Full text of H.16 Capital Market Developments : August 2, 1956

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Not for Publication MCOKTROLLED AFTER SIX MONTHS
H.lU

August 2, 1956
CAPITAL MARKET DEVELOPMENTS

Large public security offerings issued for new capital
during the week ending July 29 totaled $119 million for corporations and $1*5 million for State and local governments. The calendar for this week, ending August 3, indicates a small volume of
both corporate and tax-exempt offerings. Two large new corporate
issues totaling $50 million were originally scheduled for sale and
a single local government offering for $9 million is expected. However, all bids on a $25 million public utility bond offering were
rejected on Wednesday, August 1; the highest bid would have resulted
in an interest cost to the company of about U.70 per cent, well
above the rate on similar recent,offerings.
Bond yields - Yields on all types of outstanding bonds
increased further last week. Corporate Aaa bond yields rose sharply
in the latter part of the week and continued to rise in the early
days of this week. On Tuesday, the Moody series reached 3*3h per
cent, 3 basis points above the early May high.
Offering yields on new issues also continue to increase.
On August 1, Jersey Central Power and Light Company's A-rated 30-year
first mortgage bond issue for $10 million was reoffered to yield
U.00 per cent, 18 basis points higher than a similar offering made
on July 3. Early reports indicate a favorable reception for the issue.
Estimated August volume - The volume of corporate security
issues for new capital during Augrust is estimated at $700 million.
This volume is only three-fifths as great as the July total, but
represents the largest volume for any August in the postwar period,
and exceeds last year's August volume by one-twelfth. Most of the
estimated volume is comprised of issues to be publicly offered;
take-downs of private placements are expected to be seasonally low.
State and local government bond offerings for the month
of August are expected to total &200 million. This would be a substantial drop from the previous month, and would also be somewhat
below last year's volume. No large issues are currently scheduled
for sale in August.
Stock prices - Common stock prices declined fractionally
last week and, as measured by the SEC index of 265 stocks, were
292.2 on July 27. Daily figures through Wednesday of this week
indicate increases in prices to new record levels.
More detailed information concerning recent capital market
developments is presented in the attached exhibits.
Business Finance and Capital Markets Section,
Division of Research and Statistics,
Board of Governors of the Federal Reserve System.




H I G H - G R A D E BOND YIELDS
Weekly

CORPORATE

' P r /

V

U. S. GOVERNMENT
\
lona-lerm
I

STATE AND LOCAL |
GOVERNMENT A a a

long-term 2/

U. S.
Date

Corporate
Aaa 1/

Old series

•New series

Spread between
State and
U. S. Govt,
local govt. (old series) and
Aaa } /
Corporate!State and
Aaa
1local Aaa

(Per cent)

- High
Low
1955 - High
Low .
1956 - High
Low

3.1*2
2.99
3.09
2.85
3.17
2.91
3.30
3.07

June
July
July
July
July

3.27
3.26
3.27
3.28
3.30

1953 - High
195k

29
6
13
20
27

(6/19)
(1/9)
(1/8)
(V23)
(12/23)
(1/7)
(7/27)
(3/2)

3.15
2.78
2.7k
2.1*1*
2.9k
2.62
3.08
2.80

(6/6)
ri.a.
(12/26)
(1/9)
(8/7)
n.a.
(8/5) 3.03 (8/5)
(1/7) 2.89 (6/10)
( V 2 0 3.13.(U/20)
(2/17) 2.92 12/3)

2.92
2.90
2.95
2.98
3.02

3.00
2.98
3.01
3.05
3.10

1/ Weekly average of daily figures.

2.73 (6/25)I
. 1.98 (1/8)
2.21 (6/10)i
1.90 (9/2)
2.3k (9/8)
2.05 (5/26)
2.51 (5/3)
2.17 (2/23)
2.31
2.38
2.38
2.1*0

2.1a

.38
.19
.
.1*3 •
.32
.31*
.13
.1*0
.13

.81*
.30
.61
.29
.70
.51*
.68
.1*5

.35
.36
.32
.30
.28

.58
.52
.57
.58
.61

Average term of bonds included is 25-26

2/ Weekly averages of daily figures. The old series includes fully taxable,
marketable 2 1/2 per cent bonds due or first callable after 12 years through
September 1955> and those due or callable in 10-12 years thereafter; the average
term to first call of the bonds included declined from lit years in early 1953 to
11 1/2 years in early 1956. The new series is comprised of the 3 per cent bond
of 1995 and the 3 1/1* per cent bond of 1978-83.
3/ Thursday figures. Only general obligation bonds are included; average
term is 20 years.
Note.—Highs and lows are for individual series and may be on different dates
for different series.




