Full text of H.16 Capital Market Developments : May 3, 1956

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J/7
Not f o r P u b l i c a t i o n DECONTROLLED AFTER SIX MONTHS
H»1U

.

• May 3, 1 9 #

CAPITAL MARKET' DEVELOPMENTS
The volume of l a r g e p u b l i c l y o f f e r e d s e c u r i t y i s s u e s was
heavy during the week ending April 2 f . Three corporate s e c u r i t y
i s s u e s with aggregate proceeds of $66 m i l l i o n , S t a t e and l o c a l
bond i s s u e s t o t a l i n g $80 m i l l i o n and a $50 m i l l i o n f o r e i g n government debenture i s s u e were s o l d . The volume of l a r g e p u b l i c o f f e r • ings t h i s week, ending May U, i s expected to be somewhat l i g h t e r .
Corporate i s s u e s t o t a l i n g $>60 m i l l i o n and S t a t e and l o c a l i s s u e s of
96I4 m i l l i o n are scheduled f o r s a l e .
Divestors were considerably more r e c e p t i v e to l a s t week's
new i s s u e s , o f f e r e d a t higher y i e l d s , than they had been to e a r l i e r
o f f e r i n g s , and most new i s s u e s were quickly d i s t r i b u t e d .
Bond y i e l d s - Yields on outstanding corporate and S t a t e
and l o c a l government bonds increased f u r t h e r during t h e week ending
A p r i l 2'/. U. S. Government bond y i e l d s declined somewhat.
Yields on newly o f f e r e d i s s u e s also increased f u r t h e r .
An Aa-rated 30-ysar f i r s t mortgage p u b l i c u t i l i t y bond i s s u e was
r e o f f e r e d on April 25 a t a y i e l d of 3.77 per c e n t , UO b a s i s p o i n t s
higher than t h e y i e l d on outstanding bonds of s i m i l a r term and
q u a l i t y . In l a t e March a s i m i l a r new o f f e r i n g was p r i c e d to y i e l d
3.19 per c e n t , 18 b a s i s p o i n t s above t h e then p r e v a i l i n g y i e l d
l e v e l of outstanding i s s u e s .
Despite the small volume of f l o t a t i o n s , S t a t e and l o c a l
government new i s s u e y i e l d s have a l s o r i s e n more r a p i d l y than y i e l d s
on outstanding bonds, p a r t i c u l a r l y f o r the s h o r t e r m a t u r i t i e s . This
i s i l l u s t r a t e d t y the t a b l e on t h e following page which compares
y i e l d s on the Aa-rated S t a t e of Ohio highway i s s u e sold l a s t July
and t h e one sold l a s t week, with the y i e l d s on outstanding bonds
of comparable r a t i n g a t both d a t e s .




H.1U

-2—

July 20,
•1955

April 2St
1956

(Per cent)
State of Ohio f l o t a t i o n s (limited tax revenue)
Reoffering yields.
1-year maturity
5-year maturity
10-year maturity
15-year maturity
ITet i n t e r e s t cost
Yields on outstanding Aa-rated S t a t e and
l o c a l issues (Moody's)
20-year
10-year

1.30
1.85
2 = 15
2.30
2.31

: !

Change
(Basis p o i n t s )

2.30
2.75
2.90
3.00
3*09

+100
+90
+75
+70
+78

2.69
2.U7

+31
+U3

Expected May volume - An estimated $1,050 million of corp o r a t e s e c u r i t y issues are expected to be offered during the month
of May. This i s about one-third g r e a t e r than the volume in April
and 16 per cent greater than in the corresponding period l a s t year.
Large publicly o f f e r e d i s s u e s expected t o t a l $568 million, i n c l u d ing the $300 million General E l e c t r i c debenture i s s u e .
S t a t e and l o c a l governments are expected to o f f e r $375
million of bonds during May, somewhat g r e a t e r than the volume sold
in both A p r i l t h i s year and May 1955* No very large issues are expected.
Stock p r i c e s - Common stock p r i c e s , as measured by the
SEC index of 265 stocks, increased 1.6 points during the week ending
April 27, to close a t 286.2. Daily indexes indicated some decline
i n prices on balance through Wednesday of t h i s week.
More d e t a i l e d information concerning recent market developments i s presented in t h e attached e x h i b i t s .

Business Finance and Capital Markets Section,
Division of Research and S t a t i s t i c s ,
Board of Governors of the Federal Reserve System.




EXHIBIT A

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

CORPORATE

\ u. s.

