Full text of H.16 Capital Market Developments : December 11, 1957

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Not for Publication DECONTROLLED AFTER SIX MONTHS
H.lli

December 11, 1957
CAPITAL MARKET DEVELOPMENTS
(Including Quarterly Review of
Corporate Security Financing)

Large public security offerings for new capital during the
week ending December 6 totaled $L5 million for corporations and $$0
million for State and local governments. The calendar for this week
includes large corporate offerings amounting to $50 million and State
and. local government issues totaling $li3 million. Press reports had
previously indicated the negotiated sale of a $250 million bond issue
by the Chelan County Public Utilities District No. 1 would take place
this week. Current information indicates it will be sold later in the
month.
.
*
Bond yields - Yields declined last week for all categories
of outstanding bonds except for those of U. S. Government (new series)
obligations, which increased slightly. The drop was substantial for
the State and local government bonds and U. 5. Government (old series)
bond yields. Daily figures for Monday and Tuesday of this week indicate
a sharp decline in yields on Aaa-rated corporate bonds.
Offering yields on new corporate issues also have declined
further. An A-rated, 30-year first"mortgage electric utility bond
issue was sold to the public this week at a yield of U.hO per cent -110 basis points below an offering made in early November.
Stock prices - Stock prices, as measured by the Standard and
Poor's index of 500 common stocks, declined last week, closing at hi.31
on December 6. Prices declined further in the early part of this week
closing at li0.5l on Wednesday.
Corporate Security Offerings
in the Third Quarter 1957
Net proceeds for new capital - Corporations .sold $2.9 billion
of security issues to obtain new capital during the third quarter of 1957 >
as shown in Table 1. Although this was the largest volume of offerings
in any third quarter, exceeding the corresponding period of 1956 by oneeighth, offerings in the July-September period were smaller than earlier
this year (#3.5 billion in the first quarter and $3.2 billion in the
second quarter). The total volume for the first nine months of 1957
was about 28 per cent, or $2.1 billion, more than a year ago.




- 2

H.Ik

'

-

Table 1
Corporate Security Offerings for New Capital
by Type of Business of Issuer
Third Quarter
(Net proceeds in millions of dollars)
1956

1955

195U

1953

-2,878

2,556

1,911

1,991

1,561

807

736

U95

735

292

62

77
26
70
327

10
13
15
65
25
8

1957
All corporate offerings
Manufacturing
Motor vehicles and equipment
Nonelectrical machineiy
Petroleum and refining
. Primary iron and steal
Primary nonferrous metals
Electrical machinery
Stone, clay and glass
Chemicals
Paper
- Textiles and apparel
Fabricated metal products
Other transportation equipment
Other 1/

Hi?
1
102
92
• 79
58

Electric, gas & water utilities

913

Communication

2 hh

399

Railroad

62

87

Other transportation

89

19

Commercial and other

• 88

Mining
Financial and real estate
Sales and consumer finance cos.
Other

h9

"32
19
16
16
10
ItO

126
106
6
\ 72
30
51
l
128 „
. 52 ;
17
25

2k.
h

32
71
21
.
2
63

17
3
32

31

U6

k2

118

11
23
2
131

U9

7
28
102

2
n.a.
39
35

632

395

166

5U5

155

353

136

59

37

U2

65

109

51

h

.

h

65

65

6ii

59

69

Ut9

10U

102

30

605

139

573

123

318
287

309
130

L6?
106

80
Ii3

1/ Includes small volume of foreign issues not further classified in the
manufacturing group.
Note.—Details may not add to totals due to rounding.
Source.--Securities and Exchange Commission and Federal Reserve.




