Full text of H.16 Capital Market Developments : March 15, 1957

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Not for Publication DECONTROLLED AFTER SIX MONTHS
March 15, 1957

H.Ik

CAPITAL MARKET DEVELOPMENTS
(Including Quarterly Review of Corporate Security Financing)
The volume of public security financing continues to be
substantial, particularly for corporate securities. During the week
ending March 8, corporations sold large issues totaling $173 million,
including expiration of subscription rights for two issues, and a
State government issue for &13 million was sold. The calendar for
this week includes issues totaling *170 million for corporations,
of which $79 million are subscription issues, and 938 million for
State and local governments.
Bond yields - Changes in yields on outstanding bonds were
mixed last week. Yields on State and local government Aaa and re- '
venue bonds and U. S. Government (old series) obligations increased,
while those for the Aaa corporate and Baa State and local government
bonds remained stable. The Baa corporate and (J, S. Government (new
series) bond yields registered a slight decline. During the past
two weeks Aaa State and local government bond yields have increased
half as much as they had declined earlier in the year.
Reoffering yields on new corporate securities have increased after showing a decline earlier. A new A-rated, 30-year,
electric utility issue was reoffered this week to yield U.58 per
cent — 17 basis points about that for a comparable offering made
last week and at about the level of a comparable offering late in
January.
Stock prices - Stock prices, as measured by the SEC index
of 265 common stocks increased 1.8 points last week, closing at
265.1 on March 8. Daily figures through Wednesday of this week indicate some further increase in prices.




Corporate Security Offerings In 1956

Net proceeds for new capital
Corporations sold $10. ^ billion of security issues to obtain new capital during 1956, as shown in Table 1, 17 per cent more
than the previous record volume achieved in 1955.
Manufacturing companies made the most significant contribution to 'this increase, offering securities with proceeds of
billion. Manufacturing new issue volume was Ip. per cent greater than in 1955, and accounted for one-third of all corporate offerings.
Nearly all industries sold a markedly greater volume of securities
than a year earlier, with the lumber and wood products and petroleum
and refining industrial groups showing the biggest percentage increases. Rubber, primary iron and steel, and motor vehicle manufacturing subgroups registered a significant decline from the previous year in the volume of securities sold... New offerings by these
groups were unusually large in 1955, reflecting principally the large
issues by Goodyear Tire and Rubber, Bethlehem Steel and General
Motors. ,
,
New capital offerings by electric, gas and water utilities
totaled $2.5 billion last year — 10 per cent greater than the volume
of 1955, but below the volume in -the three previous years.
Finance and real estate companies, with total net proceeds of 01.7 billion, ranked third in importance. However, this
total was slightly below 19551s peak volume. It should be noted
that the volume in 1955 included two y>200 million debenture issues
publicly offered by GMACj there was no .single issue of this magnitude sold by finance companies in 1956.
There were increases in the volume of offerings by railroads, communication and mining companies\ however, offerings by
commercial and other corporations showed a moderate decline and
those for other transportation companies remained about the same
in volume.
Total gross proceeds
Gross proceeds from corporate offerings, which include
refunding issues and costs of flotation, were a record #11.0 billion
during 1956, 7 per cent greater than a year earlier. Refunding
issues last year were only about &U00 million, as compared to over
Si,200 million in 1955 and over $1,800 million in 195b.




H.il*

- 3 Table 1
Corporate Security Offerings for New Capital
by Type of Business of Issuer
1952-1956
(Net proceeds in millions of dollars)

All corporate offerings
Manufacturing
Electrical machinery
Petroleum
Nonelectrical machinery
Paper
Motor vehicles and equipment
Chemicals
Primary iron and steel
Stone, clay and glass
Lumber and wood products
Primary nonferrous metals
Textiles and apparel
Foods
Other transportation equipment
Fabricated metal products
Rubber
Other 1/