GOVERNMENT:

A T V - / o i d s""5

'/

STATE AND LOCAL
GOVERNMENT A a a

J 2.00

long-term * /

U. S.
Date

Corporate

New s e r i e s

Spread between
•State and
l o c a l govt. (old s e r i e s ) and
Corporate(State and
Aaa 3 /
| l o c a l Aaa
"

(Per cent)

1956 - High
Low

3.U2
2.99
3.09
2.85
3.17
2.91
3-30
3-07

March -30
April 6
April 13
April 20
April 27

3-lit
3.16
3-21
3-27
3-30

1953 - High
195U - High
1955 - High

(6/19)
(1/9)
(1/8)
(U/23)
(12/23)
(1/7)
(it/27)
(3/2)

3-15
2.78
2.71*
2.UU
2.9lt
2.62
3.08
2.80

(6/6)
n.a.
(12/26)
(1/9)
(8/7)
(8/5) 3.03 (8/5)
(1/7) " 2.89 (6/10)
(it/20) 3-13 (lt/20)
(2/17) 2.92 (2/3)

2.73
1.98
2.21
1.90
2.3U
2.05
2.51
2.17

2.96
3-03
3.06
3-08
3-07

3.01
3.07
3.09
3.13
3.11

2.33
2.38
2.38
2. it 3
2.51

.y average of d a i l y f i g u r e s .

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

.38
.19
• it3
.32
• 3it
.13
.28
' -13
.18
• 13
• 15
•19
.23

.81t"
•30.
.61
• 29
.70
• 5U
.68
• 56
.63
•65
.68
.65
.56

Average term of bonds included i s 25-26

2/ Weekly averages of d a i l y f i g u r e s . The old s e r i e s i n c l u d e s f u l l y . t a x a b l e ,
marketable 2 1/2 p e r cent bonds due or f i r s t c a l l a b l e a f t e r 12 y e a r s through
September 1955, and those due or c a l l a b l e i n 10-12 y e a r s t h e r e a f t e r ; t h e average
term to f i r s t c a l l of t h e bonds included declined from lU y e a r s i n e a r l y 1953 t o
11 1/2 y e a r s in e a r l y 1956. The new s e r i e s i s comprised of the 3 per cent bond
of 1995 and t h e 3 1/U per cent bond of 1978-83«'
3/ Thursday f i g u r e s . On general o b l i g a t i o n bonds are included; average
term i s 20 y e a r s .
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 on d i f f e r e n t d a t e s
for different series.




EXHIBIT B

LOWER - GRADE

BOND

YIELDS

STATE AND LOCAL GOVT. Bo,

1953

1954

1955

1956

Corporate
Baa 1 /

S t a t e and.
l o c a l govt.
Baa 2 /

3.89(9/18)
3.50 ( 1 / 2 )
. 3;71 ( 1 / 8 )
3.UU (12/31)
3.63 (12/30)
3.U5 ( 1 / l U j
3.72 (U/27)
3.58 ( 3 / 9 )

3-79 ( 6 / 2 5 )
2.96 ( 1 / 8 )
3.32 ( 1 / 7 ) '
2.93 (8/5)
3.26(12/29)
3.02 ( 1 / 6 )
"3-UU (1/26)
3.20 ( 3 / 8 ) ,

3.27
2.71
3.00
2.72
2.99
2.76
3.12
2.89

3.29
3.33
3.35
3.U0
3-UU

3.00
3.01
3.06
3.10
3.12

Date

State and
l o c a l govt,
r s v . 3/

(Per cent)
1953 - High
Low
195k - High
1955 -.High
1956 - High
Low
March
April
April
April
April

30
6
13
20
27

3.62
3.61 .
3*67
3.70 •
3.72

(6/26)
(1/2)
(1/1)
(8/13)
(12/30)
(1/7)
(U/27)
(2/21)

1 / Weekly average of d a i l y f i g u r e s . Average term of bonds
i n c l u d e d i s 25-26 y e a r s .
2 / Thursday f i g u r e s . Only general o b l i g a t i o n bonds are
i n c l u d e d ; average term i s 20 y e a r s .
3/ Friday f i g u r e s . Average r a t i n g of bonds i n c l u d e d i s
between -aa and A; average term i s 20 y e a r s .
Note.—Highs and lows 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 on d i f f e r e n t d a t e s f o r d i f f e r e n t s e r i e s .




STOCK MARKET

Date

Stock p r i c e

Trading 1 'Common
Stock market customer c r e d i t
volume 2 /
stock
Customers'
( m i l l i o n s 1yields 3 /
d e b i t b a l - loans to
of s h a r e s ) [ ( p e r c e n t ) |
ances k / " o t h e r s " 5 /
( M i l l i o n s of d o l l a r s )

1956 - High
Low

167.1
1UU.0
221.li
156.5
270.7
217. It
290.8
257.k

February
March
A p r i l 13
A p r i l 20
A p r i l 27

266.3
283-2
285.6
28b.6
286.2

1953 - H i g h
19514 - High
1955 - High

(1/2)
(9/18)
(12/31)
(1/6)
(12/30)
(1/110
(U/6)
(1/20)

2,1445
2,055
3,1436
2,1405
U,030
3,537

2.5
0.9
3-7
1.1*
li. 6
1-5
3-1
2.0

5.75
5-15
5-33
It.20
U. 22
3.78
14,08
3-68

2.3
2.7
2.6
2.3
2.5

3.93
3.68

3,991 "
14,038

n.a.
n.a.

n.a.
in . a .

k,oko
3,991

1,665
1,3114
2,388
• 1,653
2,805
-2,517
2,786
2,710
.2,7140
2,786
n.a.
n.a.

