Full text of H.16 Capital Market Developments : December 7, 1956

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=

Not for Publication DECONTROLLED AFTER SIX M01TTHS
L
11 6
December 7j 1956

H.1U

CAPITAL MARKET DEVELOPMENTS
Two State and local government offerings totaling $1?
million were the only large issues for new capital publicly offered
during the week ending November 30. The calendar for this week
indicates a substantial volume of offerings, particularly for corporate securities. Corporations are expected to market issues
totaling $295 million. This total includes expiration of subscription rights for the $167 million Sinclair Oil CompanyTs debenture
issue and the $U7 million Chase Manhattan Bank stock offering.
State and local government offerings amounting to $77 million were
scheduled for sale. The largest of these, issues, however—the
Michigan State Highway bond issue—has been indefinitely postponed.
The issue, carrying a 3 1/2 per cent coupon limit and a required
bid of par, received no bids on the scheduled date.
Bond yields - Yields on all types of outstanding bonds
• continued to increase last week, establishing new highs for the
year in every category.
Offering yields on new corporate issues also continue
to increase. A new Aaa-rated 30-year first mortgage electric utility issue for $10 million was reoffered this week at a yield of
U.20 per cent. This is the first such issue of this rating group
to be offered since mid-August, when an issue was reoffered to
yield 3*9k per cent. An A-rated utility issue was also offered
this week to yield U.58 per cent—18 basis points above that for
the last comparable issue, an offering made on October 10.
Estimated December volume - Corporate security offerings
during December are expected to total $1,100 million, the same as
the estimate for November, but one-fifth greater than the volume
in December last year. Included in the total are expected large
issues totaling between $UOO and $1*50 million. . Take-downs of private placements are expected to be seasonally large. Including
this estimate for December, fourth quarter offerings are estimated
to total $3,000 million, which would be the largest quarter on
record. The volume for the year as a whole would be almost $10.5
billion, about one-sixth larger than last year.
State and local government issues for December are currently estimated at $250 million, one-fourth below the estimate for
November and less than one-third the volume for December a year ago.
This total does not include the $15U million Memphis, .Tennessee
electric revenue bond issue, although reports indicate that it may
be marketed in mid-December. Offerings for the whole fourth quarter




f
f

"* 2 "*
are expected to total 01,210 million, two-fifths less than the
comparable quarter last year• The total far the year, however, is
likely to be only about 10 per cent below that of last year.
Stock prices - Stock prices, as measured by the SEC index
of 265 common stocks, declined slightly last week, closing at 269*3
on November 30. Daily figures through Thursday of this week indicate
a substantial increase in prices.
State and Local-Government Security
Offerings in the Third Quarter 1956
State and local governments offered 3928 million of longterm security issues in the third quarter of 1956, as shown in the
table on the following page, 18 per cent less than last year and
the smallest third quarter volume since 1951* No very large issues—
defined here as those with proceeds over $50 million—were offered for
sale this year; three such issues were included in.the quarterly total
for 1955* Nearly all bonds sold were for the -purpose of raising,
new capital, as refunding issues continued to be small.
Purpose of issue
As in the third quarter of each of the last two years,
more issues were sold for school building construction than for any
other purpose. The volume of such offerings amounted to &289 million,
slightly more than last year. Issues to obtain funds for sewer and .
water construction were the second largest in volume and totaled
SlU5 million, one-fifth smaller than in the third quarter 1955*
New financing for highways, bridges arid tunnels, aggregating
$115 million, was two-fifths less than last year with most of the
decline being in highway flotations. This category has been particularly affected by the numerous postponements of offerings which
occured during the quarter, reflecting market congestion and rising
interest rates. It is estimated that about #80 million of bonds for
roads and highways either were postponed from their originally
scheduled offering dates or failed to be sold when offered to the
underwriters. Included in this estimate are §50 million New York
Thruway general revenue bonds and §25 million New Jersey Highway
Authority revenue bonds. (The New Jersey issue was rescheduled and
sold in October.)
The volume of bonds sold to provide for residential building
by local governments also was low—§7 million as compared to over
&100 million in each of the corresponding periods of the four previous
years. There was no issue of Public Housing Authorities' bonds in the third quarter this year, as these Authorities delayed funding of
their short-term notes because of the high interest rates prevailing
on long-term securities.




