Full text of H.16 Capital Market Developments : March 24, 1955
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Not f o r Publication neviz , 1Trn __ DECONTROLLED AFTER SIX MONTHS H.Ik March 2k, 1955 CAPITAL MA.RKET DEVELOPMENTS Small volume of security o f f e r i n g s - S t a t e and l o c a l governments o f f e r e d U6 million d o l l a r s of large issues during the week ending March 18; no large corporate o f f e r i n g s were f l o a t e d . This week large public issues f o r new c a p i t a l t o t a l i n g 101 million d o l l a r s are scheduled f o r o f f e r i n g . Bond y i e l d s - Yields on outstanding corporate Baa and highgrade municipal bonds did not change l a s t week; corporate Aaa yields decreased one b a s i s p o i n t . Long-term U . S . Government y i e l d s dropped three b a s i s points during t h e week ending March 18 and declined fur-~ther on Monday and Tuesday of t h i s week. Stock p r i c e s r i s e - The SEC index of 265 common stocks i n creased moderately t o 222.7 l a s t week. Prices, a f t e r , d e c r e a s i n g on Monday, rose on Tuesday and ",,'ednesday t o the highest l e v e l since early March, according t o d a i l y indexes. Average d a i l y trading v o l ume declined t o 2.9 million shares l a s t week. I n s t i t u t i o n a l Savings and Investments i n 19$k The inflow of new savings i n t o l i f e insurance companies, savings and loan associations and mutual savings banks t o t a l e d 12,278 million d o l l a r s in 195hf as shown in the accompanying t a b l e , more than i n any other year t o d a t e . New savings flowing into these i n s t i t u t i o n s represented two-thirds of t h e increase in net public and p r i v a t e debt l a s t y e a r . Liquidation of U. S» Government securities—more than twice the volume i n 195U than in 1953—provided a d d i t i o n a l funds f o r investments of other types. This l i q u i d a t i o n was f a c i l i t a t e d by the increased demand of commercial banks f o r Government obligations developing from the e a s i e r c r e d i t policy of t h e Federal Reserve System, Moreover since Government s e c u r i t y p r i c e s rose i n 195U t o about the same l e v e l as when they were purchased, the savings i n s t i t u t i o n s incurred no l o s s i n these s a l e s . Aggregate mortgage holdings of the major types of savings i n s t i t u t i o n s increased almost 9 b i l l i o n d o l l a r s in 195k, a record t o d a t e . Net investments i n domestic business s e c u r i t i e s were 2,it81 million d o l l a r s l a s t y e a r , compared t o 3,193 million i n 1953. Savings i n s t i t u t i o n s increased t h e i r holdings of S t a t e and l o c a l government s e c u r i t i e s by 752 million d o l l a r s , a growth well above t h a t of any previous y e a r . H.lU L i f e insurance companies -2- ' . Net mortgage a c q u i s i t i o n s of l i f e insurance'companies amounted t o 2,652 m i l l i o n d o l l a r s l a s t y e a r , well above t h e corns p a r a b l e volume f o r 1953• Holdings of corporate s e c u r i t i e s rose 2,266 m i l l i o n d o l l a r s , but t h e i n c r e a s e was not a s l a r g e as i n 