780
66U .
l,0l»8.._
7U6
1,2U1
1,018
1,267
1,219
1,251
1,252
r/l,2ii7
1,260
n.a.

"

n.a.—Not available.
1 / SEC i n d e x of 265 common s t o c k s , weekly c l o s i n g p r i c e s , 1939=100; converted
t o 19H7-lt9=100 by F e d e r a l R e s e r v e . T h e - c o n v e r s i o n f a c t o r i s 1 2 3 . 9 1 .
2 / Averages of d a i l y t r a d i n g volume on t h e New York Stock Exchange.
3 / Moody's 200 common s t o c k s ; end of month f i g u r e s .
5 / End of month f i g u r e s f o r member f i r m s of t h e New York Stock Exchange which
c a r r y - m a r g i n a c c o u n t s ; e x c l u d e s b a l a n c e s - s e c u r e d by U. S . Government o b l i g a t i o n s .
5 / Wednesday f i g u r e s f o r weekly r e p o r t i n g member banks. Excludes l o a n s f o r
p u r c h a s i n g o r c a r r y i n g U. S. Government s e c u r i t i e s a t banks i n New York and Chicago.
Weekly r e p o r t i n g banks account f o r about 72 p e r c e n t of l o a n s t o o t h e r s .
Note.—Highs and lows 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 on d i f f e r e n t d a t e s
for different series.




Exhibit D

H.lli

Corporate and State and Local Government
Security Offerings and Placements
(In millions of d o l l a r s )

1956
January
FebruaryMarch
April
May
June

!

Corporate
1955
1

New c a p i t a l
1954

1956

State and l o c a l
1 1?55
1

1954

487
708
e/875

546
436
1,261

547
426
6#

404
696
e/375

535
312
. 538

396
411
565

e/800
e/1,050

494
903
697

' 497
656
842

• e/350
I/375

427
350
641

734
748
853

283
654
680

909
335
747

470
249
406

279
261
649

1,207^
631
921

1,003
290
6o4

919
658
408

594
423
877

2,243
2,09k
1,917
2,760
9,01k

1,608
1,995
1,991
1,896
7,490

July
August
September

" .

October
November
December
^ 1 s t quarter
P 2nd quarter
3rd quarter
4th quarter
Year

e/2,070

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

e/1,670

e/l,li75

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

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

Excluding finance companies 2 /
1,791
1,912
1,441
2,619
7,762

1,527
1,927
1,911
1,792
7,158

1/ Includes $637.2 million AT&T convertible debenture "issue.
2 / Total new c a p i t a l issues excluding o f f e r i n g s of sales and personal finance companies.
Note.—Details may not add to t o t a l s due to rounding.




I

1
H.lU

:

Exhibit E
Large Public S e c u r i t y Issues f o r New C a p i t a l
(Other than U. S. Treasury) 1 /
Proceeds of Large Issues Offered
(Millions of d o l l a r s )
S t a t e and
l o c a l government

Corporate

Month

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

750
173
m
175
101
ko$
328
805
221
263
95 .
212
278

,

337
238
152
103
278
65
2 3h
716
396
205
192
h33
163

Other £ /
__
15

.

25
50

Large I n d i v i d u a l I s s u e s Offered April 2 through 27
Issuer

Type 3/

Amount
Coupon
(millions
r a t e or
O f f e r i n g Rating
JMaturity n e t i n t e r of
yield
dollars)
e s t cost

CORPORATE
Bank of America
S c o t t Paper
P l a n t a t i o n Pipe Line
F l o r i d a Porer & Light
Duquesne Light
C a t e r p i l l a r Tractor
Columbia Gas
Southern C a l i f . Edison
Wisconsin E l e c t r i c Power
Westcoast Trans. Ltd.
Natiomri.de Corporation

Com. s t k .
.56.0
Conv. deb.
98.7
SF deb.
25.0
1st mtg. bds. 15.0
1 s t mtg. bds. - 20.0
Com. s t k .
3k.U
Deb.
ho.o
1st & r e f .
mtg. bds.
ko.o
1 s t mtg. bds. 30.0.
Sub. deb.
20.5
Com. s t k .
15.2




1971
1986
1986
1986

3
3 1/2
3 5/8
3 1/2

1981
1981
1986
1981

3.00
3-50
3.57
3.U0

A
A
A
Aaa

3 7/8

3.85

A

3 5/8
3 7/8
1.

