Evening star., 1928-04-29
REST BOND TREND
DOWNDUR|NG WEEK
New Financing Is Being Re.
stricted to Retundlng op.
F%R
erationS Largely.
Special Dispatch TO The star.

NEW YORK. April 2s.-~-The out
standing features in this weeks bond
market have been the slow decline in
hieh-grade rails and public utilities.
the large fluctuations in speculative in
ouStrialS, the tendency that is again
being exhibited to bring out new issues
above the market" and a continued
restriction Of new financing to refund
Ing operations.
The flrst Of these conditions is re-
Mected in the prices of sUch bonds as
Atchison Is, Baltimore g. Ohio Is,
Northern, Pacific Is, Union Pacific Is
and PENNSYLVANIA 4i2S These are of
an average OF Slightly over 2 points
from the high Of the year In the pub
lie utility group an average decline Of
about z points is to be noted In such
issues as DuQueSne Light and Phila-
delphia Electric 4laS and active 5 per
cent bonds such as those of the Phila-
delphia Co. Columbia Gas g. Electric
and Utah Power & Light. United States
Government bonds and Treasury GER
tificates are down a little over a point
and Short-term corporations issues "A
points.
May Go Further.
This is only a moderate reflection of
the higher rate for money, but it may
so on further in view Of the fact that
time loans are at per cent. commercial
paper az to AZ per cent and Federal
Reserve discount rates approaching q
uniform ngure of 4i2 per cent The
general average of the market is now
at the lowest Of the year.
The fluctuations in the bonds Of
manufacturing companies follow the
movements in stocks. This tendency
Is distinct from the others and has
nothing to do with the Stiffening of
the money rate. Associated with 1t
have been movements In certain rail-.
toad bonds like the ST. Paul adjust
mentS and the obligations of a few
small independent railroads that are
likely to be absorbed in the general
effort to bring all the lines IN the trunk
line territory under the domination of
the four great. systems In that region.
Long Period Of Digestion.
The third feature .of pricing new
bonds above the market for old bonds
OF the same mortgage, as well as bonds
OF similar character. is one that is
dttncult for the layman to understand.
II usually results in poor distribution
OF these bonds and Q long period Of
digestion. It is prominent not only
in domestic but foreign issues now
being offered to replace those that are
to be taken UP and to which higher
coupons are attached. This is a part
Of the general tendency to lower the
interest rate on new borrowings dur
ing the period Of comparatively easy
money.
Eventually these new low coupon
bonds may hnd a ready market and,
as was the case with the earlier Az
per cent railroad and public utility
bonds, establish a premium over the
listing prices. At the moment, how
ever, it looks as though investment
dealers were forcing the market be.
yond its willingness to accept this type
Of bond :.
with. the exception of a few large
issues. the activity In the matter of
negotiating new loans has modified
considerably since February and March.
The April total Of new securities win
be q comparatively moderate one.
which demonstrates the fact that the
increase IN brokers leans has much
more to do nov with the speculation
in stocks than with the production OF
bonds.
Few Bonds Held
In general, II may Be said that the
amount Of new bonds stiil in the hands
OF underwriters Is small. Therefore, the
technical condition Of the market. 10
strong. II 1t had not been so there would
have been more effect on IL from high
money rates than has 50 far been exc
hihited. The banks have been sellers 10
q modrate extent. not only 70 relieve
their position and In order 70 take care
OF their commercial requirements and
also 10 place their money In the call
market but because they felt that bonds
we're for the present high enough. The
savings banks have not gone into the
new legal public utilities TO the extent
anticipated last month, as they have
been waiting for . reaction before buy
ing on a large scale.
There Is still strong demand for all
Of the sandard industrial and railroad
preferreds stecks and the public utility
preferred issues recentIy made legal.
This gtfil Is the most. attractive field In
which tf1e institutions can operate and
II has brought an elGuent Of competi-
ton into the investment market from
which the high priced bonds have suf-
1eTed es$ If
See Ne Advantage IN Limlts.
The institutional buyers. under the
necessity Of showing q Satisfactory re.
turn on their securities have taken the
position that they need not limit them
selves to the old group Of Legal bonds
when there are 30 many spIendidly de-
yeloping situations Ia the public utilities
and industriaiE gith earnings sufncient
90 cover interest Or dividend require
Inent6 on such obligations more times
over than On the standard raile In
cher words, they, are analyxing more
situations than ever. before and taking
q broader viewpoint and one comparable
70 that og the individual investor, who
has gone out Of bonds TO large extent
IN the last two years and into common
stocks,
The foreign dollar market has been
quiet, With operations limited % q smail
group Of issues IN which Italians, South
Americans and French issues have been
prominent, The early success Of the
Great Britain and Northern ireland 4
per cent Offering has been followed by
. reaction of points In spite Of this,
another Erfti2h loan has been listed
here. and others may follow Nearly
t70 900 900 of German and Ecandi-
DHviAH loans are now under consider