Evening star., 1936-12-31
NEW FINANCING
NEARLY DOUBLED.
Refunding Predominates,
but 274 Per Cent New
Money Is Sought.
tBy Cambridge Associates }


When 1885 new financing is com.
pared with 1885 and the five previous
years the result Is some fantastic
percentages. When the 1896 figures
are considered in comparison with
the interest rates, production indiceS
and general business activity, the
achievement is in nowise remarkable
Still, in the light of the expecta.
tions Of two years ago. they are re.
markable enough. For the first II
months of 1886 total corporate finan.
cling reached 1881. .033,346 against
the 1885 figure of s2,100073,8 n
1888, the low point, the II months
total was only s365, ,433,63
Naturally the emphasis is still upor
refunding rather than upon new
capital. The borrower is king thesi
days and naturally his first thought
is to place his obligation upon thi
royal basis that he now enjoys Vas
interest savings are being affected BY
substituting to per cent bonds IL
place of the 6. Z or per cent obli.
cations formerly required of public
utilities and industrial corporations.
Utilities Hold Lead.
The utilities for the last four year.
have been the biggest beneficiaries o.
the current low money rates. ThI
year their refunding operations &C.
counted for more than a billion ant
a half of the total with far steadieI
operating revenues than the rails ant
yet occupying a preferred position
over the industrial borrower, the
power producers have taken full ad.
vantage to reduce carrying charge.
on funded debts
Although still accounting for
minor proportion of 1885 financing
the gain percentagewise in new capi
tai is far more striking than tn,
refunding record. In the first 1.
months of 1885 corporate busines
asked for only 1886 s32,395 in nev
money. In the same 1886 periot
1896, ,744526 in new-capital securitie
were placed on the market.
The trend at this point appears vel
defined Refunding operations durinI
1887 will undoubtedly continue to b.
important but the rising demand fo
new capital should. within the mex
year, equal or exceed the amour
required for refunding purposes.
Faster Rate Likely.
Both new and refunding issues vii
come on the market next year a
faster rate than has yet been NANTES
but the year should bring the peak o
refunding operations.
Should the upward trend in com
modify prices continue at the sam
rate as in the last two months. /
would not be surprising if interes
rates were affected before the yea
ends. This in turn would. of course
have its rearing on the course Of net
financing; new capital would b
sought more eagerly. there woul
be less incentive to re-hTance out
standing obligations.
During the past year it has beef
the railroads which have found tn
greatest need for new funds. EveI
though loss of the emergency freigh
surchargeS causes some hesitancy il
regard to new equipment commit
ments much buying cannot be de
ferred. Further railroad issues 70
new capital will undoubtedly be
feature of 1887 financing.
So far long term bonds and note
have dominated the picture but b
recent months as more industris
firms have entered the market 70
new money. preferred and commo
stocks. particularly the latter, hav
been offered in increasingly larg
amounts.