tant financing is in the making.
The public utilities were the most
important borrowers this week.
Philadelphia Co. Offering.
day $50, 100000 of per cent bonds
priced only points below par and on
the succeeding day sold S2O.0O0,O 900 OF
S per cent preferred stock of a sub
sidiary. the Duquense Light Co. 1t
should be understood that these sums
are in major part for the purpose or
refunding existing obligations. In
general there is no. increase in capital
liability commensurate with current
new financing. The significance of the
movement Is not in the addition TO the
sum total of securities available for
investment, but in the progressively
lower return to the investor.
Take for instance the Duquense
Light IS preferred This is sub
stitute for the same company's 4 per
cent preferred stock which is to be
called for redemption. incidentally
the new preferred as well as the new
Philadelphia Co. bonds sold at pre-
aniums as soon as they were introduced
to trading. With the market in the
present condition any public utility
per cent bond or any public utility
per cent preferred stock priced below
par is quickly snapped up, providing,
of course, they are bonds or stocks or
strong and established corporations.
Duke Power Bonds.
Another example of the trend of the
times was the sale of $40 100000 Duke
Power Co. mortgage bonds with ].
per cent coupon. The success OF recent
financing on basis to yield the buyer
not much over " has been so pro-
nounced that the more optimistic in
vestment bankers are predicting that
next year they will be bale to sell cleo
trio light and power mortgage bonds
with per cent coupons. They point to
the fact that the old line railroad bonds
carry per cent coupons for the most
part, and some of them dated in the
opening years of the present century
carry " per cent and even per cent
coupons. They urge that there is no
reason why under present circum-
stances the utilities should not be able
to finance on just as favorable terms
as the railroads Comparison of pres
ent earnings of the two kinds of cor
porations gives point to the argument.
Whether this will come to pass or
not depends upon the course of the
money market in 1928. Despite gold eA-
ports. actual and potential, there is
no immediate concern on that score.
Investors and spectators alike rely
upon the continued ease of time and
call money rates. Then there is the
assurance. official and semi-ofiicial, of
the Secretary of the Treasury and of
the Federal Reserve authorities that
gold can go not in large volume with
out disturbing the domestic money
market This is accomplished through
an extension of the open market
operations of the Federal Reserve
banks. The objective. as Secretary Mel
Ion has put it.. is TO hold our money
N, a rlef steady whiIe avery possib1a
aid is extended to re-establish finan.
cial stability abroad. This seems to be
the deliberate policy of those now in
control of our financial institutions.
That being the case, the market is
not worrying over money rates.
Rise i'm Stock Market.
Speculation for the rise in the stock
market was still in the ascendent at
the close of the week. Volatile indus
trials were bid up violently. The more
stable and conservative issues like
United States Steel and General Motors
were bought with every show of conf
dence, tthe same time this buying has
not been primarily representative of
investment demand. The speculative
fever still burns brightly in Wall
Street. 1t Is much easier to put stocks
UP than to put them down, or at least
1t so seems now.
Unfavorable developments are ig
nored. This is a dangerous situation.
but il is one which has been dupli-
Gated many times during the course of
the remarkable year just closing. To
counsel caution is waste of breath.
Spectators are content to go along
with the tide and it must be admit
4~A &lak 20 1o4o haf ho