1953, due in p a r t t o t h e smaller volume of new i s s u e s and in p a r t t o t h e heavier investments i n the h i g h e r - y i e l d i n g mortgages and S t a t e and l o c a l government s e c u r i t i e s — p a r t i c u l a r l y the long-term revenue bonds with high coupon r a t e s . A c q u i s i t i o n s of S t a t e and l o c a l government s e c u r i t i e s and other a s s e t s were considerably l a r g e r l a s t year than e a r l i e r . A major p a r t o f " t h e S t a t e and l o c a l i n c r e a s e f o r a l l i n s t i t u t i o n s mentioned above was accounted f o r by the l i f e insurance companies. I n c r e a s e i n a s s e t s was almost 700 m i l l i o n d o l l a r s l a r g e r l a s t year than t h e previous twelve-month period and t o t a l e d 5,851 m i l l i o n . The' other source of funds— s a l e s of Government obligations—provided 7^6 m i l l i o n d o l l a r s compared t o i|28 m i l l i o n i n 1953. Savings and loan a s s o c i a t i o n s The inflow; of savings c a p i t a l i n t o savings and loan a s s o c i a t i o n s was U,U8l m i l l i o n d o l l a r s l a s t y e a r , 23 per cent more than - in 1953. The growth i n t h e flow l a s t year was r e l a t i v e l y l a r g e r than i n e i t h e r of the other two types of i n s t i t u t i o n s . Since t h i s i n c r e a s e more t h a n o f f s e t t o t a l demands made, mainly by mortgage a c q u i s i t i o n s , e x t r a funds were a p p l i e d towards i n c r e a s i n g cash and Government h o l d i n g s — e s p e c i a l l y t h e cash h o l d i n g s , which were r a i s e d ii£8 m i l l i o n d o l l a r s . Mutual savings banks Mutual savings banks increased t h e i r holdings of mortgages by 2,055 m i l l i o n d o l l a r s i n 195U compared t o a growth of 1,556 m i l l i o n t h e year b e f o r e . Investments i n "business s e c u r i t i e s grew but not as much a s . d u r i n g 1953. New savings were 1,9^6 m i l l i o n d o l l a r s l a s t y e a r , about 10 per cent more t h a n the flow t h e year b e f o r e . Host of t h e a d d i t i o n a l funds needed f o r new investments were supplied by ah i n c r e a s e d reduction of holdings of Government s e c u r i t i e s i n 195k. H.lii -3- Uses and Sources of Funds by Major Types of Savings I n s t i t u t i o n s 1953-1951 (In millions of d o l l a r s ) Year Total uses 1/ Uses - Net purchases of: Domestic State.and business Mort- l o c a l govt, Other gages securities securities Sources of funds Reduction New Of U> S. sav- Government ings securities Total sources 2 / . Total - Major Types of Savings I n s t i t u t i o n s 19$h 1953 13,608 11,317 2,181 3,193 8,967 7,132 752 23k 1,1*08 758 13,608 11,317 12,278" 10,5.79 1,095 53U L i f e Insurance Companies 195k 1953 6,592 5,515 2,266 2,805 2,652 2,030 555 152 1,119 528 5,851 5,167 71*6 128 h,h 83 3,732 hMl '3,635. -103 -132 2,533 2,070 . I,9k6 1,777 152 238 6,592 5,515" Savings and Loan Associations 195a 1953 3,732 - 1951 1953 2,533 2,070 215 388 ' 1,260 3,546 223 186 Mutual Savings Banks 2,055 1,556 197 82 66 kh and U7 S. Government s e c u r i t i e s . 2 / Includes other sources not shewn s e p a r a t e l y . 