Full text of H.16 Capital Market Developments : May 17, 1956

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S/y
Hot for Publication DECONTROLLED AFTER SIX MONTHS
E.lk

May 17, 1 9 #

CAPITAL MARKET DEVELOPMENTS
The volume of publicly offered securities was large during
the week ending May 11, and will be even larger this week. Sales
of large corporate issues (or expiration of subscription rights) amounted to $123 million during tne week6ending May 11, and large
State and local issues totaling $21 million were sold. This week
$315 million of large corporate issues and.$36 million of State and
local government issues are scheduled for sale.
This week's major offering was the $300. million General
Electric 20-year debenture issue- which was offered Tuesday, May 15,
at a yield of 3.U7 per cent. The issue, which was rated Aaa, was
quickly oversubscribed and quoted at a premium in the over-thecounter market. The terms of the issue provided for an optional
delayed payment by purchasers in July, which therefore moderates
the immediate drain on investment funds.
The recent stabilizing of yields and the decline in the
volume of dealers1 inventories of unsold securities has apparently
resulted in a rather sharp increase in the calendar of forthcoming
State and local government bond issues. Announcement was made last
week of bidding dates for 7 large issues totaling $122 million, all
scheduled for sale late this month or in early June. Accordingly
the May estimate of State and local government offerings has been
raised substantially, from $375.million to $500 million.
Bond yields - Yields on corporate and State and local
government bonds, except Baa-rated corporate bonds, declined last
week, after having stabilized at high levels the previous week.
U. S. Government bond yields declined further.
Yields on new issues also have declined. An A-rated
first mortgage electric utility bond was offered Wednesday, May 16,
at 3,73 per cent, 7 basis points below the yield on a similar issue
offered a week earlier.
Stock market credit - Customer credit in the stock market,
excluding U. S. Government securities, increased slightly during
April, rising $5 million to total $U,0i;3 million at the end of this month,
Both net debit balances and bank loans to "others" increased slightly.
Borrowing by member firms of the NYSE maintaining margin accounts,
except borrowings on U. S. Government securities, increased $18 million. Borrowing on customer collateral increased $52 million, but
this increase was largely offset by a decline in borrowing on other
collateral. Customers' net free credit balances declined $61; million. These and other data on stock market credit are shown in the
table on the following page.




#

H.lit

—2—

End of month
March
April

Change

(Millions of dollars)
Customer credit
Excluding U. S. Govt, securities - Total
Net debit balances
Bank loans to "others"
Net debit balances secured by U.S. Govt, securities
Bank loans to others 'for purchasing or carrying
U. S. Govt, securities
Broker and dealer credit
Money borrowed except on U. S. Govt, securities
On customer collateral
Money borrowed on U. S. Govt, securities
Customers' net free credit balances

1,038
2,786
1,252
31

+5
+2
+3
+2

M^3
2,788
1,255
33

ho

>0

0

2,12?
1,742
50
960

2,115
1,79U
hh
896

+18
+52
-6
-61;

i
Stock prices - Common stock prices, as measured by the SEC
index of 265 stocks, declined 6,8 points during the week ending May 11
to close at 283.2. Daily indexes indicate a further sharp decline
through Tuesday of this week.
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.




EXHIBIT A

HIGH-GRADE BOND YIELDS

Weekly

Per cent p e r gniu#m

CORPORATE Aoq.

/h
/—Vy. 1

\ U. S. G O V E R N M E N T :

1953

1954

1955

long-term j*/

U. S.
Date

""" " " "

Corporate
Aaa 1 /

Old series

New series

1956

Spread between
U. S. Govt,
State and
local govt. (old series) and
Aaa y
Corporate1State and
Aaa
1local Aaa

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

3.1*2
2.99
3.09
2.85
3.17
2.91
3.30
3.07

April 13
April 20
April 27
May 4
May 11

3-21
3.27
3.30
3-30
3.27

(6/19)
(1/9)
(1/8)
(4/23)
(12/23)
(1/7)
(5/4)
(3/2)

3.15
2.78
2.74
2.44
2.94
2.62
3.08
2.80

(6/6)
(12/26)
(1/9)
(8/7)
(8/5) 3.03
(1/7) 2.89
(4/20) 3.13
(2/17) 2.92

3.06
3.08
3.07
2.99
2.98

3.09
3.13
3.11
3.08
3.05

1/ Weekly average of dally figures!

