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Lethbridge Herald Newspaper Archives

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Lethbridge Herald, The (Newspaper) - December 27, 1974, Lethbridge, Alberta 18 THE LETKBRIDGE HERALD Friday, 27, 1974 Lower interest rates cut tonic for bond market By SANDRA INGALSBE The Canadian Press The recent trend to lower interest rates has acted as a tonic on the Canadian bond market and analysts say the outlook, at least for the short term, has im- proved. After months of fall- ing prices, the decline in interest rates increased the value of bonds and the resultant revived interest has provided a renewed source of government and cor- porate financing. Dealers say there is a great deal of uninvested cash around, particular- ly in the hands of in- stitutional investors. While short-term rates were rising, these funds were in high-yielding money market securities. Now, deal- ers say, institutions are ready to put the excess cash into high-yielding, long-term securities Another positive influence is the phenomenal success of the Canada Savings Bond campaign. With most of its cash require- ment in hand, the fed- eral government will not have to borrow heavily in 1975. While most analysts are predicting further declines in short-term interest rates, they say long-term rates will likely remain at historically high levels. Russell Harrison, president and chief operating officer of the Canadian Imperial Bank of Commerce, said in a speech early in December that no ma- jor easing of longterm rates is expected during the next several quarters. Relatively large cor-' porate requirements and substantial financ- ing needs of provincial and municipial gov- ernments will com- bine to ensure a heavy bond calendar. In- flation expectations will also keep rates high. "If one assumes that investors require a minimum three to four per cent real rate of return plus compensa- tion for inflation, one cannot anticipate significant declines in long-term rates unless and until inflation sub- sides." Mr. Harrison es- timated the inflation rate in 1975 at about 10 per cent, down from 12.5 per cent in 1974. Dominion Securities Corp. Harris and Partners Ltd. of Toronto also says major declines in long-term rates are unlikely for several months. In its quarterly Market Strategy, the firm says corporate li- quidity requirements in- dicate that the sharp in- crease in the new issue volume will continue for some time. "The ratio of short- term to long-term debt for Canadian non- financial corporations has risen dramatically to record levels in the first nart of this year, and corporations which earlier balked at long- term bond rates well below current levels now appear to be will- ing to pay the going rate as funds become available." Capital spending plans remain strong in Canada and provincial debt requirements will add to market demands, creating a heavy borrowing calendar for some time, Dominion Harris says. "On this basis then, we continue to feel that it, will be several months before any but the very highest of cor- porate credits will be able to borrow money at less than 10 per cent." E. Wayne Clenden- ning. economic advis- er to Richardson Securities of Canada, says the prospects for more stable long rates have become much better as the threat of large federal bond issues is removed. "In fact, it now seems unlikely that long rates will retuin to their previous peaks, but instead remain close to their current levels in the early months of 1975. Following that, a declining trend is likely to be established sooner than expected." He suggests that by the second quarter, long rates should be on a gradual declining trend, the extent of which will depend on the inflation outlook. "If this is more satisfactory, the long- term rate decline could carry through the last half of 1975 and possibly early in 1976." Grain buying warning for tax dodge issued BROADLOOM 'Classic Touch' 100% Polyester Shag Broadloom Special purchase of Manufacturer's Clearance lets you treat your floors to first quality carpet at a great buy. Enjoy the lasting luxury of deep, two-tone Polyester shag with secondary Jute backing. Non-allergenic; moth proof. In decorative co-ordinating colours of White Pearl, Misty Moss, Sun Gold, Sapphire Blue, Purple Passion. 12 feet wide. AW< )LCO SQ.YD HERE'S MORE BROADLOOM VALUES 'f'-v-' SASKATOON (CP) Prairie farmers were warned today against buying grain this month for resale early Rail line proposal outlined OTTAWA (CP) Here is a provincial breakdown of the railway line proposal outlined today by Otto Lang, minister responsible for the wheat board. The gold-faced numbers are the mileage protected until at least the year 2000. They are followed by the mileage protected until at the the end of 1975 and then the mileages that will not be protected against abandonment as of Jan. 1 next year as a tax reduction dodge. The United Grain Growers said it has found such trading in wheat would be regarded as speculation and would not be allowed by the federal tax authorities. The plan under which farmers would purchase wheat-board grains from a local elevator and declare them a 1974 business expense to reduce taxes in a high- income year, was put to two tax consulting firms, the UGG said. Neither found that farmers could successfully claim such expenditures as proper operating costs unless the grain was fed to livestock. But the UGG said it is understan- dable that farmers would want to reduce taxes, and suggested the federal govern- ment could still provide some acceptable allowance. .'v 'Bellwood' Acrilan Acrylic Pile Wall-to-Wall Broadloom Popular Plush Velvet-finish carpeting. Secondary Jute backing adds strength and durability. Non-allergenic; moth proof. In decorative colours of Parchment, Temple Gold, Windsor Blue, Honeycomb and Frosted Willow. 12 feet wide. 'Courtship' Polypropylene Will-to-Will Broidloom Stain resisting carpet fibres tufted in loop texture. Non-slip, high density Rubber back for added long wear and com- fort. In carefully selected two-tone shades of Natural, Gold, Green, Rust and Red. 12 feet wide. SQ.YD. 9.99 SQ.YD. 5.99 CNR CPR NAR Total Protected to 1976 CNR CPR NAR Total Unprotected in 1975 CNR CPR Total Man. Sask. 986.4 354.7 128.8 86.2 215.0 102.9 63.9 166.8 Tic Tac' Nylon Wall-to-Wall Broadloom Bonded, high density Foam Rubber back for lasting comfort and wear for any room in your home. Easy to install. In coloyrs of Red, Gold, Brown, Green and Orange. 12' wide. SQ.YD. 5.95 Estimates Professional Installation Installation Extra V rVi 'Belmonf 100% Nylon Wall-to-Wall Broadloom Highlight your floors with wall-to-wall carpeting accented by a tip sheared texture. Medium density Rubber backing. Completely moth proof; non-allergenic. Easy to install on your own. 12 feet wide. 550 SQ.YO. (CO DEPARTMENT STORES WE RESERVE TNI RIQHT TO LIMIT QUANTITIES College Shopping Mall 2025 Mayor Magrath Drlva Monday, Tuesday Wednesday a.m. to p.m. Thursday A Friday a.m. to p.m. Saturday a.m. to p.m. MY Will I ;