1956

1955

195U

1953

1952

10,362

8,821

7,leo

8,495

6,716

4 #
335
113
11*6
322
kk6
108
n.a.
n.a. :
. 72
22
68
U3
n.a.
32
229

563
237
150
16
829
21*5
n.a.
n.a.
306
93
136
18
n.a.
159
366

1*13
362
306
265
231
198
180
157
136
130
113
9k
68
56
2 la

100
168
119
i;l6
163
313 .
60
2k
107
82 .
91
95
93
152
219

292
253
125
103
2U8
?6U
66
6
H*5
50
101
30
35
23
131

Electric, gas and vater utilities

2,479

2,251

2,675

2,905

2,539

Communication

1,389

1>0U5

651

871

7U7

Railroad

365

221

213

267

297

Other transportation

322

323

288

286

461

Commercial and other

300

382

363

282 )

Mining

to

386

1*68

220 )

1,719 ^ 1±812
1,129
1,227
216
327
263
369

788
332
228
228

Financial and real estate
Consumer finance, companies
Banks

Other

512

1,536

10*8

103
165

77
. 106

1^55

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




-

h

-

Table 2
Total Corporate Security Offerings by Type of Issue

1952^1956

1955

1954

1953

1952

10,963

10,2l»0

9,516

8,898

9,531

Type of offering
Public
Private

7,059
3,903

6,763
3,U77

11

5,580
3,318

5,533
It,002

Type of security
..Bonds and notes
Public
Private

8,020
k,22h
3,796

7,120
It,119
3,301

7,U88
it,003
3,1#

i s
3,228

111

(Gross proceeds in millions of dollars)

Type of issue

Total corporate offerings

Preferred stock
Common stock

1956

.

633

635

816

2,309

2,185

1,326

1*8 9
1,326

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

Public issues totaled &7.1 billion in 1956. Representing
nearly two-thirds of total security offerings, these public issues
were a slightly smaller proportion of total security financing than
in 1955, but a slightly greater proportion than in other recent years.
Debt financing was somewhat larger in volume last year than
in 1955, primarily because of the increase in privately placed obligations. Common stock financing also increased, but preferred stock
financing remained about the same. ,The proportional distribution by
type of security did not change significantly from that of a year .
earlier.
Nearly one-tenth of the new securities offered were convertible issues—predominatly bonds. Convertible financing totaled
$1,1 billion and compares to the volume of $1.U billion in 1955#
including the %637 million AT&T debenture issue, and to slightly
less than $250 million in 195U.
More detailed information concerning recent capital market
developments is presented in the attached exhibits.
Business Finance ancTCapital Markets Section,
Division of Research and Statistics,
Board of Governors of the Federal Reserve System.




. 561t
1,369

H I G H - G R A D E BOND YIELDS
Weekly

CORPORATE

U. S. GOVERNMENT

STATE AND LOCAL
GOVERNMENT A o o

,«4

1955

'

U. S. Govt., long-term 2/
Corporate
Aaa 1/

Old series

New series

Spread between
State and
U. S. Govt,
local govt. (old series) and
CorporatelState and
Aaa 2/
Aaa
Jlocal Aaa

(Per cent)
1953 - High
Low
195k - High
Low
1955 - High
Low
1956 - High
Low
1957 - High
Low

3.k2
2.99
3.09
2.85
3.17
2.91
3.79
3.07
3.82
3.66

February 8
February 15
February 22

3.69
3.67
3.66
3.66
3.66

March 8

(6/19)
(1/9)
(1/8)
(1/23)
(12/23)
(1/7)
(12/28)
(3/2)
(1/k)
(3/8)

3.15
2.78
2.7k
2.kk
2.9k
2.62
3.U9
2.80
3.53
3.15

(6/6)
(12/26)
(1/9)
(8/7)
(8/5)
(1/7)
(12/21)
(2/17)
(1/k)
(2/15)

3.15
3.15
3.2k
3.27
3.30

1/ Weekly average of daily figures.

n.a.