(8/5)
(6/10)
(it/20)
(2/3)

2.73
1.98
2.21
1.90

(6/25)
(1/8)
(6/10)
(9/2)
(9/8)
2.05 (5/26)
2.51 (5/3)
2.17 (2/23)

2,2k

.38
.19
• 43
.32
.34
.13
.31
.13

.84
.30
.61
.29
.70
.54
.68 •
.48

2.38
2.43
2.51
2.51
2.48

.15
.19
.23
.31
.29

.68
.65
.56
.48
.50

Average term of bonds Included is 25-26

. 2 / W e e k l y 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 11* 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 1/4 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
Weekly

Per cent per

Corporate
Baa 1/

Date

State and
local govt.
Baa 2/

State and
local govt,
rev. y

(Per cent)
1953 - High
Low
1951* - High
Low
1955 - High
Low
1956 - High
Low

3.89 (9/18)
3.50 (1/2)
3.7k (1/8)
3-liU (12/31)
3.63 (12/30)
3.U5 (1Ak)
3.72 (5/11)
3.58 (3/9)

3.79 (6/25)
2.96 (1/8)
3.32 (1/7)
2.93 (8/5)
3.26 (12/29)
3.02 (1/6)
3.a (5/3)
3.20 (3/8)

3.27 (6/26)
2.71 (1/2)
3.00 (1/1)
2.72 (8/13)
2.99 (12/30)
2.76 (1/7)
3.12 (li/27)
2.89 (2/21*)

April 13
April 20
April 27
May
May 11

3.67
3.70
3.72
3.72
3.72

3.35 "
3.W
3.a
3.a
3.U0

3.06
3.10
3.12
3.10
3.06

included is 25-26 years.
2/ Thursday figures. Only general obligation bonds are
included; average term is 20 years.
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
index 1/

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

Stock market custtamer credit
Customers'
debit bal- loans to
ances 4/ "others" 5/
(Millions of dollars)

1953 - High
Low
1954 - High
Low
1955 - High
Low
1956 - High
Low

167.1
144.0
221.U
156.5
270.7
217.4
290.8
257. 4

April
April 27
May 4
May 11

283.2
286.8
286.2
290.0
283.2

(V2)
(9/18)
(12/31)
(1/6)
(12/30)
(1M)
(4/6)
(1/20)

2.5
0.9
3.7
1.4
4.6
1.5
3.1
2.0
2.7
2.6
2.5
2.6
2.6

.

5.75
5.15
5.33
4.20
4.22
3.78
4.08
3.68

2,445
2,055
3,436
2,405
4,030.
3,537
4,043
3,991

1,665
1,314
2,388
1,653
2,805
2,517
2,788
2,740

780
664
1,048
746
1,241
1,018
1,267
1,249

3.68
3.6 9

4,038
4,043

2,786
2,788

n.a.

n.a.

1,252
1,255
1,255
1*259
n.a.

> available.
1/ SEC Index of 265 common stocks, weekly closing prices, 1939-100; converted
to 19W-49-100 by Federal Reserve. The conversion factor is ,123.91.
Averages of daily trading volume on the New York Stock Exchange.
Moody's 200 common stocks; end of month figures.
End of month figures for member fines of the New York Stock Exchange which
carry margin accounts; excludes balances secured by U: S. Government obligations.
j>/ 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 ivr individual series and may be on different, dates
for different series.

