Foreign Bonds

In the years immediately following the War, credit in the U. S. was none too plentiful and U. S. investors were unfamiliar with foreign loans. As a result, the foreign bond issues brought out during this period bore, as a rule, very high coupon rates.

Recent episodes in the bond market have clearly shown that this abnormal situation is changing, probably for good. Credit is now very plentiful in this country, and underwriting houses are actively bidding for new Government flotations, so that their coupon rates and yields are falling rapidly. Moreover, in many instances the credit of the borrowing Governments abroad has improved to such an extent that they are now in a position to bargain on equal, if not superior, terms with U. S. moneylenders.

Last week, Norway wanted $33,000,000. But, instead of borrowing simply on the terms of the leading banking groups which had previously handled Norse obligations, Norway obtained her funds through a smaller house on the basis of a lower coupon rate and current yield.

Some U. S. investors dislike the lower return thus allowed on new foreign flotations. But the day when high yield and relatively safe securities were plentiful in Wall Street has long since departed. Under the present conditions df easy money, the investor, individual or institutional, must take what he can get.