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

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Not for Publication 'DECONTROLLED AFTER SIX MONTHS
H.14

July 11, 1957
CAPITAL MARKET DEVELOPMENTS
(Including Quarterly Review of State and
Local Government Security Financing)

Few large security issues were offered publicly last week
which included the July It holiday. Large corporate debt offerings
consisted of two mortgage issues^ totaling $55 million, and rights
expired on a $19 million subscription offering of common stock. A
$5 million flotation by a regional power district was the only State
or local obligation sold. This week's calendar for large issues
•'
will be heavier with $115 million in corporate and $50 million in
State and local issues scheduled. Also scheduled is a foreign
issue for $25 million.
Bond yields - Yields on high-grade outstanding corporate
bonds reached a new high weekly average of U.00 per cent last week.
On a daily basis, however, the Friday figure was down slightly from
a peak earlier in the week, and daily figures since then show further
slight declines. Lower grade corporate bonds, which also established
a new high, have not as yet registered a similar decline. Yields
on both Aaa- and Baa-rated State and local issues turned down slightly
while long-term Government bond yields declined for the second week.
An Aa-rated electric utility thirty-year first mortgage
issue was reoffered on Tuesday of this week.to yield U.58 per cent,
down 20 basis points from a similar issue on June 11. The following
day, however, an A-rated issue with five-year protection against refunding was reoffered at it.88, 8 basis points higher than a July 3
issue with comparable provisions. The two electric utility issues
marketed last week sold quickly and are currently being quoted at
premiums.
'
Stock prices - The SEC index of 265 common Stocks closed
at 291.8 on July 5> the highest level of stock prices reached this
year. Trading volume increased, averaging 2.3^ million shades per
day. Daily indexes indicate little change on balance during the
first three days of this week.
State and Local Government Security
Offerings in the Second Quarter of 1957
State and local governments sold $1.7 billion of bonds
during the second quarter, a somewhat larger volume than a year
earlier, but below the record volume of the second quarter of 19Sh$




when four exceptionally large toll-highway issues accounted for two' fifths of the $2.3 billion total.
New issue volume declined from the high level of April in
both May and June, particularly the latter month which is usually a
month of a large volume of sales. In June this was due to a considerable extent to postponements or failures to sell issues offered,
because of rapidly rising interest rates and.unstable market conditions. In the early months of 1957> when.interest rates declined
temporarily, there was a record first quarter new issue volume as
issuers took advantage of the somewhat lower rates. As a result, the
volume of bond sales was about the same in both quarters whereas
usually second quarter volume is substantially larger than in the
first quarter.
Purpose - Bonds sold during the second quarter to provide
funds for school construction accounted for one-third of the total,
and amounted to $568 million. This was probably an increase over
last year, but precise comparison is impossible, because data for
1956 and earlier years exclude small school bond issues and thus
understate school issue volume. - Sales of highway and of veterans'
aid bonds were substantially larger during the second quarter than a
year earlier; in the case of veterans'aid bonds the increase reflected
the sale of a large issue by the State of California.
Type - Sales of general obligations were somewhat larger in
volume this year than last, while revenue bond volume was somewhat
smaller.
Issuers - All types-of issuers except special authorities
-appear to have sold more bonds during the second quarter of 1957 than
in 1956. Issues of special authorities were only one-half as large
.. as in 1956. Except for issues of State governments, however, comparison is difficult because of the unclassified small issues in the
earlier data.
•
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.l4

- 3
Long-Term Security Issues of State and Local Governments
Second Quarter
(In millions of dollars)
1957

Issuing authority:
State
County and township
Municipality
School district
Special authority
Unidentified 1/
Total
Purpose of issues
New capital total
Schools 2/
Highways, bridges, tunnels
Residential buildings •
Hospitals and institutions
Sewer and water
Misc. public service enterprises
Recreation
Port and airport
Veterans1 aid
Industrial buildings
Other
Unidentified 1/
Refunding

107
106
602
353
235
1,697

k

Total

12

1,697

1955

1954

668
. 164
2 54
118
134
53
466
152
363
287 , 241
247
312
496
745
165
125
129
1,617 1,429 2,372
1,418

m

568
312
42
26
247
96
15'
47
136
1
193
'

Type of issue:
General obligation
Revenue
Federal Government loans 3/

1956

3 94
159
lilt
15
213
2 45
6
76
68
3
116
165
lh

1,617

365
226
140
28
192
37
14
59
. 20
3
210
125
11
1,429

" 1953

136
66
299
263
524
154
1,442

1,412
M S
416
502
1,068
323
123
133
43
44
162
178
30
.57
8
13
22
9
10
25
2.
'1
186
ill;
127
153
39
2,372