m
338
66

Electric, gas and water utilities were the most important
group of issuers in the third quarter, offering securities with proceeds of $913 million — over UO per cent greater than last year.
Issues by this group of public utilities accounted for nearly onethird of all offerings this third quarter.
New capital offerings by manufacturing companies totaled
$807 million — 10 per cent larger than in the third quarter last
year. Nearly all groups of manufacturing industries sold a markedly .
greater volume of securities than a year earlier. Largest percentage
increases occurred in the petroleum, nonferrous metals, and stone, clay,
and glass subgroups. Much of the increase in financing by these groups
reflects sale of large issues (over $1$ million). Chemical: and paper
companies were the only types* of^manufacturers that sold a smaller volume
of securities than in the third quarter of 1956• New offerings by the
chemical group had been unusually large last year.
Financial and real estate companies, with total proceeds of
$605 million, ranked third in importance this year. Most of the increase in issues by the banking subgroup reflects the $118 million stock
issue by the First National City Bank of New York. New issue volume
of sales and consumer finance companies was about the same as last year.
The decline in third quarter security financing by the communications 'industry.; reflects largely the difference in timing of
financing by AT&T. In 1956, their large financing came in July and
November; this year it occurred in October. There were increases in
offerings by other transportation and commercial and other corporations3
however, offerings by railroads and mining companies were smaller.
Total gross proceeds - Gross proceeds from corporate offerings, which includes refunding issues and cost of flotation, were $3.0
billion during the third quarter of 1957 compared with $2.7 billion a
year earlier. The volume of refunding issues continued to be small.
Publicly offered issues totaled $2.0 billion in the third
quarter of this year.3>Representing 68 per c*nt of total security offerings, these public issues were a slightly smaller proportion than a
year ago.
Debt financing was in larger volume this year than last,
while both common and preferred stock financing declined. One-tenth
of the new securities offered were convertible issues — predominately
convertible bonds.




h.Ht

- 1* -

Table 2
Total Corporate Security Offerings by Type of Issue
Third Quarter
(Gross proceeds in millions of dollars)
Type of issue

1957•'

1956

Total corporate offerings

2,987

2,690

Type of offering
Public
Private

2,91*1
9U6

1,881
.809

Type of security
Bonds and notes
Public
Private

2,513
T3G5
927

2,13k

preferred stock
Common stock

,782

. 1955

.

1951*

1953

2,358

2,685

1,621*

1,1*27
931

1,767
918

ig

1,801*
92H
875

862

NK
681

72

99

150

. 180

82

1*02

1*57

1*05

182

196

Note.—Details may not add to totals- due to rounding.
Source.—Securities and Exchange Commission.
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.




HIGH-GRADE

BOND

YIELDS

Corporate
Aaa 1/

1953 - High
Low
1951 - High
Low
1955 - High
Low
1956 - High
Low
1957 - High
Low

3.1*2
2.99
3.09
2.85
3.17
2.91
3.79
3.07
h.lli
3.66

November
November
November
November
December

1*.12
it. 12
1*.06
1*.02
3.97

8
15
22
29
6

(6/19)
(1/9)
(1/8)
(1./23)
(12/23)
(1/7)
(12/28)
(3/2)
(9/27)
(lt/12)

tt. S.
Old series

Spread between
State and
New series local govt. (old aeries) and
.Aaa 3/
Corporate!State and
|local Aaa
(Per cent)

long-term

n«&e
3.15 (6/6)
n.a.
2.78 (12/26)
2.71 (1/9)
2.1*1* (8/7)
2.91* (8/5) 3.03 ( 8/5)
2.62 (1/7) 2.89 (6/10)
3.1*9 (12/21)3.39 (12/28)
2.80 (2/17) 2.92 (2/3)
3.87 (10/18)3.66 (10/18)
3.15 (2/8) 3.22 (2/8)
3.77
3.70
3.50
3.W*
3.32

3.60
3.51,
3.1*1*
3.1*0
3.1*1

2.73
1.98
2.21
1.90
2.31*
2.05
3.05
2.17
3.1*5
2.76

(6/25)
(1/8)
(6/10)
(9/2)

.38
.19
.1,3
.32
.31*
(9/8)
(5/26)
.13
(12/27) .W*
(2/23)
.13
(8/29]I .65
(2/21)1 .20

3.30
3.28
3.23
3.16
3.03

.35
.1*2
.56
.58
.65

.81*
.30
.61
.29
.70
.51*
.68
.32
.58
.11*
.1*7
.1*2 '
.27
.28
.29

1/ Weekly average of dally figures. Average term of bonds Included ia 25-26
years.
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 1995, and those due or callable in 10-12 years thereafter, including,
beginning October 1957* the It per cent bond of 1969. The new series is comprised
of the 3 per cent bond of 1955 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

Corporate
Baa 1/

State and
local govt,
rev. y

State and
local govt.
Baa 2/
(Per cent)

1953 - High-.