E.Ik

-3 Long-Term Security Issues of State and Local Governments
Third Quarter
(In millions of dollars)

Issuing authority:
State
County and township
Municipality •
School district
.Special authority
Unidentified 1/
Total
Purpose of issue:
New capital total
Schools
Highways, bridges, tunnels
Residential buildings
Hospitals and institutions
Sewer and water
Misc. public service enterprises
Recreation
Port and airport
Veterans aid
Industrial buildings
Other
Unidentified 1/
Refunding
- Total

1953

1952

1956

1955

195U

106
57
2 3k
2U6
16U
120

77
125
296
210
230
199

157
96
286
177
35U
163

928

1,136

1,232

1,258

931

h m

hMk

gg

908

21U
72
. 2l|2
155
k3k
iki

21
115
186
107
327
17k

277
as
125
ik
139
2k
5
13
15
3
79
1U1

212
120
202
6
87
56
11
2
2
3
k3
17k

5

12

1,232. 1,258

931

272
271
lilO "
13
i5ii
. 61;
8
20
10
1
79
159

289
115
7
8
115
58
19
28
2

273
200
129
7
183
18
6
11
8

118
120

92
199

20

12

928

1,136

670
258

795
33k
.8

730
502

7k7
235
275

700
231

928

1,136

1,232

1,258

931

a

Type of issue:
General obligation
Revenue
General revenue 2/
- Total

1/ Issues of less than $500,000 not further classified.
2/ Total of issues with proceeds of $5 million or over.
Note.—Details may not add to totals because of rounding.
Source.—Bond Buyer and Federal Reserve.




- i+ Type of issuer
School districts sold the largest volume of bonds during
the third quarter of the year, accounting for over one-fourth of all
issues. Flotations by municipalities were almost as large. The
volume of §2i\6 million for school districts was • 17 per cent greater
than in 1955 but the total of $231+ million for municipalities reflected
a 21 per cent decline from last year. Special authority aifd county
and township issues were smaller than the 1955 volume, but the
volume of State government issues increased.
Type of issue

General obligations were the most important type of issue
during the third quarter of 1956. The volume of such issues was
^670 million or 72 per cent of the total. While the volume of both
general obligation and revenue bond issues declined, the relationship
of each type to the total volume did not change significantly from
that of last year. An increased volume in the issuing of revenue
bonds to finance miscellaneous public service enterprises partially
offset the decline in toll highway issues.
More detailed information concerning recent 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

/

—

^

y vwi oio $1*11$

\ U. S. GOVERNMENT:

long-term 2/
Corporate
Aaa 1/

Old series

New series

Spread between
State and
U. S. Govt,
local govt. (old series) and
Corporate1 State and
Aaa 3/
Aaa
1local Aaa

(Per cent)
1953 - High
195U - High
1955 - High
1956 - High
Low
November
November
November
November
November

2
9
16
23
30

3.L2
2.99
3.09
2.85
3.17
2.91
3.73

(6/19)
(1/9)
(1/8)
(h/23)
(12/23)
(1/7)
(11/30)

3.07 (3/2)
3.65

3.66
3.67
3.71

3.73

n.a. '
3.15 (6/6)
n.a.
2.78 (12/26)
2.71* (1/9)
2.16 (8/7)
2.9k (8/5) . 3.03 (8/5)
2.62 (1/7)
2.89 (6/10)
3.36 (11/30) 3.33 (11/30)
2.80 (2/17) 2.92 (2/3) .

1.98
2.21
1.90
2.31
2.05
3.01
2.17

2.73 (6/25) .
(1/8)
(6/10)
(9/2)
(9/8)
(5/26)
(11/29)
(2/23)

.38
.19
.1*3
.32
• 31*
.13
.1*1*
.13

.81*
.30
.61
.29
.70
.51*
.68
.32

3.26
3.27
3.26
3.30
3.36

2.714
2.79
2.85
2.98
3.01

.39

•

.52
.1*8

.U
.37

• 32
.35

3.29
3.29
3.29

3.29

3.33

.39
.la

.la

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 19551 and those due or callable in 10-12 years thereafter; the average
term to first call of the bends 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 l/L per cent bond of 1978-833/ 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.




LOWER - GRADE BOND YIELDS

\

~

f—"i

Corporate
Baa 1/

State and
local govt.

Baa V

State and
local govt.
rev. 3/

(Per cent)
1953 - High
Low
195U - High
Low
1955 - High
Low
1956 - High
Low

3.89
3.50
3.7h
3.hh
3.63
3.h 5
U. 30
3.58

November 2
November 9
November 16
November 23
November. 30

U. 20
U. 21
a.22
a. 26
a. 30

(9/18)
d/2)
d/8)
(12/31)
(12/30)
(1/1L)
(11/30)
(3/9)

3.79
2.96
3.32
2.93
3.26
3.02
a.i2
3.20
3.82
3.89
3.99
a.09
a. 12

(6/25)
(1/8)
(1/7)
(8/5) \
(12/29)
(1/6)
(11/29)
(3/8)

