CUBA: Scared Money

The reaction of U.S. investors to Cuban Prime Minister Fidel Castro's power-rate slash a fortnight ago was swift and direct. Two days before the rate cut was announced, an offering of $15 million worth of 6% convertible debentures by American & Foreign Power Co., majority owner of Cuban Electric Co., went on the market and was oversubscribed. Then came Castro's command to reduce rates 21%.

The First Boston Corp. and Lazard Frères & Co., heading a syndicate of in underwriters, figured that the rate slash would have cut revenues by about $16,700,000 in Cuba last year, leaving the subsidiary with...

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