Full text of H.16 Capital Market Developments : December 20, 1956
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—'[{ Not for Publication / v/v / DECONTROLLED AFTER SIX WORTHS December 20, 1956 H.llt CAPITAL MA.RKET DEVELOPMENTS The volume of publicly sold security issues was large last week, particularly for tax-exempt issues, but is expected to be much smaller this week, During the week ending December lit, large issues sold by State and local governments amounted to $181 million, including the $163 million Memphis, Tennessee electric revenue bond issue. Corporate issues totaling $76 million and a Canadian issue for $22 million were sold. This week, subscription rights expire for two corporate debenture issues with proceeds of $58 million. No large State and local government issues are expected. Bond yields - Changes in yields on outstanding bonds were mixed last week. Yields on corporate Baa, State and local government Aaa and Baa and U. S. Government obligations increased slightly and those for corporate Aaa's remained stable while State and local government revenue bend yields declined. Stock market credit - Customer credit in the stock market (excluding U. S. Government securities) increased $32 million during November, to total $3,91*6 million at the end of the month. The increase in net debit balances—$>36 million—more than offset the decline in October in these balances. Bank loans to "others" continued to decline in November, however. Borrowing by member firms of the NYSE maintaining margin, accounts, except on U. S. Government securities, declined $15 million, principally in borrowing on customer collateral. Customers' net free credit balances continued to decline, totaling $822 million at the end of the month. These and other data on stock market credit for. November and October are shown in the following table. End of month November October Change (Millions of dollars) Customer credit Excluding U. S. Govt, securities - Total Net debit balances Bank loans to "others" Net debit balances secured by U. Sf Govt, securities Bank loans to others for purchasing or carrying U. S. Govt, securities Broker and dealer credit - Money borrowed except on U. S. Govt, securities On customer collateral Money borrowed on U, S. Govt, securities Customers' net free credit balances Revised 3,91*6 2,781 1,162 33 3,91k . 2,718 1,166 ' 36 32 36 -It -3 1*3 1*2 1 2,071 1,778 h3 . 822 2,086 1,788 1*5 r/835 -15 -10 -2 -13 Stock prices - Stock prices, as measured by the SEC index of 265 common stocks, declined 1.8 points last week,closing at 277.It on December lU. Daily figures through Wednesday of this week-indicate little change in prices. 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. EXHIBIT A H I G H - G R A D E B O N D YIELDS Weekly CORPORATE GOVERNMENT: J \ j STATE AND LOCAL GOVERNMENT Aaa • " .1956 ,«4 ' ,,53 ' D. S. Govt., long-term 2/ Corporate tiaV Old series New series Spread between U. S. Govt, State and local govt. (old series) and CorporatelState and Aaa J/ Aaa J local Aaa (Per cent) 1953 - High Low 195U - High Low 1955 - High 1956 - High Low November November November December December 16 23 30 7 lU 3.U2 2.99 3.09 2.85 3.17 2.91 3.73 3-07 (6/19) (1/9) (1/8) (lt/23) (12/23) (1/7) (13/30) (3/2) 3.67 3.71 3.72 3.15 (6/6) 2.78 ' ' ( $f 2.7U ( .... 