3.27
2.71
3.00
2.72
2.99
2.76
3.9a

(6/26)
(1/2)
(1/1)
(8/13)
(12/30)
(1/7)
(11/30)
2.89 (2/2L)

3-71
3.80
3.87
3.91
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.
J/ Friday figures. Average rating of bonds 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 MARKET

Stock price

Trading
Common
volume 2/
(millions yields 3/
of shares) (per cent)

Stock market customer credit
Bank
Customers *
debit bal- loans to
ances 4 / "others" 5/

Total

(Millions of dollars)
1953 - High
Low
1954 - Higfr
Low
1955 - High
Low
1956 - High
Low

167.1
144.0
221.4
156.5
270.7
217.4
295.5
257.4

October
November
November 16
November 23
November 30

275.7
273.1
272.9
269.9
269.3

(1/2)
(9/18)
(12/31)
(1/6)
(12/30)
(1/14)
(8/3)
(1/20)

2.5
U.9
3.7
1.4
4.6
1.5
3.1
1.5

5.75
5.15
' 5.33
4.20
. 4.22
3.78
4.24
3.86 "

2,445
2,055
3.U36
2,405
4,030
3,537
4,047
3,914

1,665
780
664
1,314
2,388 •
1,048
1,653
" 746
2,805
1,241
1,018 .
2,517
2,810
1,267
2,740
1.158

1.8
2.2
2.0
2.3
2.3

4.23

3,911+

2,748

1,166

n.a.

1,158
1,158
n.a.

n.a.

n.a.

l/ SBC index of 265 conmon stocks, weekly closing prices, 1939=100; converted
to 191+7-^9-100 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.
73/ 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.--Highs and lows are for individual series and may be on different dates
for different series.




H.lk

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

1956
January
February
March

|

Corporate
1955 1

New capital
195k

1956

State and local
1 1955 1 195k

579
. 70U
790

535
1*07
1,223

5U7
1*26
635

l*ol*
696
390

535
312
538

396
1*11
565

April
May
June

816
1,1 1*1*
830

- 178
886
687

1*97
656
81+2

377
1*90
735

1*27
350
61+1

73k
71*8
853

July
August
September

1,066
669
836

597
: 6a
670

909
335
7U7

376
199
333

1*70
.2 1*9
1*06

279
261
61*9

October
November
December

e/800 9/
5/1,100 *
e/1,100

1,162 ^
632
900

1,003
290
601*

e/635
^325
e/250

919
658
1*08

591*
1*23
877

2,073 '
2,790
U,863
2,571
7 fk3k
e/3,000
e/to, h5k

2,165
2,052
a,217
1,911
6,128
2,695
8,821

1,608
1,995
3,603
1,991
5,5 9k
1,896
7,1*90

1,1*90
1,603
3,093
908
k,001
e/1,210
e/5,211 ,

1,385
1,1*18
2,803
1,12k
3,927
1,981
5,911

1,372
2,331*
3,706
1,188
l*,89l*
1,891*
6,789

1st quarter
12nd quarter
' 1st half
3rd quarter
Three quarters
kth quarter
Year

Excluding finance companies 3/
1st quarter
2nd quarter
3rd quarter
l*th quarter
Year

1,617
2,520
2,263
g/2,875
e/9,275

1,727
1,870
l>h3k
2,551
7,569

1,527
1,927
1,911
1,792
7,158

1/ Includes 1637.2 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.

#



9
H.li+

Exhibit E

Large Public Security Issues for New Capital
(Other than U. S. Treasury) l/
Proceeds of Lare;e Issues Offered
(Millions of dollars)

Corporate

Month

State and
local government

221
#3
95
•212
278
395
623
185
592

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

Other 2/
25
50

4oi
227

192
WJ163
157
2%
1*63
164
35
181+
383
135

217

556
386
701

50
20
—

37
35
"

Large Individual Issues Offered during Novonbur
Type 3/

Issuer

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

CORPORATE
S.F. deb. 15.0
Allied Stores Corp.
American Tel. & Tel. Co. Common stk. 571.5
Northspan Uranium
Gen. mtg.bds.
Kines, Ltd.
,45.0
Public Service Electric
1st & ref.
and Gas Co.
mtg. bds. 50.0
Conv. pfd. 19.8
Pacific Lighting Corp.

A

1976

4 3A

4.75

1963

5 3A

5.93

1986

4 3/8

4.30

Aa

2.25-3.35
2.10-3.00
2.40-3.60
3.50-3.65

Aa
Aa
A.
A

STATE & LOCAL GOVERNMENT
Los Angeles, Calif.
Trenton, New Jersey
San Antonio, Texas
Chicago, 111.

Elec. rev.
G.O.
G.O.
Water rev.