f




/

Exhibit D

H.lii

#

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

1956
January
February
March
April
May
June

New capital
1954

1956

427
641

7.34
748
653

909
335
747

470
249
406

279
261 .
649

1,207 ^
631
921

1,003
290
60b

919
658
408

594
423
877

2,2h3
2,0 94
1,917
2,760
9,014

1,608
1,995
1,991
1,896
7,190

1,385
1,418
/ 1,124
^1,984
5,911

1,372
2,334
1,188
1,-894
6,789

547
426
635

404
696
e/375

e/830
2/1,050

494
903
697

k97
656
81+2

e/350
e/500

563
654
680

2,073

e/1,475

1 Excluding finance companies 2/
1st quarter
2nd quarter
3rd quarter
4th quarter
Year

e/1,673

1,791
1,912
1,MH
2,619
7,762

1,527
1,927
1,911
1,7-92
7,158

e/ Estimated.
' !
'
'
1/ Includes $637*2 million AT&T convertible debenture issue.
2/ Total new capital issues excluding offerings of sales and personal
finance companies.
Note.—Details may not add to totals due to rounding.




1954
396
411
565

546
#36
1,261

October
November
December

State and local
1
1 1955
535
312
5#

279
70k
790

July
August
September •

1st quarter
2nd quarter
3rd quarter
4th quarter
Year

Corporate
1 1955
1

.

1
H.lii '

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

Month

State and
local government

Corporate

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

j

238
152

173
1*83175"
101
1*05
328
805
221
263
95
212
278
395

Other 2/

15

to

278
65
23k
716
hOl
227
192
hhh
163
157

25
50

5o

Large Individual Issues Offered May. 1 through 11
Issuer

Type 3/

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

•CORPORATE
Duke Power
Kaiser Aluminum & Chem.
General Telephone
Calif. Oregon Power
General American Trans.
Niagara Mohawk Power

1st & ref.
mtg. bds. : 30.0
Conv. pref.stk, 30.0 '
Conv„ deb. 53,0
1st mtg. bds. 16.0
Conv. deb.
23.8
Gen'l.
mtg. bds. 30.0

1986
1971
1986
1981
1986

.

3 5/8

3.50

Aaa

k
;
3 7/8
h

k.00
3.80
li.00

A
Baa

3 5/8

3.55

Aa

STATE & LOCAL GOVERNMENT
Allegheny Co. Sanitary
Auth., Pa.
Baltimore, Maryland
La Mesa, Lemon Grove
& Spring Valley
Irrigation Dist., Cal.




Rev.
G.O.

25.0
25.0

1961-96
1958-82

. 3.35
2.81

2.75-3.35
2.10-2.80

Aa

G.O.

5.2

1966-96

-3.90

3.30-3.85

Baa

#

H.llt

E-2
Large Individual Issues Offered May 1 through 11 (Cont'd)

Issuer

Type 3/

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

STATE & LOCAL GOVERNMENT
(Cont'd)
Los Angeles, Calif.
Dept. of Water & Pwr.
Chesapeake Bay Ferry
Dist. Commission, Va.
Great Falls, Montana
Pasadena, Calif.
Tulsa, Oklahoma

Rev.
Rev..'
G.O.
G.O.
Rev.

9.0

1957-86

2.9h

2.10-2,95

Aa

20.0
5.0
11.0
5.0

' 1966
1973
1958-71
1958-81

n.a.
U.35
2.1i7
2.82

n.a.n.a.
2.00-2.50
2.20-2.85

Aa
A

OTHER
None
y Includes corporate and other security offerings of $15 million and over;
^State and local government security offerings of $5 million and over.
£/ 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.