2.1*1* (8/7) . . .(8/5) ... 2.9U 2.62 (1/7) ' 3.38 (12/U*) 2.80 (2/L7) 3.26 I 2.73 (6/25) 1.98 (1/8) 2.21 (6/10) •IE 3.03(8/5) 2.89 (6/10) . ... . 3.3U (12/11*) 3.0l* (12/13) 2.92 (2/3) 2.17 (2/23) 3.29 3.29 3.33 13 2.85 2.98 3.01 3.02 3.0k .38 .19 .1*3 .32 .31* .13 .1*1* .13 • 81* .30 .61 .29 .70 •5U .68 .32 .la .la .37 .37 .31* .la .32 .35 .33 .3U 1/ Weekly average of dally figures! Average term of-bonds included la 25-26 ^ 2/ Weekly averages of daily figures. The old series includes fully taxable, marketable 2 1/2 per cant bends due or first callable after 12 years through September 1955, and those due or callable in 10-12 years thereafter; the average term for first call of tbe 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 1/4 per cent bond of 1978-83. 2/ 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 2/ Date State and local govt. Baa %/ State and local govt, rev. J/ (Per cent) 1953 - High Low 195U - High Low 1955 - High 1956 - High Low 3.89 3.50 3.7k 3.W 3.63 3.U5 14.35 3.58 November November November December December li.22 li.26 It. 30 L. 32 U.35 16 23 30 7 lit (9/18) (1/2) (1/8) (12/31) (12/30) (l/lii) (12/Ui) (3/9) 3.79 2.96 3.32 2.93 3.26 3.02 U.17 3.20 3.99 U.09 li.12 U.15 U.17 (6/25) (1/8) (1/7) (8/5) (12/29) (1/6) (12/13) (3/8) 3.27 2.71 3.00 2.72 2.99 2.76 3.91* 2.89 (6/26) (1/2) (1/1) (8/13) (12/30) (1/7) (12/7) (2/2U) 3.87 3.91 3.9k 3.9l 3.91 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. Jl/ Friday figures. Average rating of bands included is between Baa and A; average term is 20 years. Note.—Highs and lows are for individual series and may be on different dates for different series. Stock price Index 1/ Trading Stock market customer credit Common volume 2/ Customers' Bank (millions yields 2/ debit bal- loans to of shares) (per cent) ances k/ "others" £/ (Millions of dollars) 1953 - High Low 195k - High 1955 - High Low 1956 - High Low October November November 30 December 7 December lit 167.1 (1/2) lkk.O (9/18) 221.h (12/31) 156.5 (1/6) 270.7 (12/30) 217.U ( W ) 295.5 (8/3) 257.U (1/20) 2.5 0.9 3.7 l.it lt.6 1.5 3.1 1.5 275.7 273.1 269.3 279.2 277.lt 1.8 2.2 2.3 2.k 2.It 5.75 5.15 • 5.33 It. 20 * it. 22 3.78 It. 25 3.86 it.23 lt.25 2,ltlt5 2,055 3,lt36 2,Jt05 It,030 3,537 U,0it7 3,91k 1,665 1,31k 2,388 1,653 2,805 2,517 2,810 2,7ltO 780 66k l,0k8 7k6 l,2kl 1,018 1,267 1,158 3,91k 3,916 2,7k8 2,78k 1,166 1,162 1,162 1,158 n.a.—Not available. 1/ SEC index of 265 common stocks, weekly closing prices, 1939*100; converted to 19k7-k9*100 by Federal Reserve. The conversion factor is 123.91. 2/ Averages of daily trading volume an the New York Stock Exchange. 3/ Moody's 200 common stocks; end' of month figures. k/ End of month figures for member firms of the New York Stock Exchange which cariy margin acccnnts; excludes balances secured by U. S. Government obligations. jWednesday 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.—Highs and lows are for individual series and may be on different dates for different series. Exhibit D H.lU Corporate and State and Local Government Security Offerings and Placements (In millions of dollars) Corporate 1956 January February March I 1955 New capital 1 1956 UoU 696 390 535 312 538 396 Ull 565 377 U90 735 \l21 sia 73U 748 853^ 909 335 376 199 333 2h9 h06 1,003 290 60U e/6 35 e/325 579 70U 790 535 Uo? 1,223 5U7 April May June 816 i,iUi 830 b78 886 687 h97 July August September 1,066 669 836 670 778 2/ e/1,050 A/ e/1,100 1,162 ^ 632 . 