2.73
1.98
2.21
1.90
3.03 (8/5)
2.3k
2.89 (6/10) 2.05
3.39 (12/28) 3.05
2.92 (2/3)
2.17
3.k5 (1/k)
3.05
3-22 (2/8)
2.76
3.22
3.26
3.29
3.28
3.26

2.61
2.76
2.76
2.83
2.90

(6/25)
(V8)
(6/10)
(9/2)
(9/8)
(5/26)
(12/27)
(2/23)
(1/10)
(2/21)

.38
.19
•k3
.32
.3k
.13
.kk
.13
'.5k
.29

.8k
.30
.61
.29
.70
.5k
.68
.32
.k8
.26

.5k
.52
.k2
.39
.36

.3k
.39
.k8
.kk
.kO

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 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 31/k 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
Weekly

Per cent per annum

Date

Corporate
Baa y

State and
local govt.
Baa |/

State and
local govt,
rev. ]/

(Per cent)
1953 - High
Low
1954 - High
Low
1955 - High
Low
1956 - High
Low
1957 - High
Low

3.89
3.50
3.74
3.1*
3.63
3.45
4.4l
3.58
4.50
4.45

(9/18)
(1/2)
(1/8)
(12/31)
(12/30)
(1/14) (12/28)
(3/9)
(1/18)
(3/8)

February 8
February 10
February 22
March 1
March 8

4.48
4.47
4.46
4.47 .
4.45

3.79 (6/25)
2.96 (1/8)
3.32 (1/7)
2.93 (8/5)
3.26 (12/29)
3.02 (1/6)
4.22 (12/27)
3.20 (3/8)
4.22 (1/10)
3.90(2/21)

3.27
2.71
3.00
2.72
2.99
2.76
3.98
2.89
3.98
3.70

4.00
3.94
3.90
3.99
3.99

3.80
3.70
3.70
3.83
3.85

(6/26)
(1/2)
(1/1)
(8/13)
(12/30)
(1/7)
(12/28)
(2/24)
(1/4)
(2/22)

,

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 terra is 20 years.
y Friday figures. Average rating of bonds included is
between Baa and A; average terra is 20 years.
Note.—Highs and lows are for individual series and may
be on different dates for different series.




STOCK M A R K E T

Stock price

Trading
6on*non
volume 2j
(millions. yields j /
of shares) (per cent)

Stock market customer credit
Customers'
debit bal- loans to
ances jt/ "others" jy
(Millions of dollars)

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

167.1 (1/2)
lltlt.O (9/18)
221. It
156.5 w
270.7
217.lt iiXS
295.5 ( 8 / 3 )
257. h (1/20)
279.2 ( i A )
260.3 ( 2 / 8 )

2.5
0.9
3.7
1.1*
It.6
1.5
3.1
1.5
2.7
1.7

273.0

2.2

261.3
263.3
265.1

1.7
1.7

262.1;

2.0

.

'

5.75
5.15
5.33
a.20
It. 22
3.78
It. 25
3.86
It.ltlt
It. 31

1

U>030
3,537

h,0k7
3,91U

fcfi 3,903
;

1,66$

l,31ii
2,388
1,653
2,805
2,517
2,823
2,7L0

2,762

780

66I1

1,0U8
7U6

s s

1,267
1,155
1,163
1,117
i,ua
1,117

1,121

1,117

n.a.—Not available.
1/ SEC index of 265 common stocks, weekly closing prices, 1939-100; converted
to 19u7-lt9e100 by Federal Reserve. The conversion factor is 123.91.
2/ Averages of daily trading volume on the New York Stock Exchange.'
z
3/ Moody's 200 common stocks; end .of month figures.
£/ End of month figures for member firms of the New York Stock Exchange which
carry margin accountsj 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.