•

EXHIBIT' B

LOWER - GRADE BOND YIELDS

STATE AND LOCAL GOVT.
| /V
i . Moody's ;

STATE AND LOCAL GOVT. REVENUE

State and
local

State and
local govt
rev. 3/

(Per cent)
1953 - High
Low
195U - High
Low
1 9 # - High
Low
1956 - High
Low
June
July
July
July
July

29
6
13
20
27

3.89 (9/18)

3.50 (1/2)

3.71*
3.hh
3.63
3.U5
3.82
3.58
3.77
3.78
3.78
3.79

3.82

(1/8)
(12/31)
(12/30),
d/iU 1
(7/27)
(3/9)

3.79 (6/25)

3.27 (6/26)

2.96 (1/8)

2.71 (1/2)

3.26 (12/29)

2.72
2.99
2.76
3.12

is :*i
3.02 (1/6)
3 . a (5/3)
3.20 (3/8)

3.26
3.31
3.3U
3.35
3.37

3.00 (1/1)

(8/13)
(12/30)
(1/7)
(U/27)

2.89 (2/2U)

3.03
3.0L
3.05

3.08

3.11

1/ Weekly average of daily figures. Average term of bonds
included is 25-26 years.
.......
^
,
2/ Thursday figures. Only general obligation bonds are
included3 average term is 20 years.
. , , , .
3/ Friday figures. Average rating of bonds included is
between Baa and Aj average term is 20 years.
Note.—Highs and lows are for individual series and may
be on different dates for different series.




EXHIBIT C

STOCK MARKET

Date

Stock price
index 1/

Trading
Common
volume 2/
(millions yields j /
of shares) (per cent)

Stock market customer credit
Customers'
debit bal- loans to
ances h/ "others" 5/
(Millions of dollars)

1953 - High
Low
1951t - High
Low
1955 r High
1956 - High
Low
May
July 13
July 20
July 27

167J
ltit.O
221.14
156.5
270.7
217.U
292.8
257.lt

(1/2)
(9/18)
(12/31)
(1/6)
(12/30)
(1/lU)
(7/20)
(1/20)

280.1
275.5
289.2
292.8
292.2

2.5
0.9
3.7
l.lt
U.6
1.5
3.1
1.6

5.75
5.15
5.33
It. 20
U.22
3.78
lt.08
3.68

2,Ut5
2,055
3,U36
2,it05
it,030
3,537
U,0U7
3,991

1,665
• l,31lt
2,388
1,653
2,805
2,517
2,810
2,7UO

780
66U
l,0lt8
7lt6
l,2ltl
1,018
1,267
1,217

2.It
1.8
2.3
2.3
2.1

3.97
3.82

lt,0lt7
It i 009

2,810
2,786

na

n.a.

n.a.

1,237
1,223
1,225
1,219
n.a.

e

'*

n . a . — N o t available.
1/ SEC index of 265 common stocks, weekly closing prices, 1939-100; converted
to 19U7-ii9"100 by Federal Reserve. The conversion factor is 123.91.
2/ Averages of daily trading volume on the New York Stock Exchange.
3/ Moody's 200 common stocks; end of month figures.
h/ End of month figures for member firms of the New York Stock Exchange which
carry margin accounts; excludes balances secured by U. S. Government obligations.
5/ Wednesday figures for weekly reporting member banks. Excludes loans for
purchasing or carrying U. S. Government securities at banks in New York and Chicago.
Weekly reporting banks account for about 72 per cent of loans to others.
Note.—Kighs and lows are for individual series and may be on different dates
for different series.




Exhibit D
Corporate and State and Local Government
Security Offerings and Placements
(In millions of dollars)

1956
January
February
March
April
May
June
July
August
September

New capital
195k

1956

57 9
70k
790

535
1|07
- 1,223

5k7
U26
635

kOh
696
390

e/890
e/1,100
-"e/760

U78
886
687

k97
#6
8k2

377
U90
e/730

e/1,150
e/VOO

October
November
December
1st quarter
2nd quarter
3rd quarter
Uth quarter
Year

Corporate"
1 1955
1

2,073
e/2,7#

597
6kk
670

909

1,162
632
900

1,003
290
60k

2,165
2,052
1,911
2,695
8,821

1,608
1,995
1,991
1,696 .
7,190

e/350
e/200

l,k90
e/1,597

State and local
1 1955
1 195k
535
312
538

g
6kl

396

g

a

853

k70
2k9
ko6

279
261
6U9

658
k08

S9h
U23
877

1,385
l,kl8
1,12%
1,98k
5,911

1,372
2,33k
1,188
1,89k
6,789

Excluding finance companies 2/
1st quarter
2nd quarter
3rd quarter
Uth quarter
Year

1,617
e/2,550

1,727
1,870
l,k3k
2,55k
7,569

1,527
1,927
1,911
1,792

7,158
|
e/ Estimated.
~~
" ~
1/ Includes $637.2 million AT&T convertible debenture issue.
2/ Total new capital issues excluding offerings of sales and personal finance
companies.