30
lshh2

1,071
912
1,244 1,048
165
457 1,126
^ 533
393
—
38
13
1
3
Total
1,697, 1,617 1,129 2,372 l bh2
1/ Issues of less than $500,000 not further classified.
2/ Data for years prior to 1957 probably understate school issues by about
one-fourth because of unclassified small issues. This is partially offset by the
fact that 1957 data are for elementary and secondary schools only while data for
prior years include in addition a small amount of bond sales for higher education
facilities, libraries, art galleries, and museums.
3/ Coverage for 1957 is broader than for earlier years„
Note.—Details may not add to totals because of rounding.
Source.—1953-1956, Bond Buyer and Federal Reservej 19575 Investment Bankers
Association of America. Data for 1957 not strictly comparable with data for
Baarlier years.




1,19k

9

HIGH-GRADE BOND YIELDS

i,

19S3

1954

1955

1956

long-term ~£J
Date

Corporate
Aaa 1/

SERIES

New series

1957

Spread between
State and
U. S. Govt,
local govt. (old series) and
Aaa | /
Coiporatel State and
Aaa
jlocal Aaa

(Per cent)
1953 - High
195b - High
1955 •• High

3.U2
2.99
3.09
2.85
3.17
2.91

(6/19)
(1/9)
(1/8)
U/23)
(12/23)
(1/7)

3.15 (6/6)

2.78 (12/26)
2.7k (1/9)
2.W, (8/7)
2.9U (8/5)

1956 - High

2.62 (1/7)
3.79 (12/28) 3.1,9 (12/21)
3.07 (3/2)
2.80 (2/17)

1957 - High
Low.

U.OO (7/5)
3.66 ( V 1 2 )
3.82

3.88
June 28

3.9k
3.97
U.oo

n.a.
2.73
n.a.
1.98
n.a.
2.21
n.a.
1.90
3.03 (8/5) 2.31
2.89 (6/10) 2.05
3.39 (12/28)3.05
2.92 (2/3) 2.17
3.62 (6/21) 3.23

(6/25)
(1/8)
(6/10)
(9/2)
(9/8)
(5/26)
(12/27)
(2/23)
(6/27)

3.22 (2/8) 2.76 (2/21)

iS
3.68

3.61

1/ Weekly average of daily figures.

3.47

3.U9
3.62

3.60

3.56

3.1U
3.17
3.23
3.23

3.20

.38
.19

.8U

.13

&

:K

1

:S
2

.2k

1
.29
.39

.29

.32

I

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 H I 10-12 years thereafterJ the average
term to first call of the bonds included declined from 1L 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/ii per cent bond of 1978-83.
. ] / Thursday figures. Only general obligation bonds are included) average
term is 20 years.
M o t e . — H i g h s and lows are for individual series and may be on different dates
for different series.




EXHIBIT B
LOWER-GRADE BOND YIELDS

V

Corporate
Baa 1/

State and
local govt,
rev. y

State and
local govt;
Baa y
(Per cent)

1957 - H i g h
Low

» 3.79 (6/25)
3.69 (9/18)
2.96 (1/8)
3.50 (1/2)
3.32 <1/7)
3.7k (1/8)
2.93 (8/5)
•3.Wt (12/31)
3.26 (12/29)
3.63 (12/30)
3.02 (1/6) .
3.15 (1/llt)
lulil (12/28) . it. 22 (12/27)
3.20 (3/8)
.3.58 (3/9)
lt.35 (6/27)
lt.71 (7/5)
It. 1*2 ( V 1 2 )
3.90 (2/21)

June
June
June
June
July

it. 59
1.62.
I4.66
lt.68
it. 71

1953 - High
19Sh - High
1955 - H i g h
1956 - High

7
lit
21
28
5

It. 27
It. 31
U. 33
It. 35
• it. 33

3.27
2.71
3.00
2.72
2.99
2.76
3.98
2.89
3.98
3.70

(6/%)
(1/2)
(1/1)
(8A3),
(12/30)
(1/7) ^
(12/28)
(2/2lt)
O A )
(2/22)

V

1/ Weekly average of daily f i g u r e s . A v e r a g e term of bonds
included is 25-26 years.
y 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.
h/~Series discontinued, as of March 15.
N o t e . — H i g h s and lows are for individual series and may
be on different dates for different series.




