A THREE PER CENT. BASIS ?
The great success which attended the recent issue of the Plymouth Corporation Loan for £1,000,000 has occasioned some discussion whether we are approaching the days when English Corporations will be borrowing on a 3 per cent. basis. The Plymouth Loan was in the form of 3 per cents. at 971, which gave to the investor a flat yield of only £3 ls. 6d. per Cent. Nevertheless, the rush for the Loan was so great that large applicants only received about 3 per cent. of the amount applied for. This flotation was followed by the issue of a Stoke-on-Trent Loan for 11,500,000 in 31 per cents. at par, and as might have been imagined after the success of the Plymouth Loan the Subscription Lists closed within a few minutes of the opening. Of course, in the case of these instant successes of flotations of Trustee stocks some allowance must be made for the operations of the " stag " or premium hunter. For although the premiums in these new issues at first may be small, say about 4 per cent., the applicant knows that in the present state of the market he can practically be sure of being able to realize his holding at a premium estab- lished. Moreover, in the case of the Plymouth Loan the stock rose to one premium on the first day of the dealings. But even after making all allowance for the activities of the mere premium hunter, the genuine demand for high-class investment stocks is sufficiently strong to warrant the expectation that unless there is some change in monetary conditions there may be few further issues of 34 per cent. stocks, the tendency being in the direction of 8 per cents.
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