900 October November December LLst quarter r2nd quarter 1st half 3rd quarter Three quarters llth quarter Year 2,073 2,790 a,863 2,571 7A3U e/2,928 e/to,362 h2S 635 656 81*2 597 6bh 2,165 .2,052 a, 217 1,911 6,128 2,695 8,821 State and local • . 19Sk I 1955 1 195k 7kl 1,608 1,995 3,603 . 1,991 5,59L . 1,896 7,1:90 V . e/kOO 1,190 1,603 3,093 908 It',001 e/1,360 e/5,361 350 U70 279 261 649 . 919 658 . i+08 591 1*23 877- 1,385 1,U18 2,803 1,372 2,331 3,706 1,188 • 4,894 1,121 3,927 1,9% 5,911 1,894 6,789 Excluding finance companies 3/ 1st quarter 2nd quarter 3rd quarter U'th quarter Year 1,617 2,520 2,263 e/2,803 e/9,203 1,727 1,870 l,k3k 2,55L 7,569 1,527 1,927 1,911 1,792 7,158 1/ Includes $637*2 million AT&T convertible debenture issue. 2/ Includes $571.5 million AT&T common stock issue. 3/ Total new capital issues excluding offerings of sales and consumer finance companies. Note.--Details may not add to totals due to rounding. H.Hi Exhibit E Large Public Security Issues for New Capital (Other than U. S. Treasury) 1/ Proceeds of Large Issues Offered (Millions of dollars) Month Corporate 1955 - November December 1956 - January February March April May June July August September October November State and local government 221 263 95 212 278 395 623 185 592 217 558 386 701 Other 2/ Wl 227 - 192 1M . 163 157 233 1x63 • l6h 35 18U 383 135 25 50 50 20 . 37 35 Large Individual Issues Offered December 1 through lU Issuer Type 3/ Amount Coupon (millions Maturity rate or Offering Rating of net inter- yield dollars) est cost CORPORATE Sinclair Oil Corp. Conv. sub. deb.167.2 Chase Manhattan Bank Cap. stk. U7.0 Michigan Bell Tel. Deb. 30.0 Long Island Lighting Co. 1st mtg. bds. 20.0 Public Service Elec. & Gas Co. Common stk. 31.2 General Telephone Corp. Common stk. 31.1 Texas Eastern Trans. mission Corp. Deb. 30.0 Florida Power & Light Co. 1st mtg. bds. 15.0 A ,1986 4 3/8 1991 1986. k 3/8 a 3A It. 25 L58 Aaa Aaa 1976 . 1986 5 1/2 L 3/8 5.50 L.30 Ba Aa Baa •U.38 STATE & LOCAL GOVERNMENT Prince Georges Co., Md. Maryland State Roads Commission Milwaukee, Wisconsin G.O. 5.0 1957-81 L28 3.00-L25 G.O. G.O. 15.0 B.h 1958-72 1957-76 3.60 2.75-3.50L/ Aa 2.20-2.85 Aaa 2.81 Large Individual Issues Offered December 1 through lk (Cont'd) Issuer Type Amount Coupon : (millions Maturity rate or Offering Rating of net inter- yield dollars) est cost STATE & LOCAL GOVERNMENT (Cont'd) Florida State Board of Education Memphis, Tennessee L.L. Elec. rev. 9.3 163.2 1958-77 1963-92 3.79 k.hl J/ 3.£0-U.20 n.a. A OTHER n.a.—Not available. 1/ Includes corporate and other security offerings of $l£ 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.L., limited liability obligations secured by pledge of ^designated revenues. k/ Part not reoffered. 5/ Not reoffered. H.lU Exhibit F Forthcoming Large Public Security Offerings for New Capital (Other tfian U. S. Treasury) 1/ Expected Proceeds from Forthcoming Large Issues Subsequent to During month following date shown date shown State and Corporate Other 2/ Corporate State and Other 2/ local govt. local govt. Date of computation 1955 - Nov. 30 .Dec. 30 1956 - Jan. 31 " Feb. 29 Mar. 30 Apr. 30 May 31June 29 July 31 Aug. 31 Sept. 28 Oct.. 31 Nov. 30 215 70 176 123 380,. 