3 / Change of l e s s than 500 thousand d o l l a r s . Mote.—Details may not add t o t o t a l s because of rounding. Sources of daita.—Institute of Life Insurance, Federal Savings and Loan Insurance Corporation, and National Association of Mutual Savings Banks. H.llt "h" . 1 Further d e t a i l s on c a p i t a l market developments a v a i l a b l e from e x h i b i t s - More d e t a i l e d information concerning r e c e n t c a p i t a l market developments w i l l be found in the following e x h i b i t s which are attached hereto: A - Bond Yields B - Stock Market C - Corporate and S t a t e and Local Government S e c u r i t y O f f e r i n g s and Placements D - Large Public Security Issues f o r New C a p i t a l (Other than U. S. Treasury) E - Forthcoming Large Public S e c u r i t y Offerings f o r New C a p i t a l (Other than U. S. Treasury) F - Yields on New and Outstanding E l e c t r i c Power Bonds, Rated Aa and A Business Finance and C a p i t a l Markets S e c t i o n , Division of Research and S t a t i s t i c s , Board of Governors of the Federal Reserve System. H. 1 4 EXHIBIT A BOND YIELDS WEEKLY PER CENT PER ANNUM 4 CORPORATE Baa CORPORATE A a a GOVERNMENT LONG-TERM vZ /HIGH-GRADE . STANDARD MUNICIPAL AND P O O R ' S CORP. I I I I I I I I I 1 I I I I I I I I I 1 II I 1951 1952 C o r p o r a t e 1/ Date 1954 1953 U. S . G o v t , long-term 2/ Spread between C o r p o r a t e Aaa and U. S . G o v t . Highgrade Mun. 3 / ( P e r c e n t p e r annum) 1952 - High 1953 - High Low - High Low 1955 - High 19Sk F e b r u a r y 18 February 25 March, k March 11 March 18 *1 / 3.03 2.91 3.12 2.99 3.09 2.85 3.Oh 2.91 2.99 3.02 3.03 3-Oil • 3.03 3.63 3.1x8 3.89 ' 3-50 3.7k 3.a 3.19 3.1,5 ' 3.17 3 -ii8 3.U8 3.19 3.19 2.79 2.56 . 3.15 2.71 2.7k 2.hh 2.77 2.62 2.72 2.77 2.75 2.72 2.69 .37 .19 .38 .19 M3 .32 ,.3U .25 .27 .25 .28 .32 •3h 2 .1*3. 3-1U 2.1x3. 2.56 2.23 2.1:6 2.36 2.1:1 2.1:3 2.1*6 2.1:5 2.1:5 1 a TfMfae+ftwo CAW 5"/ F e d e r a l R e s e r v e ; w e e k l y a v e r a g e o f d a i l y f i g u r e s . 1/ Standard and P o o r ' s C o r p o r a t i o n ; '.Tednesday f i g u r e . N o t e . — H i g h s and l o w s a r e f o r i n d i v i d u a l s e r i e s and may be c for d i f f e r e n t s e r i e s . different dates ' STOCK MARKET Date Bank loans 1 to "others" Trading • Common stock Customers f o r purchases Stock price volume 2 / yields 3/ of securbalances 1\J index 1 / (per cent (millions, i t i e s $f (adllions (1947-49-100) of shares) per annum) of d o l l a r s ) (millions of d o l l a r s ) 1952 - High Low 1953 - High 195U - High 1955 - High January February March 11 March 18 165-3 151.7 167.1 liili.O 221.ii 156.5 231.0 217.ii 2l8.ii • 226.8 231.0 220.8 222.7 2.0 0.9 2.5 0.9 3.7 l.ii ii.6 2.8 3.6 3.2 3.0 3.2 2.9 . 5.77 5.13 5.75 5.15 5.33 ii-20 il.22 ii.21 il.22 ii.21 • 1,328 l,2iil 1,665 l,31ii 2,388 1,653 2,590 2,517 2,517 2,590 295 250 327 252 ' 1I87 328 507 475 ii8l U90 ii93 . £/501 507 1/ ART 1 nriAY of 6S nommnn et.o?If WAAkl V noinrr nri re.. 1919-inn? nnnvAnt.oH t.n 19li7-2T9»100 by Fed eral Reserve. The conversion f a c t o r i s 123.91. 2 / Weekly averages of d a i l y t r a d i n g volume on New York Stock Exchange. 