Evening star., 1928-04-15
VITALITY OF BOND
MARKET IS SHOWN
Trading Smaller, Due to High
Money Rates and Peak
Level Prices.
BY BYRON SELLER.

! Special Dispatch 10 The Star
| NEW YORK. April i4.--Hieh money
rates this week and high average prices
| for both domestic and foreign bonds
would have affected prices for invest
ment securities. AS matter of fact
these influences have initiated to only
a small extent. thus demonstrating the
vitality of the market and the large
uninvested supplies of capital that are
seeking profitable employment,
However, there has been less trading
and some OF the largest buyers, notably
the banks, have withdrawn from the
market These institutions have been
unwilling to increase their bond hold
ings when they could lend their money
cut on call between So and 6 per cent,
This rate has attracted funds into New
York from all over the country. SO
long as it continues the bond market
will feel the effect of this competition
Banks Prefer Cali Loans.
There are a great many banks that
prefer a call loan as a permanent policy
over any other form of use TO which
they can put their surplus funds. They
have been willing to accept the low
rates of the past wear rather than lock
up their capital in investments.
obviously with rates at their present
profitable level, these banks and others
that have been buying securities to
Weld between "A. and 5i4 per cent,
have been turning to the call loan
market to bring up their average earn
ings.
In the face OF high interest rates a
few corporations have had the boldnesS
10 bring out additional low coupon bear
ing bonds. Last week new epoch In
the foreign bond market was reached
i'm the oilering of a 4 per cent King
dom of Denmark loan. This week there
appeared first mortgage 4 per cent
public utility bond priced to yield 4.4o
per cent. This recalls the period 70
wears ago wnen railroads ana munich
pa,ities did their financing through the
medium of ga per cent and per cent
issues.
The era of 4ie per cent bonds was
entered just year ago, and with some
timidity on the part OF borrowers. II
is interesting to review the subsequent
history Of these bonds. out OF nlhe
Al. per cent issues, of which five we're
by public utility corporations. the aver
age price advance has been S "A points,
with the average return on the list 4.72
when they were issued and today about
4.45 per cent There are those optimistic
enough to predict that year hence
4 per cent corporation bonds now being
sold will show about the same average
gain as have the Al per cent ooiiga-
tions.
HeSitant About Increasing Holdings.
There is. however. considerable heSi-
fancy on the part of careful buyers OF
bonds toward increasing their holdings
at the present level For months the
first mortgage railroad issues have not
moved away from a fixed price. In
other words they have ceased TO be
attractive to institutional buyers. since
they declined below an average of 4l4
per cent.
Recently there has been disinelina-
ton on the part of the same class OF
buyers TO purchase the high-grade
public utilities. which went up to new
record level during the period when
legality for them was being sought In
New York State. This attitude has
been intensified By the higher rates for
money, but 1t may be revised as soon as
money rates ease again and further
decline in prices occurs.
Industrial bonds of the better type,
like rails. have not moved to any ex-
tent for long while. indicating that
for the time being they have dis
counted all OF the influences that 20
to make up a price basis
This weeks griSt Of new offerings
involves a large dollar value and a
varied list of mortgages. In addition
10 the $35. 1000. 900 Cincinnati Gas &
Electric first mortgage As there have
been several moderate sized public
utility offerings including $4,000 900
first mortgage 4lks BY the Super rsger
Co. of Illinois. 81 .00o. 900 refunding 4i2s
by the Queensborough Gas & Electric
Co. OF New York, and several small first
mortgage per cent water company
bonds.
Cement Issue Large.
The largest industrial issue was one
of $4,000 900 by the International
Cement Corporation which sold 5
per cent convertible gold debenture,
convertible into common stock, on a
S.25 basis. The Famous Players Cana
dian Corporation offered $4,000. 900 of
first mortgages 6s at par. while a 5ia
per cent mortgage for $6250. 900 on the
rational Press Building at washington,
was sold at 100
The two foreign loans we're $4,000 900
by the Electric Power Corporation OF
Germany. which came on the market
at 99is. or considerably higher than
previous loans by this company and
81 100000 Of per cent bonds by the
City Savings Bank Co. Of Budapest,
Hungary There have also been several
small municipal loans and fair num-
Der Of public utility per cent preferred
stocks
IN the listed market for bonds the
chief interest this week has centered
in the movements In the New York
traction issues. IN the convertible I
per cent bonds Of the metal companies
and in such foreign obligations as those
of italy. Chile, Japan Finland
France and Peru New high prices
have bern established IN nearly all Of
fneGH laans