11 FEBRUARY 1938, Page 46


THE corollary of the present market tendency to widen the gap between the yield on industrial ordinary shares and on the best type of fixed interest security is that Corporation issues and high-class debenture issues should find a ready demand from the investing public. This tendency has been manifest in the overwhelming success of the £2,000,000 Bristol loan which attracted applications amounting to £58,000,000, and in the success of the £1,500,000 3f per cent. London Power Company issue.

Birmingham has now come to the market with an issue of £5,000,000 31 per cent. stock at £98. The market is not usually fond of 31 per cent. issues, but Trustees will welcome an issue at a discount, and present conditions seem to promise success. Actually the date is a little shorter than that of the Bristol loan. The Birmingham stock is repayable at par between 1957 and 1962, the Bristol stock between 1961 and 1966. Moreover the Birmingham stock is issued at a discount of 2 points, while the Bristol issue was at a premium of it points. These two factors approximately compensate for the reduction in the rate of interest from 31 per cent. to 31 per cent. The redemption yield to the latest repayment date was £3 7s. 9d. per cent. on the Bristol issue, and is £3 7s. 9d. per cent. on the Birmingham issue.