13.5
5.3
5.0
5.0

1957-86
1957-81
1957-76
1970-74

3.36
2.99
3-57
3.73

E-2

H.H+

Large Individual Issues Offered during November (Cont'd)

Type 3/

Amount
(millions
of
dollars)

Coupon
rate or Offering
Maturity- net inter- yield Rating
est cost

STATE & LOCAL GOVERNI.1ENT
(Cont'd)
Newark, N. J.
Chicago Board of.
Education, 111.
Cleveland, Ohio
State of Oregon
Houston, Texas
Hempstead School District No. 5, N. Y.
Long Beach, Calif.
Chelan Co. Public Utility Dist., Wash.
Niagara Falls, N. Y.
Oklahoma City, Okla.

G.O.

12.5

1957-76

3.59

2.50-3.55

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

10.0
7.4
5.7
20.0

1959-76
1961-81
1969-71
1958-82

3.62
3.58
3.06
3-75

2.75-3.60
3.00-3.56
2.90-3.00
2.6O-3.75

A
A
Aa
A

G.O.
G.O.

5-6
5.0

1957-86
1958-81

U.30
3.35

3.95-4.15
2.50-3.45

Baa
Aa

Rev.
G.O.
G.O.

23.1
6.4
10.7

1992
1957-78

3 .*02

2.25-3.05
5/

4/

4«82

—

Aa
n.a.

OTHER

h|a;—Not available,
1/ Includes corporate and other security offerings of -^15 million and over;
State and local government security offerings of $5 million and over7
2/ Includes foreign government and International Bank for Reconstruction and
Development issues.
"
j5/ 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.
4/ 1957-62 maturities not reoffered.
5/ Not reoffered.




Exhibit F

H.l4

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

Date of
computation

215
70
176
123
380

1955 - Nov. 30
Dec. 30
1956 - Jan. 31
Feb. 29
Mar. 30
Apr. 30
May 31
June 29
July 31
Aug. 31
Sept. 28
Oct. 31
Nov. 30

568

198
437
247
369
315

683

436

205

121
327

50

220
132

173
332
81
131
359
162
48

37

23

230
85
376
233
1,013
' 818
. 448
567
1,096
1,202
1,009
990
481

756
618
917
785
811
832
941

50

726
958
1,197
955
979

37

690

23

Forthcoming Large Offerings, as of November 30
Amount
Approximate date
(millions
of offering
of dollars)

Sinclair Oil Corp.
Chase Manhattan Bank
Michigan Bell Telephone Co.
Long Island Lighting Co.
Public Service Electric & Gas
Florida Power & Light Co.
Texas Eastern Transmission Co.
May Stores Realty Corp.

Burroughs Corp.

National Cash Register Co.
Michigan Wisconsin Pipe Line Co.
Southern New England Telephone Co.




Conv. sub. deb.
Cap. stk.
Deb.
1st mtg. bds.
Common stk.
1st mtg. bds.
Deb.
Gen. mtg. bds.
Deb.

I67.2

47.0
30.0
20:0
31 o2
15.0

l+o.o

25.0
30.2

Conv. sub. deb.

28.3

1st mtg. bds.
Common stk.

25.0

20.4

December 3
(rights expire)
December 3
(rights expire)
December 5
December 6
December 6
December 11
December 12
December.13
December 17
(rights expire)
December 19
(rights expire)
Winter
Winter

H.lU

P-2

Forthcoming Large Offerings, as of November 30 (Cont'd)
Issuer

Type

Amouit
Approximate date
(millions
of dollars) of offering

STATE & LOCAL GOVERNMENT
Prince Georges.Co., Md.
University of.Washington
Maryland State Roads Commission
Milwaukee, Wisconsin
Florida State Board of Education
Norfolk, Virginia
•Denver, Colorado
State of Michigan
Memphis, Tennessee
Pennsylvania Turnpike Commission
Washington State Toll Bridge Auth.
Inter-American Center Auth., Fla.
New York Statd Thruway Authority
Jacksonville Expressway Authority
Florida State Turnpike Authority
Oklahoma Turnpike Authority
| State of Connecticut

G.O.
Rev.
G.O.
G.O.
L.L.
G.O.
G.O.
L.L.
Eleo. rev.
Rev.
Rev.
Rev.
G.O.
Rev.
Rev.
Rev.
Expressway rev.

1*2.0
185.0
65.O
5U.0

December 6
December 6
December 6
December 11
December 11
December 18
January 18
Winter
Winter
Winter
Winter
Winter
Winter
Winter
Winter
Winter
Winter

Deb.

22.5

December 11

5.0
5.0
15.0
8.1+
9.3
5.0
20.0
52 ;0
154*0
62.Q

227.0

20.0

50.0

OTHER
City of Montreal, Canada

*—Included in table for first time.
l/ 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: None