STOCK MARKET

Date

Stock price

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

Stock market custc>rner credit
Customers'
debit bal- loans to
ances hJ "others" $J

Total

(Millions of dollars)
1953 - High
19Sh - High
Low
1955 - High
1956 - High
Low
1957 - High
Low
May
June
June 28
July 5

167.1
Utlt.O
221.lt
156.5
270.7
217.it
295.5
257.U
291.8
260.3

(1/2)
(9/18)
(12/31)
(1/6)
(12/30)
(1/llt)
(8/3)
(1/20)
(7/5)
(2/8)

381*. 2
286.2
283.0
28li.lt
291.8

2.5
0.9
3.7
l.lt
h.6
1.5
3.1
1.5
2.7
1.6
2.L
2.2
2.2
1.9
2.3

..

'

5.88
5.15
5.49
1.09
• U.23
3.59 .
It. 13
3.65
It.28
3.73

2,ltlt5
2,055
3,136
2,lt05
14,030
3,537
lt,0h7
3,91It
3,938
3,832

1,665
1,31k
2,388
1,653
2,805
2,517
2,823
2,7ltO
2,79k
1,713

780
66U
l,0lt8
7h6
l,2lil
1,018
1,267
1,155
1,163
1,117

3.82
3.79
3.83
3.79.
3.73

3,92lt

2,79k

n.a.

n.a.

1,130
1,11*7
1,145
1,147
n.a.

n.a.--Not available.
1/ SEC index of 265 common stocks, weekly closing prices, 1939-100; converted
to 19li7-U9"100 by Federal Reserve. The conversion factor is 123.91.
2/ Averages of daily trading volume on the tiew *ork Stock Exchange.
. 3/ Moody's 125 industrial stocks; weekly data based.on Friday.
V/ 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.
Sj 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.




Exhibit D

H.lli

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

1957
January
February
March
April
May .
July
August
September

1

Corporate
1956 |

New Capital

State and local
1 1956 I 1955

19 55

1957
685
566
1*99

I4OI4
696
390

535
312
538
U27
350
61*2
1470
2149
I4O6

1,063
1,071
1,3^4

573
712
817

' 535
li07
1,223

e/950
e/750
e/1,350

818
1,1L6
8UX

U78
886
687

762
V550
e/380

378
1*90
735

1,063
651*.
838

597
6a
670

e/375

376
199
333

7 hS.'
1,0892/
1,088

1,1622/
632
900
2,165
1,750
2,052
e/1,692
1,911 '
2,695

e/900

October
November
December
1st quarter
2nd quarter
3rd quarter
hth quarter -

3,U79
e/3,05b

2,102
2,805
2,556
2,922

1st half
Three quarters
Year

e/6,529

14,907
7,163
10,38*4

1,216
6,127
8,821

311
U26

919
658
408

1,1490
1,603
908
1,382

1,385
I/I4I8
1,121*
1,981*

3,093
1,001
5,383

2,803
3,927
5,911

616

e/3,!A2

.

Excluding finance companies 2/
1st quarterEnd quarter
3rd quarter
uth quarter

3,268
e/2,800

Year

1,617 .

1,727
1,870

2,826
9,259

7,595

e/ Estimated.
1/ Includes $637.2 million AT&T convertible debenture issues.
2/ Includes $571.5 million AT&T common stock issues.
3/ Total ne«Pcapital issues excluding offerings of sales and consumer finance
companies.
Note.—Details may not add to totals due to rounding.




-

-

Exhibit E

H.m

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

Month
1956 - June
July
August
September
October
November
December
1957 - January „
February
March
April ^
May " .

185
592
217 .
558 .
386
701
U30
567
671
786
lt77
329
877

State and
local government
2t63
. 16U
. 35
18U
383
135
201
386
306
• 19lt
h99
21+8
176

Other 2/
20
37
35
100
50
125
25
39

Large Individual Issues Offered July 1 through 5
Type y

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

CORPORATE
Southern Calif. Edison Co. 1st & ref. mtg. bds,itO.O 1982
Rochester Gas & Elec. Co. 1st mtg. bds.
15.0 1987
Timken Roller Bearing Co.
Common stk.
19.h

ii.70
It. 80

Aa
A

STATE AND LOCAL GOVERNMENT
Salt River Agric. Lnpr. &
Power Dist., Arizona

None




G.O.

5.0 1960-87

It.29

3.20-U.25 A

H.lli

E-2

n.a.--Not available.
1/ Includes corporate and other security offerings of $15 million and over;
State arid 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.ll*

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

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

Subsequent to
During month following
—
date shown
date shown
State and
State
and
Other 2/ Corporate local govt. Other 2/
Corporate
local govt.
U37
21*7
369
315
683
136
U76
591
7lt0
U6l
187
525
370

81
131
359
162
1*8
280
153
153
290
179
97
172

__

37

23
100
35
25
25

.

