Evening star. [volume] (Washington, D.C.) 1854-1972, 1931-04-16
NEW BOND ISSUES
CLOGG|NG MARKET
Bankers May Plan Methods
of Regulating Offerings
of Securities.
BY CHARLES +. sPEARE.
Special Dispatch To The Star.

Special Dispatch to The Star.
NEW YORK, April 16.-It is quite
possible that at some of the Spring
meetings OF the governors of the In
vestment Bankers Association the Ques-
ton of better regulation of the flow
OF new securities will be discussed and
EFFORTS made TO correct market condi-
tons following the emission of huge to-
tails OF stocks and bonds within a COM
paratively short period of time.
The situation is again rather acute
following the large volume OF new Sc
curities in March and the introduction
into the market last week of nearly
$500 ,000, 600 par value of bonds, or the
greatest amount for any single week
since 1927.
Price Disturbance.
The decline in the prices of the
Pennsylvania Railroad and New York
Central bond issues below the initial
offering figures Of month ago and the
poor distribution known to have taken
place in other corporation issues
brought out this month has been due
not only to the volume of these Offer
lngsS but to the poor timing of them,
ana, TO certain extent, to the price
disturbance in all grades of securities.
Last weeks offerings of nearly $780,
OOO,OOO OF corporation bonds had to
compete with an equal amount of
United States Treasury bills, which were
generously subscribed to by banks and
concerns that normally would be SUBJ
stantial buyers of long-term obligations.
There has apparently been very little
regulation OF the supply of corporation
ponds With respect to the simultaneous
cHering OF unusually large sums of Gov
eminent and municipal paper.
A feature OF the corporation offerings
so lar this year has been the size Of the
individual issues. This has been a fac
tor In delaying distribution and in soft
enlng prices, so that popular bonds
nave frequently been available from J.,
to lI2 points below the advertised
price within "a hours of the an
nouncement of the sale. Out of l8 sep
arate issues brought out this year, 10
were Tor amounts ranging from $780,
100000 to $500 100000 and for sums
between s25,000,000 and $50 900 600.
Within comparatively short time the
market has had a 500, 900, 900 issue by
New York City, another 500, 900 900 by
the Pennsylvania Power & Light Co.. a
ST5.O0O,000 sale by the PENNSYLVANIA
Railroad and one Of $4,000 900 by the
Port of New York Authority. In three
months there have been half a dozen
offerings amounting to $4,000, 900 each
and two of $4o,Ooo,oO0.
Difficulty in Marketing.
The difficulty in distributing issues of
great size is similar to that experienced
by recent syndicate, which found that
1t was necessary for dealers in the group
to persuade clients to sell other issues
IN order to raise the funds sufficient to
subscribe to the new bonds In other
words, 1t has been hard to find, outside
the savings banks and life insurance
companies, sufficient new capital to take
up the full amount of these large units
OF new bonds. Consequently some of
them have, In the vernacular of Wall
street, gone sour" and lower prices
than those now bid for syndicate ac-
count are anticipated when free mar
ketS are established.
Attempts have been made at differ
ent times to regulate the output of
bonds to the current conditions of the
market and its ability to absorb those
offerings submitted to it. The sue
cess OF such efforts have not been
satisfactory to those who have at
tempted it. This is due to the extreme
competition among investment bankers
Tor new business; also to differences
or opinion as to the actual situation
IN the market, such as whether it Ia
a rsi congested or can accommodate
additional supplies 1t is recognized
that until some agency with the proper
authority is able to obtain from is
suing houses and dealers in securities
their actual position from week to week
or month to month with respect to I'M
sold bonds. that little progress in the
way of regulation similar to that in
effect during the war can be expected
Some such plan as this is now being
advocated. 1t is expected that it may
be presented in official form before the
end of this year.
Copyright, 1919