11 MARCH 1938, Page 36

SOME HYPOTHETICAL YIELDS If the scheme is accepted—it has the

blessing of the invest- ment trusts and insurance companies—some very interesting speculative possibilities are opened up not merely for the debenture holders but for the preference shares. The fol- lowing are the yields indicated at today's prices on the assump- tion that the company receives the 7 per cent. dividend on its allotment of stock in the new Transport Board as envisaged under the co-ordination plan and is also able to remit its income at the current official rate of exchange of 16.12 pesos to the L:

City of Buenos Aires Tramways Current price.

Indicated dividend. Indicatea yield approx. %

£5 Ordinary ..

£2

5 121 Anglo-Argentine 4% First Deb.

LIoo stock ..

33 4 121 A.-A. Second Debenture Doo stock .. 25 4 16 A.-A. Third Deb. £roo stock . .

15

4 261

A.-A. First Pref. £5 stock ..

8s. 4

5o A.-A. Second Pref. £5 stock .. 5s.

4 8o

Indicated yields running up to 8o per cent. naturally whet the speculative appetite but I must remind any would-be buyers that there are very obvious risks. First, there is the inevitable period of waiting for a dividend, estimated by the board at two years. A great deal can happen in two years, especially in the Argentine whose fortunes are closely de- pendent on commodity prices. I still feel, however, that for the long-range speculator the debentures and the preferences are attractive at current prices. If the new Transport Board functions effectively, as it undoubtedly should, and world trade is running more smoothly by 1940, which is anybody's guess, the above indicated yields would become facts and the capital appreciation would be very substantial. The list is nicely graded. The City of Buenos Aires Trams ordinary, whose dividend is derived from a rent charge ranking ahead of the Anglo-Argentine debentures, comes first, and looks a good 121 per cent. risk. As the position is inherently specula- tive, my own inclination would be to plump for the Third Debentures or the Preferences and forget my purchases for two years.