1957 - High
Low

3.89
3.50
3.714
3.a
3.63
3.15
U.lil
3.58
5.10
lt.it2

November
November
November
November
December

5.09
5.10
5.09
5.10
5.09

195k - High
1955 - High
1956 - High

8
15
22
29
6

(9/18)
3.79 (6/25)
(1/2) •
2.96 (1/8) .
(1/8)
• 3.32 (1/7)
(12/31)
2.93 (8/5)
(12/30)
3.26 (12/29)
(1/llt)
3.02 (1/6)
(12/28)
It. 22 (12/27)
(3/9)
3.20 (3/8)
(11/29) - U.51 (8/29)
(lt/12)
3.90 (2/21)
it. 37
1.39
it. 37
it. 25
it.lit

3.27
2.71
3.00
2.72
2.99
2.76
3.98
2.89
3.98
3.70

(6/26)
(1/2)
(1/1)
(8/13)
(12/30)
(1/7)
(12/28)
(2/21)
.
(1/lt)
(2/22)

V

1/ Weekly average of daily figures. Average term of bonds
included is 25-26 years.
2/ Thursday figures. Only general obligation bonds are included; average term is 20 years.
3/ Friday figures. Average rating of bonds included is
between Baa and Aj average term is 20 years.
h/ Series discontinued, as of March 15.
Note.—Highs and lows are for individual series and may
be on different dates for different series..




STOCK M A R K E T

X1

Stock price
index 1/

1

I | I

STOCK MARKET CREDIT

Stock market custijmer credit
Common
Customers1
volume 2/
debit bal- loans to
(millions yields y
ances h/ "others" 5/
of shares) (per cent)
(Millions of dollars)

1953 - High
Low
195k - High
Low
1955 - High
Low
1956 - High
Low
1957 - High

26.5U (1/2)
22.95 (9/18)
35.98 (12/31)
21*. 93 (1/8)
15.89 (12/9)
35.28 (1/11,)
1,9.61 (8/3)
1*3-22 (1/20)
to.08 (7/12)
'1*0.19 (11/8)

October
November
November 22
November 29
December 6

10.1*3
1*0.35
1*0.87
1*1.72
1*1.31

2.5
0.9
3.7
1.1*
1*.6
1.5
3.1
1.5
It.2
1.1*

6.25
5.38
5.82
1**32
1*.1*2
3.61*
U.35
3.82
1*.70
3.91

2,1*55
2,055
3.1*36
2,1*05
It,030
3,537
It,01*7
3,911*
It,031
3,61*3

1,665
l,3Ht
2,388
1,653
2,805
2,517
2,823
2,7ltO
2,887
2,568

780
661*
1,01,8
7lt6
1,21*1
1,018
1,267
1,155
1,163
1,060

' 2.6
2.5
2.5
3.1

It. 60
It. 62
It.59
it.50
It.53

3,61t3

2,568

1,075
1,060
1,060
1,060
n.a.

, available.
1/ Standard end Poor's composite Index of 500 common stocks, weekly closing
prices, 19l*l-l*3"10. Monthly data are averages of daily figures rather than of
Fridays' only. Highs and lows are for Friday's data only.
2/ Averages of daily trading volume on the New York Stock Exchange.
2/ Standard and Poor's composite stock yield based on Wednesday data converted to weekly closing prices by Federal Reserve.
Jt/ 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 70 per cent of loans to others. '
For further detail see Bulletin.
Note.--Highs and lows are for individual series and may be on different dates
for different series.




Exhibit D

H.lli

Corporate and State and local Government
Security Offerings and Placements
(In millions of dollarsJ
Nt-w capital
State ant] loc;:l '?/

• JanuaryFebruary
M
arch

1,071

April
May

1st ouarter
2nd quarter
3rd quarter
Jbthrauarter
1st half
Three quarters
Year

1,011

liuL
6l;6
390

53>
312
538

765
5U6
395

376
190
735

1.27
350
61,2

529
58U
ii30

1.08
206
357

1,70
21.9
1,06

695
621
e/600

639
31.7
ho?

