Full text of H.16 Capital Market Developments : February 14, 1957
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Not for Publication DECONTROLLED AFTER SIX MOUTHS H.li* February lU, 1957 CAPITAL MARKET DEVELOPMENTS The volume of large publicly offered securities was moderate during the week ending February 8, Corporate offerings totaling §62 million, State and local government issues amounting to #76 million and a $50 million Canadian issue were floated last week. The calendar for this week includes issues totaling $76 million for corporations and &75 million for State and local governments. Bond yields - Bond yields declined last week for all categories of outstanding bonds, except those for corporate Baa-rated bonds which remained stable. The decline was slight for corporate Aaa's and State and local government revenue bonds, but it was substantial for State and local government Aaa's and Baa's and U. S. Government obligations. Stock prices -Stock prices, as measured by the SEC index of 265 common stocks, declined sharply last week, closing at 260.3 on February 8, bringing prices down to the level of January 1956. Daily figures through Wednesday of this week indicate a very sharp drop in prices on Monday, with partial recovery on Wednesday, 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 Per cent per CORPORATE STATE AND LOCAL GOVERNMENT A a a U. S. Govt., long-term 2/ • B.U Corporate Aaal/ Old series New series Spread between State and U. S. Govt, local govt. (old series) and Aaa y Corporate 1 State and Aaa 1local Aaa (Per cent) 3.U2 2.99 3.09 2.85 3.17 2.91 3.79 3.07 3.82 3.69 (6/19) 3.15 (1/9) 2.78 (1/8) 2.?a (V23) 2.hh (12/23) 2.9U 2.62 (1/7) (12/28) 3.U9 2.80 (3/2) (1/W 3.53 (2/8) 3.15 is •is 3.73 3.U5 3.30 3.22 £5 (6/6) n.a. (12/26) n.a. (1/9) n.a. (8/7) n.a. (8/5) 3.03 (8/5) (1/7) 2.89 (6/10) (12/21) 3.39 (12/28) (2/17) 2.92 (2/3) (1/W 3.U5 OA) (2/8) 3.22 (2/8) 2.73 1.98 2.21 1.90 2.3U 2.05 3.05 2.17 3.05 2.81 3.a 3.05 3.02 2.96 2.87 2.81 £2 3.29 3.22 (6/25) (V8) , (6/10) (9/2) (9/8) (5/26) (12/27) (2/23) (i/io) (2/7) .13 .51t .29 .8U .30 .61 .29 .70 •5U .68 .32 •U8 .26 .36 .U8 .51 .52 .51 .ltO .28 .26 .33 .3k .38 .19 •U3 .32 • 3U .13 2/ Weekly average of daily figures. Average term of bonds included io 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 l/lt per cent bond of 1978-83-. j/ 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. L O W E R - G R A D E BOND YIELDS Per cent per annum CORPORATE Baa STATE AND LOCAL GOVT. Baa I I STATE AND LOCAL GOVT. REVENUE Corporate Baa 1/ State and local govt. Baa 2/ State and local govt, rev, y (Per cent) 1953 - High Low 195U - High 1955 - High 1956 - High Low 1957 - High Low January 11 January 18 January 25 February 1 February 8 3.89 3.50 3.7k 3.W 3.63 3.U5 It.ltl 3.58 .k.50 lt.U6 It. 1*9 It. 50 lt.ltS (9/18) (1/2) (1/8) (12/31) (12/30) (1/llt) (12/28) h.ke I4.I18 (3/9) (1/18) (1/W 3.79 2.96 3.32 2.93 3.26 (12/29 3.02 (1/6) It. 22 (12/27 3.20 (3%) It.22 lt.00 3.27 2.71 3.00 2.72 2.99 2.76 3.98 2.89 3.98 3.80 (6/26) (1/2) (1/1) (8/13) (12/30) (1/7) (12/28) (2/2U) ( W (2/8) It. 22 lt.17 L13 lt.08 lt.00 3.814 3.81 3.80 ' 3.95 3.90 1/ Weekly average of dai^y figures. Average terra 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 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 Common Stock market customer credit volume 2/ Customers' (millions yields ^ Tot.l debit bal- loans to of shares) (per cent) ances 4 / "others" 5/ (Millions of dollars) 1953 - High 1954 - High Low 1955. - High Low 1956 - High 1957 - Hi^h Low December January January 25 February 1 February 3 167.1 144.0 221.h 156.5 270.7 217.4 295.5 257.4 (1/2) (9/18) (12/31) (1/6) (12/30) (1/14) (8/3) (1/20) 279.2 (1/4) 260.3 (2/8) 277.7 273.0 268.2 1 266.3 260.3 2.5 . 