5 / Moody's 200 common s t o c k s ; end of month f i g u r e s . EZ End of month f i g u r e s f o r member f i r m s of New York Stock Exchange; excludes balances secured by U. S . Government s e c u r i t i e s . 5 / Wednesday f i g u r e s f o r weekly r e p o r t i n g mentoer banks i n New York and Chicago; excludes l o a n s f o r purchase of U. S. Government s e c u r i t i e s . On March it, 1953, t h e l a s t d a t e on which f i g u r e s f o r a l l r e p o r t i n g banks r/ere a v a i l a b l e , New York and Chicago accounted f o r ii5 per c e n t of such l o a n s . I n the p a s t New York and Chicago loans h^ve f l u c t u a t e d more than t o t a l l o a n s . r / Revised. n.a.—Not available. Note.—Highs and lows are f o r i n d i v i d u a l s e r i e s and may be an d i f f e r e n t d a t e s • for different series. H.li; Exhibit G Corporate and S t a t e and Local Government S e c u r i t y O f f e r i n g s and Placements (In m i l l i o n s of d o l l a r s ) New c a p i t a l Corporate 1 1954 1I 1953 544 4 39 660 s 1955 666 535 e/310 e/500 April May June 486 #2 #9 July August September 898 316 776 1955 January February March e/486 e/3# e/1,225 October November December 1st quarter 2nd q u a r t e r 3rd q u a r t e r 4th q u a r t e r Year 1,008 2?8 #2 e/2,06l 1,613 1,998 2,021 1,899 7,561 . S t a t e and l o c a l 1 1954 I 1953 396 411 565 389 360 426 779 675 1,123 734 748 853 329 649 434 183 325 753 279 261 649 519 259 475 577 4291/ 1,438^/ #4 423 877 453 408 774 . 1,912 2,578 e/1,345 8,495 1,372 2,334 1,188 IS 1,176 31 5A77 Excluding f i n a n c e companies 2 / 1st quarter 2nd q u a r t e r 3rd q u a r t e r 4th q u a r t e r Year e/.l,66l 1,562 1,931 . 1,9U 1,795 7,229 1,669 1,991 1,223 2,344 7,227 5 / T o t a l new c a p i t a l i s s u e s excluding o f f e r i n g s of s a l e s and p e r s o n a l f i n a n c e compara.es. e / Estimated. Mote.—Details may not add t o t o t a l s due t o rounding. H.lli Exhibit D Large Public Security I s s u e s f o r New C a p i t a l (Other than U. S . Treasury) 1 / Proceeds of Large I s s u e s Offered (Millions of d o l l a r s ) Month 19Sh - February March April - - ' May • June July August September October November December 1955 - January February Corporate j '• - S t a t e and l o c a l government 103 160 169 32 U#0 336 75 335 __ 213 378 557 - 557 603 92 86 U55 . 388 268 6# 3U1 101 to 0 9h Hil 72- Other 2/ 50 30 35 Large I n d i v i d u a l I s s u e s Offered March 1 through 18 Issuer Type 3 / Coupon Amount r a t e or Offering (millions Maturity n e t i n t e r Rating yield of e s t cost dollars) CORPORATE May Department S t o r e SF deb. . 25.0 Central & South West Corp. Common s t k . 20.1 Union Oil Company Conv. deb. 21.0 P a c i f i c Gas & E l e c t r i c Co. 1st&refmtgbds-50.0 General Uotors Acceptance Corp. Deb. 250.0 General Motors-Corp. Common s t k . 