919
658
1,08

1,820
1,706
1,513
e/1,916

1,1,90
l,6u3
971
1,395

1,365
1,1,18
i,12h
1,981,

3,526
5,069
e/6,985

3,093
L ,o6U
5,159

2,802
3,927
5,911

•

1,116

e/1,000

1VFS"

• 7h2
572
506

1,223

July
August
September
October
November
December

1937

1,1621,089-

e/2,91u

2,922

e/12,U55

10,38k

1,911

1

Excluding finance companies h/
1st q u a r t e r
2nd o u a r t e r
3rd q u a r t e r
lith. Q u a r t e r

Year

e/11,516

e/ Estimated.
1/ Data through June 1956 are Bond Buyer data classified as new capital by
Federal Reserve? later data are from the Investment Bankers Association of America
and are somewhat more complete as to coverage than the earlier data, particularly
for Federal Government loans.
2/ Includes £637-2 million AT&T convertible debenture issue .
3/ Includes $571.5 million AT&T common stock issue .
17/ Total new capital issues excluding offerings of sales and consumer finance
companies.
Note.—Details may not add to totals due to rounding.




H.ll*
Large Public Security Issues for New Capital
(Other than U. S* Treasury) 1/
Proceeds of Large Issues Offered
(Millions of dollars)

Month '

Corporate

1956 - NovemberDecember
1957 - January
FebruaryMarch
April
May

State and
local government

701
1*30
567
671
788
1*77
329
877
525
526
537
571*
1*20

July
August
September.
October
November

135
201
386
306
19U
1*99
21*8
176
265
357
185
1*35
386

Other 2/

100
50
125
25
39
25

it
i

30
75
.

—

Large Individual Issues Offered December 1 through 10

Issuer

Type 3/

Coupon
Amount
Offering
rate or
(millions
Maturity
net interyield
of
est cost
dollars)

Rating

CORPORATE
Virginia Elec. & Pwr. Co.
Northern Natural Gas Co.

lst&ref.mtg.bds.20.0
S.F. deb.
25.0

1987
1977

h 1/2

1* 5/8

1*.1*7
ii. 63

Aa
A

STATE AND LOCAL GOVERNMENT
.Akron, Ohio
Los Angeles Sch.Dists.,
Calif.
Indianapolis, Ind.
State of Ohio

Water rev.

OTHER
None




G.O.
G.O.
G.O.

5.0

1959-78

15.0 1959-83
5.1 1960-89
25.0 1958-77/67

3.36

2.50-3.1*0

A

3.19
2.91
2.65

2.35-3.25
2.25-3.00

Aa
Aaa
, Aaa

2.00-2.70

Jirllt
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.O. denotes general
obligation; Rev., revenue bonds; G.R., general obligations additionally secured by
facilities revenues; L.I.., limited liability obligations secured by pledge of designated revenues.




H.lh

Exhibit F
Forthcoming Large Public Security Offerings for New Capital
(Other than U.S. Treasury) 1/
Expected Proceeds from Forthcoming Large Issues
During month following
date shown
Corporate State and
Other 2/
local govt.

Date of
computation

1956 - Nov. 30
Dec. 31
1957 - Jan. 31
Feb. 28
Mar. 29
Apr. 30
May 31
June 28
July 31
Aug. 30
Sept. 30
Oct. 31
Nov. 29

136
It 76
591
7h0
ti6l
187
525
370
526
578
576
L58
383

b8
280
153
153
290
179
97
172
252
2h3
370
369
387

Subsequent to
date shown
Corporate State and
Other 2/
local govt.
181
796
966
795
186
258
525
L15
811
81i5
617
815
1,193

23
100
35
25
25
25
30
30
18

23
100
35

979
763
61,8
631
862
396
388
li98
51h
U39
587
573
589

25
25
25
30
15
L5
63

Forthcoming Large Offerings, as of December 6

Issuer

-

Amount
Approximate date
(millions
of dollars) of offering

Type

CORPORATE
Chesapeake $ Potomac Tel. Co. of Md.
Commonwealth Oil Refining Co.
Standard Oil Co. of New Jersey
American Telephone & Telegraph. Co.
Commercial Credit Co.
Natural Gas Pipeline Co. of America
STATE AND LOCAL GOVERNMENT
Greater Baton Rouge Port Comm., La.
Per£en Co., N . J.
Phoenix, Arizona
State of Texas
Minneapolis & St. Paul Met. Airport
Comm., M i n n .




