Business: Bonds & Borrowers

Because U. S. banks are awash with funds to lend, many a U. S. oil company has lately found it advantageous to flaunt one of the oldest rules of corporate finance. The rule: retire bank loans as soon as possible by floating bond issues. The purpose: to substitute long term debt for short term debt. Instead, major oil companies have been borrowing from banks to retire long term bonds.

Few weeks ago Standard Oil of New Jersey called $90,000,000 in debentures by paying off $8,000,000 with surplus cash, selling...

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