#



R.Ik
Forthcoming Large Public Security Offerings for New Capital
(Other than U. S. Treasury) 1/
Expected Proceeds from Forthcoming Large Issues
Date of
computation
1955 - Apr. 29
May 31
June 30
July 29
Aug. 31
Sept. 30
Oct. 31
Nov. 30
Dec. 30
1956 - Jan. 31
Feb. '29
Mar. 30
Apr. 30

During month following
Subsequent to
date shown
date shown
State
and
Corporate
Other 2/ Corporate State and Other 2/
local govt.
local govt.
425
160
67
407
222
805
202
215
70
176
123
380
. 568

116
339
344
100
184
643
330
205
121
327
220 •
132
173

__

5o

—

l,l4l
850
830
1,135
920
909
412
230
85
376
233
1,013
818

1,917
1,861
1,845
2,018
1,971
2,205
1,650
756
618
917
785
811
832

50

—

Forthcoming Large Offerings, as of May 11
Type

. Amount Approximate date
(millions
of offering=
of dollars)

General Electric
Deb.
300.0
'Northern Illinois Gas
1st mtg. bds.
15.0
Southern California Gas
1st mtg. bds.
40.0
Consolidated Edison
1st & ref. mtg.bds.. 30.0
Lockheed Aircraft
Deb.
30.0
^Mountain States Telephone & Telegraph
Deb.
25.0
•^Commonwealth Edison
1st mtg. bds.
40.0 •
American Telephone and Telegraph
Deb.
250.0

May 15
May 17
May 22
May 23
May 23
May 28
June 5
June

STATE AND LOCAL GOVERNMENT
Salt River Project, Arizona
Toledo, Ohio
Dade Co., Florida, Special Tax
School Dist. No. 1
Orleans Parish, La.
Omaha, Nebraska, School District
*Port of New York Authority, N. Y.
State of Minnesota




G.O.
Rev.

11.0
5.0

G.O.
G.O.
G.O.
Rev.
G.O.

' 15.0
5.0
20.0
30.0
10.0

May 15
May 16
May
May
May
May
May

16
16
21
21
22

H.lii

F-2

*

Forthcoming Large Offerings, as of May 11 (Cont'd)
Type

Amount
date
(millions Approximate
of offering
of dollars)

STATE AND LOCAL GOVERNMENT (Cont'd)
Cleveland, Ohio
-^-Baltimore County Metropolitan
District, Maryland
^Houston, Texas
tfMahoning Valley Sanitary Dist,, Ohio
Georgia Rural Roads Authority
-^-Cincinnati, Ohio
Wew York, New York
Denver, Colorado
Tallahassee, Florida
^Pennsylvania General State Auth.
State of California
Florida State Turnpike Auth.
Oklahoma Turnpike Authority
• Pennsylvania Turnpike Commission
Washington State Toll Bridge Auth.
Inter-American Center Auth., Fla.

G.O.
G.O.
G.O.
G.O.
Rev.
G.O.
. G.O.
G.O.
Rev.
Rev.
G.O.
Rev.
Rev.
Rev.
Rev.
Rev.

16.2
10.0
: 17.0
6.0
15.5
6.5
30.0
. 5.3
6.0
20.0
50.0
185.0
65.0
62.0
227.0
70.0.

May 22
May 23
May 23 '
May 23
May
June 5
June 5
June 6
June 7
June 12
June 13
Summer
1956
1956
1956
1956

OTHER
None *—Included in table for first .Ime.
n.a.—Not available.
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, '




Exhibit G

H.lU

Yields on Hew and Outstanding
Electric Power Bonds, Rated Aa and A l/

Date

1952
1953
195U
1955

average
average
average
average

4L956 - January
February
March 8
16
23
.
.30
April b
h
" 11
25
May 9

Aa-rated offering yields A-rated offering yields
Actual I Amount above
Actual . Amount above
(per cent) seasoned yields (per cent) 1seasoned yields
1(basis points)
(basis points)
3.16
3-U6
3.03
3.23

13
16
3
9

3.35
3.78
3-12
3.33

12
26
-3
12

None
*3*15
3.19

—

. 3
5

Hone
3.23

-5

3.37

18

3.77

UO

3.35

7

3.55

3.57
3.60
3.67

25
23
26
29

3.80

32

*—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 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. The number of new issues included in the
monthly averages varies from 2 to k except for October 195>li when 6 A-rated
issues were included. Average maturity for the seasoned issues varies from 26
to 28 years.