Evening star., 1932-09-17
MUNICIPAL BONDS
|NBETTER DEMAND
Investors Show Favorable
Attitude Toward City 0bIiga-
tions-SuppIy Smaller.
Special Dispatch to The Star.


NEW YORK. September 1.-THE i'm
proved attitude of large and discrimi-
mating investors toward the municipal
bond market is illustrated in the pur-
chase this week by a life insurance
company Of s3,500,O0O of various issues
Of city and State securities.
This is in contrast to the recent
policy of this institution and others in
the same field which were not friendly
TO bonds Of this type until 1t had been
demonstrated that local and State gov
ernmentS were taking seriously the
demand from taxpayers that they re-
duce their expenses and balance their
budgets.
Available Supply Reduced.
The effect of this purchase and others
made recently is to reduce the avail
able supply of municipal bonds to the
lowest figure in long time. Normally
the amount available to investors runs
from S75,000000 to S100,000000. At
present it is understood to be less than
$40 100000 Furthermore, there is not
much prospect of an increase in the
supply, as the current program OF
public Improvements is a modest one
and it is only the municipalities that
enjoy a high credit that are now able
to sell their bonds. Conditions among
the smaller cities and boroughs, with
bank loans which they would like to
refund into long-term obligations, have
shown little change in recent weeks.
The existing credit rating OF diff
ferent States is suggested in the basis
at which their obligations are now
selling. Those of California are quoted
to Weld between 800 and $50 per cent,
of Illinois at $50. of Kansas at 3.75,
of Maryland at $50. of Massachusetts,
at $50, of Minnesota at $40, Of Mis-
souri, at 385, of New Jersey between
ties and coupon rates, of New York
State as low as BIS for one issue of
3i.S and $50 for the per cent bonds
due in 1871, of Rhode Island at 3.65
per cent. of Vermont between 3.25 and
365. of Virginia at 365. and Of West
Virginia around per cent basis.
Credit Rating.
In contrast to these low rates are
those of to 5.25 per cent for the
bonds of Tennessee and $50 to $50
South Dakota.
1t is of interest to note the credit
rating of some of the States. as re-
fected in the basis on which their
obligations are quoted, compared with
those of the United States Government
For instance, U. S. Treasury As, which
may be called in 1914, are quoted to
yield around $50 per cent, while the
registered 31ss of New York State.
due in 1914, are held on basis OF
4I4s, due in l94l, are quoted to yield
375 per cent and the Treasury 4l4S,
callable in 1947, are listed at $50.
New York State notes due next May
are quoted as high as 1 per cent
basis which, considering there is such
a strong demand for all short Gov
ernment paper. makes favorable COM
parison with the Treasury 2 per cents
due at the same time.
With some investors there is greater
preference today for outstanding State
issues than for Treasury obligations,
owing to the fact that the probable
supply of the one will be small in the
next year. while that of the other may
be unlimited.
Government Issues.
The threat of a bonus payment.
against which President Hoover issued
a strong protest, is already causing
considerable anxiety in Treasury circles
and among the banks that hold large
amounts of Government obligations.
While so far there has not been any
reflection of this in prices of either
the long-term or short-term Treasury
notes, the prospect of Government
financing on a scale required to meet
the bonus payment and the needs OF
the Reconstruction Finance Corpora
ton is tempering the attitude of in
vestors toward the high-grade bond
market.
Copyright 1922