568 198 U37 2b7 369 315 683 U36 205 121 327 220 132 173 332 81 131 359 162 U8 50 —•* MM —— 37 23 230 85 376 233 1,013 818 i»U8 567 1,096 1,202 1,009 990 ii8l 756 618 917 785 811 832 9U1 50 726 958 1,197 955 979 37 690 23 Forthcoming Large Offerings, as of December lU Issuer Type Amount Approximate date (millions of offering of dollars) CORPORATE Burroughs Corp. Deb. 30.2 National Cash Register Co. Conv. sub. deb. 28.2 May Stores Realty Corp. ^Aluminum Co. of America -xldaho Power Co. *New England Tel. & Tel. Co. Pacific Power & Light Co. Louisiana Power & Light Co. ttArmco Steel Corp. Gen. mtg. bds. Deb. 1st mtg. bds. . Deb. 1st mtg. bds. 1st mtg. bds. Common.stk. 25.0 125.0 20.0 35.0 20.0 20.0 65.0 -^Standard Oil Co. of Ohio ^American Tel. & Tel. Co. Michigan "Wisconsin Pipe Line Co. Southern New. England Telephone Co. SF deb. Deb. 1st mtg. bds. Common stk. 25.0 250.0 25.0 20.1 December 17 . (rights expire) December 19 (rights expire) December January 8 January 8 January 9 January 10 January 16 January 2b (rights expire) January March Winter Winter . H.lii F-2 Forthcoming Large Offerings, as of December lii (Cont'd) Issuer Type Amount Approximate date (millions of offering of dollars) STATE AND LOCAL GOVERNMENT Fort Worth, Texas Los Angeles, Calif. Caddo Parish School District, La. Orange County Flood District, Cal. Mutate of California ^Dallas, Texas ^Dallas, Texas Denver, Colorado ^Spokane Co. School District No. 81, Washington ^Birmingham, Alabama State of, Michigan Pennsylvania Turnpike Commission Washington State Toll Bridge Auth. Inter-American Center Auth., Fla. New York State Thruway Authority Jacksonville Expressway Authority |Florida State Turnpike Authority "Oklahoma Turnpike Authority State of Connecticut 5.0 18.0 5.0 10.0 85.0 10.0 5.0 20.0 January U January 8 January 9 Januaiy 15 January 16 January 16 January 16 January 18 6.0 G.'O. G.O. 6.7 L.L. 52.0 Rev; 62.0 Rev. • 227.0 20.0 Rev. G.O. 50.0 Rev. U2.0 185.0 Rev. Rev. 65.0 Expressway rev. 5Lo January 18 January 23 Winter Winter Winter Winter Winter Winter Winter Winter Winter G.O. G.O. • G.O. G.O. G.O. G.O. Rev. G.O. OTHER None *—Included in table for first .ime. 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: Norfolk, Virginia, $5.0 million issue—reduced to less than $5 million by rejection of bid for part of issue. I If Exhibit G H.lU Yields on New and Outstanding Electric Power Bonds, Rated Aa and A 1/ Date 1952 average 195.3 average 195b average 1955 average. 1956 - January February March April May June July 3 18 ' 25 August 1 30 September 11 13 25 October 10 31 November 21 December 6 12 Aa-rated offering yields A-rated offering yields Amount above Amount above Actual seasoned yields Actual seasoned yields (per cent). (basis points) (per cent) (basis points) 11 26 -3 12 3.16 3.1*6 3.02 3.23 13 16 2 9 3.35 3.78 3.12 3.33 None *3.15 3.28 *3.77 #.53 *3.52 3 11 W 19 18 3.62 3.70 26 33 None 3.23 3.45 3.61 3.77 *3.75 3.82 -6 15 26 28 27 28 4.07 4.20 4.17 4.01 . 52 62 58 37 * 4.00 43 4.20 4.30 48 52 4.4o 63 4.30 47 4.58 70 —— - 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. Average maturity for the seasoned issues varies from 26 to 28 years.