0.9' 3.7 1.4 4.6 1.5 3-1 1.5 2.7 1.8 2.4 2.2 2.1 1.8 2.1 5-75 5.15 5-33 4-20 4.22 3.78 4.25 3-86 2,445 2,055 1,665 3,537 4,047 3,914 1,314 2,388 1,653 2,805 2,517 2,823 2,740 4.13 4.31 n.a. 3,984 n.a. 2,923 n.a. n.a. n.a. n.a. 3,436 2,405 4,030 n.a. n.a. 780 664 1,048 746 1,241 1,018 1,267 1,155 1,163 1,141 . 1,161 1,141 1,141 1,141 n.a.—Not available. _l/ SEC index of 265 common stocks, weekly closing prices, 1939=100; converted to 19u7_49=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. 2 / 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 / Yfednesday 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 ?2 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.IU Corporate and State and Local Government Security Offerings and Placements (In millions of dollars) 1957 January February i-iarch 5/1,100 e/1,000 III July August September October November ^December 1st 2nd 3rd kth Corporate 1 1956 I 1st half Three quarters rear » 312 538 k78 886 687 377 k90 735 k27 350 • 6kl 597 6kk 670 376 199 333 . 816 l,lkk 830 1,066 66? 8# 1,09k 1,162 632 900 2,073 2,790 2,571 2,929 2,165 2,052 1,911 2,695 " e/660 jg/525 1955 kok 696 390 535 k07 1,223 1,863 •7,k3k 10,363 State and local 1957 1 1956 I 1955 579 70k 790 1,088 y quarter quarter quarter quarter New capital 3/ k,217 6,126 8,821 , k70 2k9 k06 6k5 311 s/kiS 919 658 k08 1,190 1,603 908 e/1,3'1 1,385 as 3,093 k,001 3/5,3o2 2,803 3,927 5,911 1,984 deluding finance companies 3/ 1st 2nd 3rd kth quarter quarter quarter quarter Year 1,617 2,520 2,263 e/2,80k e/9,'20k ' 1,727 1,870 l,k3k 2,55k 7,569 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.Ik 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 State and local government Other 2/ . 1956 - January February March April May June July August September October November • December <-957 - January 95 212 278 395 623 185 . • 592 217 558 386 701 WO 567 - __ 192 hhh 163 157 233 1*63 16U 35 • 18U 383 135 201 386 50 20 37 35 100 Large Individual Issues Offered February 1 through 8 Issuer Type 3/ Amount Coupon (millions rate or Offering Maturity net inter- yield Rating of dollars) est cost CORPORATE Carrier Corp. Conv. sub. deb. 18.0 Douglas Aircraft Co. Conv. sub. deb. 27.9 Stanrock Uranium Mines,Ltd. 1st mtg.bds. 16.0 1982 1977 1963 h 1/8 h 5 3/h 1.03 3.8 9 V Baa Baa — STATE AND LOCAL GOVERNMENT Milwaukee Co., Wisconsin San Diego Unified Sch, Dist., California New York, New York Fresno Unified Sch,Hist., California Public Housing Authorities G.O. 11.2 1958-67 2.18 2.00-2.15 Aaa G.O. G.O. 5.0 1959-78 25.2 1958-66 3.07 2.89 2.35-3.10 2.25-3.00 G.O. 5.5 1958-77 28.6 1958-97 2.79 2.82 2.10-2.85 Aa 1.95-2.85 Aaa A A % H.Ht E-2 Large Individual Issues Offered February 1 through 8(Cont'd) Issuer Type "2/ Amount Coupon (millions rate or Offering Rating Maturity of net inter- yield dollars) est cost OTHiijR Quebec Hydro-Electric Commission Deb. 50.0 1977 h 3/8 k.hl A 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.L., limited liability obligations secured by pledge of designated revenues. h/ Offered in units with common stock.. H.lk Forthcoming Large Public Security Offerings for New Capital (Other than U. S. Treasury) 1/ Expected Proceeds from Forthcoming Large Issues ' Subsequent to During month following date shown date shown Corporate State and Other 2/ Corporate State and Other 2 local govt. local govt. Date of computation 1956 - Jan. 31 Feb. 29 . Lar. 30 Apr. 30 May 31 June 29 July 31 Aug. 31 Sept. 28 Oct. 31 Nov. 30 Dec. 31 1957 - Jan. 31 176 123 380 568 198 U37 2h7 369 315 683 136 h76 591 327 220 132 173 332 61 131 359 162 U8 280 153 376 233 1,013 818 kk8 567 1,096 1,202 1,009 990 181 796 37 23 100 35 966 917 785 811 832 9lil 690 726 958 1,197 955 979 763 6U8 37 23 100 35 Forthcoming Large Offerings, as of February I Issuer Type Amount Approximate date (millions of dollars) of offerings . CORPORATE 18.0 Potomac Electric Power Co. Trans-Canada Pipe Lines, Ltd. Ohio Edison Co. Deb. Deb.