Evening star., 1938-09-03
PRIVATE SALES
OF BONDS GROW
Amount Placed Is Nearly
Half of Securities on
Public Market.
BY the Associated Press,


NEW YORK, Sept. 3.-Stepping out
of the usual paths of financing, big cor
porations have dipped directly into the
large pools of capital held by insur-
ance companies and other investing
institutions for many millions of dol
lars in recent months.
Corporate sales of securities to invest
ing institutions. without investment
bankers playing an intermediary under
writing role, have Appropriated $780,
100000 this year, compilation dis
closed today.
Bond men pointed out that the
amount placed privately-a practice
adopted on substantial scale the last
few years-ls nearly half the total OF
corporate bonds marketed publicly this
year
The proportion of priavtely sold
issues. it appeared. has increased, but
whether this was indicative of a long
time major trend away from the un-
derWriter as a middleman divided opin-
Ion in Wall Street.
Considering the large total already
piled up, 1t was suggested the figure
for the full year may surpass the 1887
total of nearly $500, 100000 in privately
sold issues. No detailed record of
such financing was available, although
most OF the major deals have been an
nounced.
Is Major Development.
Private sale of corporate securities
mas become a major development in
the financial district since the passage
OF the 1889 Securities Act requiring
registration of new issues at Washing
ton.
Estimates of the total financing done
that way in the meanwhile. avoiding
underwriting, range up to $500 O00,-
900.
How much the desire to save the
expense and trouble of registery with
the S. E. c. accounts for the direct
sale OF new issues to investors is a
topic Of debate in financial circles
Other factors cited in bond circles
as incentives to private sale include:
Urge by investing institutions, es-
peclally life insurance companies. to
nno outlets for idle funds making
competition for new loans.
Difficulty of making public Offer
lngs during the depression in the bond
market in the last half of 1887 and
flrst six months Of 1888
Study is Launched.
Both Federal and private invest
ment banking authorities have been
studlng the problems arising from
new corporate financing. Some bank
ers have urged simplification of S &c.
regulations to stimulate public offer
ings.
With the improvement of security
markets since March, public financing
has revived on moderate scale. At
the same time, private sales of new
securities have continued. Among
the latest announced have been S25,-
100000 of l2-year bonds by Consoli-
dated Oil and S100OO,0OO of TO-
year debentures by the Celanese Corp.
of America
Other large private sold issues this
year include: United States Rubber
Co., s45,ooo,oOO; Shell Union Oil.
S25,000.000; New England Telephone,
S20,000000; West Penn Power. ST.
100000; Consolidated Gas, Electric
Light & Power Co. of Baltimore. s2s.-
100000; Hackensack Water, $4,000
600; Detroit Edison, sl5,OOo,oO0, and
Jones & Laughlin, s13.5oO,OOO.
As with public offerings, most of
the capital obtained in these loans
has been intended for repayment of
old debts so that interest charges
would be reduced. But there have
been signs lately of an increasing
proportion for plant improvements
and expansion.