25

567
1,096
1,202
1,009
990
1*81
796
966
795
1*86
258
525
1*15

690
726
958
1,197
955
979
763
61*8
631
862
396
388
1*98 '

37

23
100
35
25
25
25

Forthcoming Large Offerings, as of July 5
Type

Central Illinois Light Company
Wisconsin Telephone Company
Washington Water Power Company
West Penn Power Company
Associates Investment Company
Texas Electric Service Company
Jersey Central Power & Light Company
Inland Steel Company
First National City Bank of New York
•^Pacific Gas and Electric Company
-sSears Roebuck Acceptance Corp.
Public Service Electric & Gas Co.
-^Tennessee Gas Transmission




1st mtg. bds.
Deb.
1st mtg. bds.
1st mtg. bds.
Deb.
1st mtg. bds.
1st mtg. bds.
1st mtg. bds.
Capital stk.

Amount
(millions Approximate date
of dollars) of offering

15.0
30.0
30.0
20.0
20.0
16.0
15.0
50.0
120.0

1st & ref. mtg. bds., 60.0
Deb.
50.0
Pfd. stk.
25.0
Deb. .
25.0

July 10
July 10
July- 11
July 11
July 12
July- 16
July 17
July 18
July 22
(rights expire)
July 2li
July
1957
1957

H.lU
Forthcoming Large Offerings, as of July 5 (Cont'd)
Issuer

Type

Amount
(millions Approximate date
of dollars) of offering

STATE AND LOCAL GOVERNMENT
Fresno Unified Sch. Dist., Calif.
G.O.Met. Water Dist. of So. California
Rev.
Port of New York Authority
Airport rev.
Cook Co. Sch. Dist. No. 205, HI.
G.O.
Philadelphia School Dist., Penna.
G.O.
State of Minnesota
Highway rev.
Atlanta, Georgia
G.O.
St. Louis County, Missouri
G.O.
State of Louisiana
G.O.
-HWestport, Connecticut
G.O.
^Georgia Rural Roads Authority
Rev.
Milwaukee, Wisconsin
Water rev.
State of California
G.O.
*State of Oregon
G.O.
Los Angeles City Sch. Dists., Calif,
G.O.
State of Ohio
Highway rev.
k State of Texas
G.O.
" Jacksonville, Florida
Utilities rev.
University System Bldg. Auth., Ga.
Rev.
Pennsylvania Turnpike Commission
Rev.
Inter-American Center Auth., Fla.
Rev.
New York State Thruway Authority
G.O.
Oklahoma Turnpike Authority
. Rev.

7.0
15.0
28.8
5.5
12.0
12.0
15.5
6.8
10.0
5.14
17.5
10.0
5o.o
15.0
a.o
31.0
12.5
30.0
12.0
62.0
20.0
50.0
65.0

July 9
July 9
July 10
July 15
July 16
July 16
July 16
July 17
July 17
July 18
July 23
July 23
July 2k
July 29
Aug. 13
Sept. 10
1957
1957
1957
1957
1957
1957
1957 '

25.0

July 10

OTHER
Montreal, Quebec

Deb.

*—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: None.




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

Date
1952 - 1956
High
Low
1956 - July
August
September
October
November
December
1957 - January.8
16
18
22
2U
February 5
19
27
March 6
12
20 29
April 3
10
12
May 10 15
16
21
23
29
June 5
7
11
- July 3

Aa-rated offering yields A-rated offering yields
Amount above
Amount above
Actual
Actual
yields
seasoned yields
(per cent) seasoned
(basis points) (per cent) (basis points)
L30(12/12/56)
2.93(3/31/5k)

62
-3

3.66
*14.07
li.13
*lu20
*14.30
*1.30

29
52
53
. U8
52

li.50

62

iwii3

56

\k.kO
h.29
k.25

I46

U.22

a. 29

h.SO

hi

53

1.58(12/6/56)
3.00(3/17/5k)

70
-15
28

*3.82
*1.00
None

k3

63

None
*1.58

70

U.67

70

It. 56

57

k5

h3

50

li.38 2/

65
51

1.63

75

li.78

87

li.ljl
li.58
1.55

k.k5

I1.60
li.50
14.53
U.53 2/

-

35
52
Ii9
U3
59

k?

k.70

52
52
69

5.00
5.25

98
123

5.10

106

1W802/

6U

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
ffrom 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.




I