Note.—Details may not add to totals due to rounding.




'

H.llt

Exhibit E
Large Public Security Issues for New Capital
(Other tlian U. S. Treasury) 1/
Proceeds of Large Issues Offered
(Millions of dollars)

I-Icnth

Corporate

1955 - June
July
August
September
October
November
December
1956 - January
• February
March
April
May
June

State and
local government

Other 2/
__

1*03
278
65

175
101
it05
328 —
805
221
263
95
212
278
395

- 23k

716
U01
227
192

25
50

khh

163
157
233
#3

623
185

50
20

Large Individual Issues Offered July 1 through 27
Issuer

Type 3j

Amount
Coupon
(millions Maturity rate or Offering Rating
of
net inter- yield
dollars)
est cost

CORPORATE
Florida Power Corp.
Pacific Gas & Electric
Tennessee Gas Trans.
American Tel. & Tel. Co.
Union Electric Co.
Superior Oil Co.
Inland Steel Co.
Sperry Rand Corp.
Illinois -Power Co.
Food Mach. & Chem. Corp.
Champion Paper &. Fiber

1st mtg. bds.
Common stk.
Deb.
Deb.
1st mtg. bds.
Deb.
1st mtg. bds.
Common stk.
1st mtg, bds,
S.F. deb.
S.F. deb.




20,0
36.6
30.0

250.0

1986

3 7/8

3.82

A

1977
1990

It
3
3
3

1/2

k.50

7/8
3A
3A

Baa
Aa
Aa
A
Aa
Aa
A
A

>0.0

1986

5o,o

1981
1981

3 1/2

3.73
3.62
3.75
3.U7

1986
1981
1981

3 3/U
3.80
3 3A

3.70
3.80
3.75

s/is.i
52.7.

20.0

30.0
16.5

H.lii

E-2

Large Individual Issues Offered July 1 through 27 (Cont'd)

Issuer

Type 2 /

Amount
Coupon x
rate or Offering
(millions
Rating
Maturity
net inter- yield
of
est cost
dollars)

STATE & LOCAL GOVERNMENT
Commonwealth of Mass.
G.O.
38o5
Puerto Rico Water Res.
Auth.
Elec. rev.
22.0
State of Michigan
G.O.
16.0
Tulsa, Oklahoma, Ind.
School District
G.O.
5.5
Dearborn, Michigan,
School District
G.O.
lii. 0
Md, State Roads Commission
G.O.
15.0
Jacksonville, Florida
Elec. rev.
lU.o
Oklahoma City, Oklahoma
G.O.
8.8
Silt Lake City, Utah
G.O.
7.5
Chicago, Illinois
Parking rev. 13.5

1957-2005

2.63

1.90-2c80

Aa

1958-93
1959-79

n.a,
2.81

2.60-3.75
2.00-2.75

•Baa
Aa

1958-71

2.62

2.10-2.60

A^

1956-73
1957-71
1958-76
1958-81
1957-7U
1958-82

2.93
2.77
2.67
2.78
2.28
1.28

2,00-3-00
1.90-2,75
2.05-2.70
2.10-2.80
1.70-2.25

A
Aa
Aa
A
Aa

V

—

OTHER
None
n.a.—Mot available.
1/ Includes corporate and other security .offerings of $15 million and over;
State and local government security offerings of $5 million and over.
2/ Includes foreign government and International Bank for Reconstruction and
Development issues.
,
3/ In the case of State and local government securities, G.0» denotes general
obligation; Rev., revenue bonds; G.R., general, obligations additionally secured
by facilities revenues; L.L., limited liability obligations secured by pledge of
designated revenues.
h/ Not reoffered.




