Evening star. [volume] (Washington, D.C.) 1854-1972, 1931-04-09
HOLDERS OF Brazil
SECURITIES UNEASY
Government Faced With In
tereSt Payment on IS
Foreign Loans.
BY CHARLES F. sPEARE.
Special Dispatch to The Star.

Special Dispatch to The Star.
NEW YORK, April 9.-The next so
TO 80 days will be a critical time for
the government and state treasures of
Brazil and for the holders of their dol
lar obligations
In this period interest and sinking
fund payments on nearly 40 per cent
OF the entire amount Of Brazilian loans
hoated in this country will become due
These payments will have to be met on
Is OF the 80 loans contracted In the
United States in the past 10 years. Five
OF them must be taken care of on May
! and the same number on June /, the
latter involving more than half of the
debt service in the present quarter.
Service Requirement.
The outstanding amount of bonds on
which interest or sinking funds are
payable between now and July / is ap-
proximately $163, 0O0, 900 of the total of
all Brazilian loans of about $500, 000, 900.
The debt service requirement in the
months of May, June and July is esti-
mated between $780, 900 and $6,000,-
900. Judging from the fact that on the
IS different loans affected in the pres
ent situation there has been a deprecia-
ton of nearly $75,000,000 in market
value, with about half of this number
of loans selling below so and several
under 40, it is apparent that holders Of
them anticipate trouble for Brazil and
her political divisions in obtaining
funds to meet the current requirements.
After the revolution III Brazil last
year, the representatives of the new
government stated that they would do
everything possible to maintain the sane
tity of Brazilian credit. They recog-
nized the necessity for preserving the
a in
tiate additional foreign loans at such
time as markets had recovered and
were friendly to foreign issues. The
strain on Brazil Of the worldwide eco
nomic depression and of a foreign debt
entirely out of proportion to her nor
NAL resources has placed her in the
position where it is Believed by bankers
here that she will be forced to ask for
some concessions on the part OF hel
creditors.
May Pay in Script.
One opinion is that a part of the
nearby debt service will be paid in
script instead of cash. 1t may be neces-
sary at the same time to default, by con-
sent of hondholders. on sinking fund
payments. Such payments have always
been an embarrassment to weak gov
eminent and corporation debtors and
have frequently brought about trouble
that might have been avoided If inter-
est on debt had been the only obligation.
Bolivia and Peru have already de-
faulted on dollar loans, and the prices
Of their bonds quoted on the New York
Stock Exchange have fallen to about
one-third of that at which they were
originally placed among American in
vestorS. Six of the Brazilian issues
were quoted today at figures approx
mately 40 per cent of those when they
were brought out in recent years. They
are now in about the same average price
area as were the Bolivian and Peruvian
issues just prior to announcement of
default.
1t is understood that heavy liquida-
tion OF Brazilian dollar loans has been
taking place recently for European ac-
count. In nearly ali of these loans Of
fered by American bankers a particle
patton was given to issuing houses In
London or on the Continent A spe-
cialist in foreign bonds said today that
he believed that Europe had now sold
back nearly all of the South American
dollar bonds to which she had sub
scribed in the past five years. This has
placed an additional weight on a mar
ket that has had difficulty in absorb
ing a steady stream of liquidation for
the account of private investors and
corporations in the United States.
Recent Losses.
1t is obvious that with the losses
that American investors have taken in
South American securities, both In de-
preciated capital and in loss Of income,
it will be many years before it will
again be possible for any great volume
of loans to the defaulting countries to
be successfully negotiated here.
(Copyright, 1917