FINANCE AND INVESTMENT
By CUSTOS
ARGUMENTS about the prospect of long-term interest rates are al hedged around by qualifications. So much depends on the given to cheap money in rival political programmes and so much the compatibility of control of the capital market with reas free conditions for private business enterprise. There is also connexion, as the White Paper on Employment Policy has rec reminded us, between checking an incipient boom and allow interest rates to rise. Against this background it is a striking ui to the importance attached to cheap money by Government and the public's confidence that the Treasury can implement its that gilt-edged stocks are a gently rising market. Buying of edged has, in fact, been a noteworthy feature this week in othe quiet markets in which enthusiasm for leading industrial ord shares, after the steady rise in recent months, has been lacking. In its latest decision concerning tap loans the Treasury under its determination to screw down interest rates. The current of 3 per cent. Savings Bonds, 196o-7o, is to be replaced by a 3 per cent. series on 'which the final• redemption date is pushed back as far as 1975. Once again the Government changed the terms of borrowing in its own favour, this time lengthening of the life of the 3 per cent. Bonds by five years. it would be foolish to argue that the long-term interest rate is down to practically 3 per cent., which is not yet the case, it is cl that interest rates are not rising. On a long view this should be " bull point " for leading industrial ordinary shares. For present, however, I doubt whether buyers will be attracted on yiet.d basis of 3 to 4 per cent. when returns can be ob on a much more generous scale on second-grade equities even moderately well-covered preferences. Investors in of capital appreciation at this late stage of the market rem will have to go out into the by-ways to find shares with any more than limited scope.
ULTRAMAR OIL ISSUE
It is a little breath-taking, in these days of curbed enterprise, find the Ultramar Company, an oil undertaking which is still in development stage, offering 163,158 new tos. shares at a P of 62s. 6d. each. ' To pay a premium of 525 per cent. over par foe share which has not yet reached the dividend-paying stage is offer a very considerable hostage to fortune, but if I held Ul shares I would take up the rights to subscrilie. In doing so should be in good company. Morgan, Grenfell are guaranteeing issue for a commission of Is. a share, and with them are the Central Mining and Investment, New Consolidated Goldfi and the Union Corporation. While it is possible that the Trea in its zeal for ensuring that investors do not get too good a b has had some influence in fixing the issue price reasonably close the existing market level of 73s., I still feel that as a lock speculation Ultramar will turn out well. The new shares are offered to existing holders in the proportion of one new for fifteen held.
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