Exhibit D

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

1957
January
''February
March

e/1,035
e/1,050
e/1,275

Corporate
1 1956
I
579
70U
790

New capital
|
State and local
1 1956
I
1955
f 1957
535
1*07
1,223

e/660
3/525
e/325

1955

hOh
696
. 390

535
312
538

April
May-

1,1a

1*78
886
687 -

377
1*90
735

1*27
350
6la

July
August
September

1,066
66?
836

597
6hh
670

376
199
333

1*70
21*9
1*06

1,09k

1,162 ^
632
. 900

61*5
311
kn

919
656
1*08

2,073
2,790
2,571
2,929

2,165
2,052
1,911
2,695

1,1*90
1,603
908
. '1,3*3

1,385
1,1*18
1,121*
1,981*

3,093
1*,001
5,301*

2,803
3,927
5,911

816

830

October
November
December
1st quarter
2nd quarter
3rd quarter
l*th quarter

5/3,361,

1st half
Three quarters
Year

1,863 .
7 ,k3h
10,363

e/1,510

It, 217
6,128
8,821

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

quarter
quarter
quarter
quarter

e/3,16],

Year

1,617
2,520
2,263
2,831;

1,727
1,870
1,1*3U
2,551*

'9,23k

7,569

y 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.lk

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

Month

1956 - Februaiy
March
April
May
June
July
August
September
October
November
December
1957 - January
Februaiy

State and
local government

212
278
395
623
185
592
217
558
386
701
h30
567 .
671

Other 2/

kkh
163
157
233
463
16U
35
m
383
135
201
#6
306

50
20
—

37
35

.

100
5o

1
Large Individual Issues Offered March 1 through 8

Issuer

Type 3/

Amount
Coupon
rate or Offering
(millions
Maturity net inter- yield . m w s
of
est cost
dollars)

CORPORATE
Commercial Credit Co,
Anaconda Co.
Columbus & So. Ohio Elec.
Connecticut Lt. & Pwr, Co.
Texas Eastern Trans. Corp.
Southern Counties Gas Co.

Sub. notes
25.0 1977
Common stk.
86.7
1st mtg. bds. 16.0 1987
Common stk.
15.3
1st.mtg. P. L, bds. 1*0.0 1977
1st.mtg.bds.
15.0 1982

It 1/2

U.65

—

U 1/2

h.hl

A

h 7/8
h 5/8

4.91
4.53

Baa
A

3.50
3.21
3.19

2.35-3.50
2.35-3.25
2.00-3.25

A
A
A

STATE AND LOCAL GOVERNMENT
Houston Ind. Sch. Dist.,
Texas
Seattle, Washington
State of Rhode Island

€



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

16.8 1958-87
6.5 1959-77
13.0 1958-85

I -I.1U

E-2
Ltiirge Individual Issues Offered March 1 through 8 (Cont'd)
Issuer

Type 3/

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

OTHER
None
3/ 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.




Exhibit F

E.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
State and other 2/
Corporate
|Other 2/ Corporate local govt,

Date of
computation
1956

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

123
380
568
198
1*37
2h7
369
315
683
U36
U76
591
7 ho

220
132
173
332
81

.

131
359
162
U8
280
153
153

37

23
100
35

233'
1,013
818
UU8
567
1,096
1,202
1,009
990
U81
796
966
795

785
811
832
9hl
690
726
958
1,197
955
979
763
61#
631

37

23
100
35

Forthcoming Large Offerings, as of March
Issuer

Type

Amount
Approximate date
(millions
of offering
of dollars)

CORPORATE
Commonwealth Edison Co.
Central & South West Co.
*Owens-Corning Fiberglas Corp.
American Natural Gas Co.
Dresser Industries, Inc.
Consolidated Edison Co,
*E1 Paso Natural Gas Co.
Appalachian Electric Power Co.
Public Service Elec. & Gas Co.
Consumers Power Co.
Lone Star Gas Co.
American Tel. & Tel. Co.
^General Public Utilities Corp,




1st mtg. bds.
Common stk.
Common stk.
Common stk.

50.0
21.5
16.3
2U.1

Conv. sub. deb.
Conv. deb.

