Evening star., 1938-05-25
BIC BOND ISSUES
TOGU|DE BANKERS
Other Corporate Activity to
Hinge on Receptions of
Huge Financing.
BY FREDERICK GARDNER,
Associated Press Financial Writer.

NEW YORK, May 25.-Bond men
are looking ahead to the next week or
two as potentially the most significant
period in their field since the invest
ment market went into a decline early
in 1887, choking of revival in corpo-
rate financing.
Two big issues-the $loo,oo0,ooo
United States Steel debentures and
about $73,000,O0O in Commonwealth
Edison bonds and debentures-will be
eligible for offering around June l
and 2, having spent the necessary 20
days in registry with the s. E. G. be-
fore formal offering.
Whether they would be brought out
promptly has not been announced,
although the market generally has
been expecting them to appear about
June / or soon thereafter. These huge
issues, together with smaller ones reg
istered with the S. E. G. in the last
month, are counted upon to give the
capital market a real test to guide in
vestment bankers in preparation for
other corporate flotations.
Low Yields Firm.
Since the United States Steel Corp.
announced its financing plans. cover
ing the biggest industrial issue to
reach the market since 1929, low-yield
corporate bonds have held their ground
or extended gains, particularly in the
United States Treasury list.
Thus many bond men see the stage
set for good reception for most issues
on the rolls for June and midyear
offering. Banks and other institu-
tions are expected to take keen inter-
est in the offerings, since idle cash Is
piling up, augmented by repayment Of
old loans and retirement of S50,000,0 900
weekly in Treasury debt through use
of desterilized gold.
Extremely Poor Demand.
Security markets lately have por-
trayed extremely poor demand for
investments. Business trends hardly
have been conducive to boldness on
the buying side. However, bond men
contend quick absorption Of the large
new issues scheduled for midyear sale
may go far toward helping break the
current stalemate. which has resulted
| in the smallest trading on the Stock
Exchange since the summer of 1884.
Wall Street debate on recovery has
educated market followers to look for
revival in the new capital market for
bullish cue Abrupt cessation of new
offerings last year. it was noted, was
among the first signals business was
rounding the top of the recovery and
was headed for the autumn collapse.
Most issues appearing for mid-year
sale represent resumption Of refund
ing operations to convert interest rates
to the lower money costs now available
to borrowers with good credit ratings.
But such operations, bond men ex-
plain, usually are forerunners Of
financing to raise funds for industrial
expansion.
Long Terms Slammed.
One obstacle to large-scale resump-
ton of corporate borrowing for capital
improvements, it was observed, is the
reluctance of the market to take long
term issues at low interest rates. The
United States Treasury's recent short
term borrowings, placed at record low
| interest rates, have shown an avid
appetite for offerings Of that char
acter.
But few corporations have anywhere
near the appeal of Government loans
| to the investment market. Moreover,
corporations embarking upon large
scale plant expansion and longe-range
planning usually want to borrow
cheaply for repayment over long
period of years. Thus maturity dates
on some outstanding corporate bonds,
mainly in the utility and rail sections,
extend into the next century.
Compared with such far-sighted
maturities, the impending United
States Steel offering-consisting Of
debentures maturing in 10 years, with
provisions for retirement out of
sinking funds q short-term loan.
Light Steel" Stressed.
Details of United States Steel busi.
ness revealed in connection with regis
tration of the debentures add another
accent to the emphasis steel men have
put in recent years on the shifting
character of their business. coming
chiefly from expansion in demand for
lighter steel products entering into
manufacture Of automobiles, con-
tainers and other consumers goods"
Mentioned as the largest single Gus
toner of Big Steel" and its subsid-
iaries is the American Can Co.. leader
in the Justify growing field for tin con-
tainers. American Can, it was re-
ported, last year took about s57,000,-
900 worth of tin plate from United
States Steel.
Analyzing this trend in light Of in
dustrial development the last few years
and Government attempts to foster
mass consumption, steel authorities
opined it seemed demand for the
lighter products would continue to