328.6 1980 3 1/1) 3.25 1975 1987 3 3 3/8 3.00 • 3.30 196051972 3;3 1/2 3.00,3.50 A Baa Aa STATE AND LOCAL GOVERNMENT Portland, Oregon S t a t e of Louisiana Hempstead & N. Hempstead, New York \ Houston, Texas G.O. G.O. 8.0 10.0 1958-75 1960-70 2.01 2.23 1.15-2.20 1.50-2.35 Aa A G.O. G.O. .15.5 15.0 1955-81* 1956-85 3.08 2.59 1.10-3.13 1.00-3.10 Baa A . H.lii D-2 Large I n d i v i d u a l I s s u e s O f f e r e d March 1 through 18 ( C o n t ' d ) Issuer Type Amount Coupon (millions r a t e or Offering Maturity net i n t e r of yield dollars) est cost Rating STATE AND LOCAL GOVERNMENT (Cont'd^ Multnomah County, Oregon M e t r o p o l i t a n \7ater D i s t r i c t of S o u t h e r n G a l . New York Bridge A u t h o r i t y S t a t e of South C a r o l i n a S t . Petersburg, Florida Oyster Bay, New York S t a t e of M i s s i s s i p p i S t a t e of New J e r s e y New J e r s e y Turnpike Auth. G.O. 12.0^ 1956-75 2.02 0.95-2.20 -Aa G.O. Rev. G.O. L.L. G.O. Rev. G.O. Rev. 8.0 16.0 20.0 1U.0 5.8 1956-80 1956-89 1956-75 1956-77 1955-83 1971-75 1957-90 1988 2.19 2.61 1.95 3.50 2.97 2.53 2.19 2.88 0.95-2.35 1.00-2.69 0.95-2.10 1.75-3.1*3 1.00-3.05 2.25-2.50 1.10-2.1*0 2.8L Aa A Aa Ba Baa A Aa 6.6 3U.0 OTHER None 1 / I n c l u d e s c o r p o r a t e and o t h e r s e c u r i t y o f f e r i n g s of 15 m i l l i o n d o l l a r s and o v e r j S t a t e and l o c a l government s e c u r i t y o f f e r i n g s of 5 m i l l i o n and o v e r . 2 / I n c l u d e s f o r e i g n government and I n t e r n a t i o n a l Bank f o r R e c o n s t r u c t i o n and Development i s s u e s . 3/ In t h e c a s e of S t a t e and l o c a l government s e c u r i t i e s , G.O. d e n o t e s g e n e r a l o b l i g a t i o n ; R e v . , revenue bonds; G.R., g e n e r a l o b l i g a t i o n s a d d i t i o n a l l y s e c u r e d by f a c i l i t i e s r e v e n u e s ; and, L . L . , l i m i t e d l i a b i l i t y o b l i g a t i o n s secured by pledge of designated revenues. V 3 . 5 m i l l i o n d o l l a r s not r e o f f e r e d pending s e t t l e m e n t of t a x p a y e r s * l i t i gation. H.Ib Exhibit E Forthcoming Large P u b l i c . S e c u r i t y Offerings f o r New C a p i t a l (Other t h a n U. S. Treasury) 1/ Expected Proceeds from Forthcoming Large Issues During month following d a t e shown Corporate S t a t e and other 2 / l o c a l govt. - Date of computation 195b - Feb. 26 Mar. 31 Apr. 30 May 28 June 30 J u l y 30 Aug. 31 S e p t . 30 Oct. 29 Nov. 30 Dec. 31 1955 - J a n . 31 Feb. 28 108 2 Oil 323 332 336 100 33U 3b3 15 9it 18U 16 710 it98 i 300 383 h36 66l 567 682 52 h Subsequent t o date shown S t a t e and % h e r 21/ Corporate l o c a l govt. - 50 690 27 Si 526 532 303 608 lOh 135 2h6 216 hZ2 1,395 30 1,916 2,789 2,322 1,971 1,52k 1,553 50 27 1,876 2,158 1,957 2,682 2,1M 1,961 1,978 30 30 35 Forthcoming Large O f f e r i n g s , as of March 18 Issuer Type Amount Approximate date (millions of o f f e r i n g of d o l l a r s ) CORPORATE Joy Manufacturing Company P a c i f i c Northwest P i p e l i n e New England Telephone and Telegraph National Gypsum General Dynamics Corp. Tennessee Gas Transmission Philadelphia E l e c t r i c ^Southern C a l i f o r n i a Gas Co. •^Public Service of I n d i a n a , J l n e . Alabama Power •^Consolidated Natural, Gas American Telephone and Telegraph SF deb. Interim notes Common stock Common stock Conv. deb. Deb. Bds. Bonds Pfd. stock 1 s t mtg. bonds Common stock Conv. deb. 20.0 17.2 15.7 18.6 bo.o 25.0 