Exhibit F

H.ll*

Forthcoming Large Public Security Offerings for New Capital
(Other than U. S. Treasury) 1/
Expected Proceeds from Forthcoming Large Issues
Date of
computation

Subsequent to
During month following
date shown
date shown
State and Other 2
State
and
Other 2/ Corporate
Corporate
local govt.
local Rovt.
1*07 •
222
805
202
215
70
176
123
360
568
198
137
21*7

1955 - July 29
Aug. 31
Sept. 30
Oct. 31
Nov. 30 Dec. 30
1956 - Jan. 31
Feb. 29
Mar. 30
Apr. 30
May 31
June 30
July 31

100
181*
81*3
330
205
121
327
220
132
173
#2
81
—

50

.
37

" 1,135
920
909
1*12
230
85
376
233
1,013
818
1*1*8
567
1,096

2,018
1,971
2,205
1,650
756
618
917
785
811
. 832
9l*l
690
726

50

37

Forthcoming Large Offerings, as of July 27
Type

Amount
Approximate date
(millions
of offering
I of dollars)

CORPORATE
1st mtg. bds,
Pfd. stock
1st mtg. bds.
Deb.
Common stock

20.0
15.0

tfMack Trucks, Inc.

S.F. deb.

19.0

-it-Pacific Telephone & Telegraph Co.
^Commercial Credit Co.
^Detroit Edison Co.

Deb.
Notes
Conv, deb.

78.0
50.0
59.8

Michigan Wisconsin Pipe Line Co.
*E1 Paso Natural Gas Co.
Consumers Power Co.
^General Acceptance Corp.
•a-Braniff Airways, Inc.

^Northern States Power Co.
-it-Southern Calif. Edison Co.
Consolidated Natural Gas Co.
American Tel. & Tel. Co. 3/
J.. P. Stevens & Co.
CIT Financial Corp.
Pacific Finance Corp.




25.0
25.0

1*0.0

1st mtg. bds.
1st mtg. bds.
Deb.
Common stock

15,0
1*0.0
30.0
575.0

S.F. deb.
Deb.
Deb.

28.7
75.0

25.0

V

August 1
August 1
August 111
August lit
August 16
(rights expire)
August 30
(rights expire)
August
August
September ,
(rights expire).
September
September
Summer
November 5
(rights expire)
1956

H.Ik

F-2
Forthcoming Large Offerings, as of July 2? (Cont'd)
Issuer

Type

Amount
Approximate date
(millions
of offering
of dollars)

STATE AND LOCAL GOVERNMENT
Milwaukee Co., Wisconsin
New Jersey Highway Authority
New York State Thruway Authority
Jacksonville Expressway Authority
•aMcmphis, Tennessee
Florida State Turnpike Authority
Oklahoma Turnpike Authority
Pennsylvania Turnpike Commission
Washington State Toll Bridge Auth.
Inter-American Center Auth., Pla.

G.O.
Rev.
Ge0.
Rev.
Elec. rev.
Rev.
Rev.
Rev.
Rev.
Rev.

8.8
25.0
50.0
U2.0
135.0
185.0
65.0
62.0
227.0
70.0

July 30
Summer
Summer
September
September
Fall
1956
1956
1956
1956

36.5

August 15

OTHER
^Municipality of Metropolitan Toronto

. Deb.

*—Included in table for first tirue.
1/ Includes corporate and other issues of $1$ million and over; State and
local"government issues of $5 million and over.
2/ Includes foreign government and International Bank for Reconstruction
and Development issues,
3/ Subject to stockholders' approval on September
1956.
5/ All bids rejected; alternative financing arranged for the present..




Exhibit G
Yields on Hew and Outstanding
Electric Power Bonds, Rated Aa and A 1/

Date

1952 average
1953 average
195b average
1955 average1956 - January
February
March 8
16
23
30
April it
h
11
25
May 9
16
2li
June 8.
20
July 3
-16

25

Aa-rated offering yields A-rated offering yields
Amount above
Actual I
above
Actual
(per cent) seasoned yields
(basis points)
3.16
3. k6
3.03
3.23

13
16
3
9

None
*3.15
3.19
3.37

18

3.77

ho

3.23
3.^2

19
18

3.62
3.70

26
33

3.3s
3.78
3.12
3.33

12
26
-3
12

None
3.23

-5

3.35

7

3.#
3.27
3.60
3.67

25
23
. 26
29

3.80
3.73
3.75
3.82

32
•2k

.

27
28

-x—Single observation, not an average.
1/ Covers only 30-year first mortgage bonds, as reported in Moody's Bond
Survey. Except where indicated, the actual yield figure and the amount above
seasoned yields are averages of offerings during the indicated period and of
the differences between these new offering yields and yields on seasoned issues
_of similar quality for the same day. The number of new issues included in the
monthly averages varies from 2 toll except for October 19 SL when 6 A-rated
issues were included. Average maturity for the seasoned issues varies from 26
to 28 years.