& common stk. Common stk. Southern California Edison Co. Socony Mobil Oil Co. Ist&ref. mtg. bds. 37.5 Common stk. 199.3 Colorado Fuel & Iron Corp. Conv. S.F. deb, Phillips Petroleum Co. ^Illinois Bell Telephone Co. Cohv. deb. 1st mtg. bds. 31.3 27.0 19.9 171.8 iiO.O . February ll* February 15 February 15 (rights expire) February 19 February 19 (rights expire) February 23 (rights expire) February 25 (rights expire) February 27 H.lU F-2 Forthcoming Large Offerings, as of February 8 (Cont'd) Issuer Type Amount (millions Approximate date of dollars) of offering CORPORATE (Cont'd) United Gas Corp. Potomac Electric Power Co. Anaconda Co. •aColumbus & Southern Ohio Electric Co. ^Southern Counties Gas Co. American Natural Gas Co. Consolidated Edison Co. American Tel. & Tel. Co. -^-Central & South West Co. Michigan Wisconsin Pipe Line Co. 1st & coll. tr. Preferred stk. Common stk. 35.0 15.0 86.7 1st mtg. bds. 1st mtg. bds. Common stk. 16.0 15.0 28.0 Conv. deb. 55.1 Deb. Common stk. 1st Mtg". bds. 250.0 20.0 25.0 February 28 February 28 March 5 (rights expire) March 6 March 7 March ll| (rights expire) March 15 (rights expire) March 26 Winter STATE AND LOCAL GOVERNMENT State of Missouri G.O. Allegheny Co, Sanitary Auth., Pa, Swr. rev. State of New York G.O. San Francisco (City & Co.), Calif. G.O. St. Louis, Missouri G.O. •Montgomery Co., Md. G.O. •Elizabeth, New Jersey G.O. El Paso Co. Sch. Dist. No. 11, Colo. . G.O. Los Angeles, California Wtr. rev. •Puerto Rico Aqueduct & Sewer Authority Rev. Commonwealth of Massachusetts G.O. Jacksonville, Florida Elec. rev. •Dallas Ind. Sch. Dist., Texas G.O. •Georgia Farmers Market Authority Rev. Houston Ind. Sch. Dist., Texas G.O. Seattle, Washington G.O. •Broward Co. Spec, Tax Sch. Dist.,.Fla. G.O. Pennsylvania Turnpike Commission Rev. Inter-American Center Auth., Florida Rev. New York State Thruway Authority G.O. Jacksonville Expressway Authority Rev. Florida State Turnpike Authority Rev. Oklahoma.Turnpike Authority Rev. State of Connecticut Expressway rev. OTHER None 20.0 15.0 kO,h 23.6 12.1 6.0 5.0 6.9 9.0 12.0 80.2 8.0 7.5 10.0 16.8 6.5 6.0 • 62.0 20.0 50.0 142.0 185.0 65.0 5I4..O February 13 February lh February 1I4 February 18 February 19 February 19 February 19 February 20 February 20 February 20 February 26 February 26 February 2J February 27 March 1 March 1 March lit Winter Winter Winter Winter Winter, Winter Winter H.lU ' ; F-3 •—Included in table for first time. l/ Includes corporate and other Issues of $15 million and over; State and local government issues of 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. H.lli Exhibit G Yields on 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 average 1953 average 1954 average 1955•average 1956 average 1956 - January February March April May June July 3 13 16 2 9 35 *3.15 3.28 *3.77 *3.53 *3.52 3 11 4o 19 18 None 18 25 August 1 30 September 11 13 25 October 10 31 November 21 December 6 • 12 1957 - January 8 16 18 22 24 3.16 3.16 3.02 3.23 3.81 . February 5 3.62 ' 3.70 26 33 1.07 It. 20 4.17 4.01 52 62 58 37 4.20 4.30 48 52 4.30 ' 47 4.50 62 4.43 • 56 4.40 4.29 53 45 3.35 3.78 3.12 3.33 3.73 11 26 -3 12 27 3.23 3.45 3.61 3.77 *3.75 3.82 15 26 28 27 28 / 4.oo 43 None 4.4o 4.58 -6 . 63 70 4.6? 70 4.56 57 *—Single observation, not an average.. 1/ Covers only 30-year first mortgage bonds, as reported in Moody's Bond . Survey, tixcept 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. '