Evening star. [volume] (Washington, D.C.) 1854-1972, 1932-09-25
INVESTMENT BOND
MARKET ADVANCES
IN WEEKS TRADING
Averages Are Only 2 Points
Below Peak of Sum.
mer Recovery.
special Dispatch to The Star.

Special Dispatch to The Star.
NEW YORK, September 24.-The
bond marekt ended the week narrowly
higher than it started it and with a
considerably better volume of business.
It is still about 2 points under its recov-
cry peak of last month. but has re-
tanned 16 points of its advance OF July
and August, so that the investment
market has really distinguished Itself
by its steadiness at time when stocks
were losing about third Of their total
Improvement.
Perhaps the best guide to the imme-
diate future of bonds is to be found In
the new capital market. During the
past week there were no new domestic
bond issues, in spite of the fact that
conditions are immensely more favor
able to new offerings now than they
were last May and June. And 1t goes
without saying that there Is an enor-
NOUS backlog Of new financing, some Of
which has been held back for nearly
two years awaiting favorable market.
The conclusion Is unacceptable that those
having hand in the arrangingsUf new
bond issues believe that the investment
market Is headed higher and that new
bonds will be more readily absorbed in
the near future.
When one speaks of new financing
nowadays, Of course, reference is only
to the highest grade of corporation. mu-
nicipal and Government obligations
There is still no market for junior rail-
road, industrial or utility offerings. Pre-
ferred stocks, unless Of the extremely
conservative type, are unmarketable.
Common stock offerings command no
market Companies that cannot offer
the utmost in security have to get along
as best they can. Almost every con-
ceivable expedient has been used-ex-
tensions, loans from the Reconstruction
Finance Corporation, reorganiZations-
and-in the extreme caSeS+receiver-
ships.
This is one phase of recovery from
depression that will be with us for some
time to come. An Industry that has
had deficits for two years running and
has used up its entire surplus must
await more than a mere improvement
in business before it can again come TO
the market for money.
The improvement in business to date
has already renewed public confidence
to point where prime corporation
bonds are selling at investment levels.
But the holders Of less well secured
obligations must wait for an extended
period of business activity, during which
companies will have chance to profit
from what they have learned by bitter
experience in the past three years and
build up adequate reserves Many a
reorganization must be accomplished.
There will be some receiverships. Some
bondholders will have to accept EXTEND
ing bonds. Until these developments
are more clearly indicated, then, further
advances on the part of junior bonds
cannot be expected.
In the foreign department the most
significant phase was the f1rmness of
German government and corporation
bonds in the face of the European polit-
ical crisis resulting from Germany's
withdrawal from the Disarmament
Conference. The truth is that Ger
many's credit was little affected by her
action. There is no talk today of Ger
many defaulting on her external debt
She has shown a substantial improve
ment in her favorable trade balance
The Reichsbank has vcuchsafed its
confidence by cutting its discount rate.
Copyright. 1922