20.0 hO.O 21.3 15.0 2h.h 650.9 March 22 March 29 March 31 April b April 5 April 6 A p r i l 25 April April May 2b June 1955 STATE AND LOCAL GOVERNMENT New York S t a t e Georgia S t a t e School Building Auth. ^ S p r i n g f i e l d , Missouri G.O. L.L. Rev. 50.7 30.2 11.1 March 22 March 22 March 29 H.lU E-2 Forthcoming Large O f f e r i n g s , as of March 18 (Cont'd) Issuer Type Amount Approximate date (millions of o f f e r i n g of d o l l a r s ) STATE AND LOCAL GOVERNMENT (Cont'd) S t a t e of Massachusetts F l o r i d a S t a t e Improvement Comm. San Francisco, C a l i f o r n i a Los Angeles, C a l i f o r n i a San Diego County, C a l i f o r n i a L o u i s v i l l e , Kentucky Calcasieu P a r i s h , Louisiana Wichita, Kansas Inter-American Center Auth., F l a . Michigan Turnpike Authority S t a t e of Louisiana F l o r i d a S t a t e Turnpike Authority I l l i n o i s Turnpike Authority Connecticut Expressway Texas Turnpike Authority Sam Houston Turnpike Corp. Texas Turnpike Company Dade County Port A u t h o r i t y , F l a . Springfield, Illinois Allegheny County, Pennsylvania S a n i t a r y Authority C a l i f o r n i a To ll Bridge Authority J e r s e y C i t y Sewerage Auth., N. J . North Carolina Turnpike Authority G.O. Rev. n.a. n.a. n.a . n.a. n.a. n.a. Rev. Rev. n.a. Rev.. Rev. Rev. Rev. Rev. Rev. Rev. 60.9 6.0 6.9 5-10.0 8.1* » 7-S 5.5 7.1* 60.0 186.0 80.0 7li.O 390.0 100.0 58.5 Uj.6.0 11:0.0 21.0 9.0 Rev. Rev. Rev. n.a. 85.0 235.0 16.0 200.0 March 29 March 31 April k April 6 A p r i l 19 A p r i l 20 A p r i l 21 - A p r i l 26 Spring Spring Spring Spring 1955 1955 1955 1955 1955 1955 1955 1955 1955 1955 1955 OTHER None • and l o c a l government i s s u e s of 5 m i l l i o n and o v e r . 2 / Includes f o r e i g n government and I n t e r n a t i o n a l Bank f o r Reconstruction and Development i s s u e s . n.a.—Not a v a i l a b l e . *—Included in t a b l e f o r f i r s t t i m e . Exhibit F H.lli y i e l d s on New and Outstanding E l e c t r i c Power Bonds, Rated Aa and A 1 / A-rated o f f e r i n g y i e l d s Aa-rated o f f e r i n g y i e l d s Amount above Amount above Actual Actual seasoned y i e l d s (per cent) seasoned y i e l d s (per cent) (basis points) (basis points) Date 1952 average 3.16 13 3.35 12 1953 average 3.43 15 3.79 27 19$h average 3.Ok 3 3.12 -3 *3.35 *3.20 3.05 3.10 3.1k 3.1ii *3.13 3.11 *3.10 3.10 None 3-11 2 -1 -10 -6 0 -2 -1 -1 -3 -2 3.23 9 3.27 12 195k - January February March . April May June July August September October ' November December , 3.20 3.02 *2.93 2.%) 3.00 *3.00 None . None 3.02 3.03 " None None 6' 0 0 5 h 1 . 3 3 3.15 13 February 2k • 25 3.H; 7 March 10 16 3.17 1955 - January 19 8 0 Survey. Except where i n d i c a t e d , the a c t u a l y i e l d f i g u r e and the amount above seasoned y i e l d s are averages of o f f e r i n g s during the i n d i c a t e d period and of t h e d i f f e r e n c e s between t h e s e new o f f e r i n g y i e l d s and y i e l d s on seasoned i s s u e s of s i m i l a r q u a l i t y f o r t h e same day. Average maturity f o r the seasoned i s s u e s - v a r i e s from 26 t o 28 y e a r s . •8—Single observation, not an average.