Deb.
Conv.'sub. deb
Common stk.
Conv. deb.
Notes
1st mtg. bds.

3u.u
2u.u
rw.2
720.0
50.0
llU.w

Dec. 10 .
Dec. 1 1
Dec. 18
(rights expire;
March 3?
(rij hts expire)
winter
V.'inter

Rev.
G.O.
Water rev.
G.O.
G.O.

19. h'
7.2
3.6.0
12.5
13.0

.

Dec.
Dec.
Dec.
Dec.

11
3]
12
16

Dec. 17

H.lh

F-2
Forthcoming Large Offerings, as of December 6 (Cont'd)
Issuer

•type

Amount
Approximate date
(millions
of offering
of dollars)

STATE AND LOCAL GOVERNMENT (Cont'd)
* Atlanta, Georgia
Richmond, Virginia
Chicago Bd. of Education, 111.
Chelan Co. Pub. Ut. Dist.,No.l,Wash<
Caddo Parish Sch. Dist., La.
* Dade Co., Florida
* New York State
Penna. State Highway & Bridge Auth.
East Baton Rouge Par. S.D. No.l, La.
New York State Thruway Auth.
State of Missouri
Pennsylvania Turnpike Commission
Inter-American Center Auth., Fla.

15.0

G.O.
G.O.
G.O.
Rev.
G.O.
G.O.
G.O.
Rev.
G.O.
Rev.
G.O.
Rev.
Rev.

7.5
lii.5
37.5
' 20.0
10.0
30.0
62.0
20.0

Dec. 17
Dec. 18
Dec. 18
Dec.
Jan. 7
Jan. 8
Jan. It
Jan. 17
Feb. U
Winter
Winter
Winter
Winter

S.F. deb.
Ext. loan bds.

30.0
15.0

Winter
Winter

6.5

25.0
250.0

1*0.0

OTHER
Pacific Great Eastern Ry. Co.
Union of South Africa

#—Included in table for first time.
'
.
.1/ Includes corporate and other issues of $15 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.
Note.—Deletions for reasons other than sale of issue: Montreal Quebec's
$18.0 million sinking fund debenture issue—to be offered in Canada.

"




Exhibit G

H.llt

Yields oh New and Outstanding
Electric Power Bonds,-Rated Aa and A 1/
Aa-rated offering yields
A-rated offering yields
Amount above
Amount above
Actual
Actual
seasoned yields
seasoned yields
(per cent)
(per cent)
(basis points)
(basis points)

Date

1952 - 1956
High
Low

it. 30(12/12/56)
2.93(3/31/51)

1957 - January
February
March
April
May
June 5
7
11
July 3
10
11
16
17
August 111
1
September 5
6
25
October 1
15
17

it.a
It. 25
None
*lt.29
u.a
it. 63

.

ii.78

62
-3
57
itit
50
58
*75
87

it.57
it.77
it. 65

it8
68
56

5.00
it. 80
it. 85

75
51
56

it. 78

U5

2k

November 7
8
15
20
21
22
December 6

it.97
it. 86 2/

63
52

it. 82
it. 65
it. 65
it. 30

53
37
39
lit

it. 58(12/6/56)
3.00(3/17/51)
it .62
None
it .50
it .55
U .80
5-10

70
-15
6it
U5
5it
79
106

it.80 2/
it.88 y

6it

it .90

71

7h

5.10

51

5.00
lt.95
5.30
5.50

39
3it
67
88

5.05 2/

it3

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. Average maturity for the seasoned issues varies
from 26 to 28 years.
2/ Provides for a 5-year period during which issue may not be called for
refunding at a lower coupon rate. Other issues have no such provision.