20.0
5U.8

Cum. pfd. stk.
1st mtg. bds.
Deb.
Common stk.

15.0
29.0
50,0
23.5

Conv. pfd. stk.

15.5

Deb,
-Common stk.

250,0
20.7

March 3
March 13
March 13
March lit
(rights expire)
.March lit
March 15
(rights expire)
March 19
March 20
March 21
March 22
(rights expire)
March 25
(rights expire)
March 26
March 29
(rights expire)

H.lit

F-2
Forthcoming Large Offerings, as of March 8 (Cont'd)
Issuer

Type

Amount
(millions Approximate date
of dollars) of offering

CORPORATE (Cont'd)
*E1 Paso Natural Gas Co.
Southern Company

—

Conv.2nd pfd.stk.

30.0

/

^Reynolds Metals Co.
Michigan Wisconsin Pipe Line Co.

Common stk.

30.1

Common stk.

17.7

1st mtg. bds.

25.0

April 2
(rights expire)
April it
(rights expire)
April
(rights expire)
Winter

• STATE AND LOCAL GOVERNMENT
Femdale Sch. Dist., Michigan
G.O.
5.5
. Chicago, Illinois
Wtr. rev.
15.0
Memphis, Tennessee
G.O.
11.5
Broward Co. Spec. Tax Sch. Dist.,Fla,
G.O.
6.0
Alabama Highway Authority
L.L.
1U.0
Commonwealth of Massachusetts
G.O.
20.2
Dade Co. Tax Dist. No. 1, Florida
G.O,
10.0
Glendale, California
Elec. rev.
6.5
Louisiana State Bldg. Authority
L.L.
9.9
State of South Carolina
G.O.
10.0
Palm Beach Sch. Dist. No. 1, Florida
G.O.
6.9
^Commonwealth of Puerto Rico
G.O.
18.3
State of Ohio
Thoroughfare rev.
32.0
^Melbourne, Florida
Wtr. & swr. rev
6.8
^Jefferson Co., Texas
G.O.
5.U
Los Angeles City Sch. Dist,, Calif.
G.O.
20.0
Jacksonville Expressway Authority
Rev.
1*2.0
^Milwaukee, Wisconsin
G.O,
22.2
State of California
G.O.
75.0
Pennsylvania Turnpike Commission
Rev.
62.0
Inter-American Center Auth.,Florida
Rev.
" 20.0
New York State Thruway Authority
G.O.
50.0
Florida State Turnpike Authority
Rev.
185.0
Oklahoma Turnpike Authority
Rev. 65.0
State of Connecticut
Expressway rev.
5U.0
uinj-oV

None




March 11
March 12
March 13
March ll*
March 19
March 19
March 20
March 20
March 20
March 20
March 25
March 26
March 27
March 27
April 1
April 2
April 9
April 16
April 2h
Winter
Winter
Winter
Winter
Winter
Winter

H.lU

F-3

*—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: University of
Illinois, $6.8 million issue — reduced to less than $5 million by rejection
of bid for part of issue.




H.14

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

Date

. 1952 average
1953 average
1954 average
1955" average
1956 average
1956 - January
February
March
April
May
' .
June .
July 3

3.16
3.1*6
3.02
3.23
3.81

13
16
2
9
35

*3.15
3.28
*3.77
*3.53
*3.52

3
11
40
19
18

None

I
j

18
25

August 1

30

September 11

13
25
October 10
31

November 21
• December 6

12

1957 - January 8

16
18

22
•
24
February 5

19
27

.

March 6

.

3.62
3.70

26
33

4.07
4.20
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
4.25

53
> 45

4.22

11
26
-3
12 '
28

' 3.35
3.78
3.12
.3.33
3.7i*

• . None

1

3.45
3.61
3.76
*3.75
3.82

-6
15
26
28
27
28

4.00

43

4.40

!j

4.58

"

63
70

4.67

70

4.56

57

4.41

35

46

43

-x—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 arid 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.