3.68
3.77
U.00

Aa
Aa
Baa

H.lt*

E-2

Large Individual Issues Offered April 2 through 27 (Cont'd)
Issuer

Type 3/

Coupon
Awount
Offering
(millions
r a t e or
Rating
Maturity
yield
of
net i n t e r e s t cost
dollars)

STATE & LOCAL GOVERNMENT
Escanaba, Michigan
La. State Bldg. Auth.
P h i l a . School D i s t . , Pa.
State of Massachusetts
D e t r o i t , Michigan
Omaha Public Power D i s t . ,
Nebraska
Oklahoma City School
D i s t r i c t No. 89
Wichita, Kansas
Oakland, California
State of Ohio
Hempstead, N.I .' Union
Free School D i s t . No. 3
Columbus, Ohio
Territory of Hawaii
*

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

7.0
12.0
12.0
18.0
5-U

1959-8 7)^/ ' 3.89
1960-352.88
1958-81
2.37
1957-86
Var.
1957-81

3.00^3,80
2.90-3,00
2.00-3.10
1.80-2.35
2.00-2.90

Baa
A
Aa
A

Rev.

15-0

1958-86

2.9b

2.10-2.95

Aa

G.O.
G.O.
G.O.
L.L.

6.8
6.9
5.0
50.0

1958-71
1957-66
1957-76
1956-72

2.89
2.93
2.59
3.09

2.20-2.80
2.20-2.80
1.90-2.65
2.15-3.00

A
A
Aa
Aa

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

6.0
5.0
7-5

1957-85
1958-82
1959-76

3.50
2.89
3.22

2.UO-3.50
2.20-2.80
2.70-3.20

Baa
Aa
A

Deb.

50.0

1981

3 7/8

OTHER

Province of Ontario

3.90

A

1/ Includes corporate and other security o f f e r i n g s of $15 million and over;
State"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 $5 million and over.
2 / Includes foreign government and I n t e r n a t i o n a l Bank f o r Reconstruction and
Development i s s u e s .
3/ In the case of S t a t e and l o c a l government s e c u r i t i e s , G.O. denotes general
obligation; Rev., revenue bonds; G.R., general obligations additionally secured by
f a c i l i t i e s revenues; L.L., limited l i a b i l i t y obligations secured by pledge of
designated revenues.
h/ For 1961-66 m a t u r i t i e s only; 1967-8$ not r e o f f e r e d .




1

9
Exhibit F

H.lll

Forthcoming Large Public Security Offerings f o r New Capital
(Other than U. S. Treasury) 1 /
Expected Proceeds from Forthcoming Large Issues
During month following
date shown
Corporate
(other 2j

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

U25
160
67
U07
222
805
202
215
70
176
123
380
568

116
339
3kh
ICO
lSii
8U3
330
205
121
327
220
132
173

Subsequent to
date shown
Corporate
[other 2 /

1,111

50

850
830
1,135
920
909
U12
230
3$
233
1,013
818

1,917

1,861

1,8U5
2,018

1,971
2,205
1,650

756

618
917
785
811
832

50

Forthcoming Large Offerings, as of April 27
Amount

Issuer

o S - S S f

Approximate date
of
°ffering

CORPORATE
Duke Power
"Kaiser Aluminum and Chemical
General Telephone
.California Oregon Power
General American Transportation
Niagara Mohawk Power
General E l e c t r i c
Northern I l l i n o i s Gas
^Consolidated Edison
^Southern C a l i f o r n i a Gas
American Telephone and Telegraph

1st & ref.mtg.bds.
Conv. p r e f . s t k .
Conv. deb.
1 s t irtg. bds.
Conv. deb.

30,0
30.0
53*0

I60O
23.8

Gen'l. mtg. bds.
30.0
Deb.
300.0
1 s t mtg. bds.
15.0
1st &ref.mtg.bds. 30.0
1st mtg. bds.
kO.O
Deb.
250.0

May 1
May 3
May 7
( r i g h t s expire)
May 8
May 9
( r i g h t s expire)
May 9
May 15
May 16
May 23'
May 23

STATE AND LOCAL GOVERNMENT
Allegheny County Sanitary Auth., Pa.
Baltimore, Maryland
*La Mesa, Lemon Grove & Spring Valley
Irrigation Dist., Calif.




Rev.
G.O.

25.0
25.0

May 1
May 1

5.2

May 1

H.Ik

F-2
Forthcoming Large O f f e r i n g s , as of April 2? (Cont'd)
Issuer

Type

Amount
( m i l l i o n s Approximate date
of o f f e r i n g
of d o l l a r s )

STATE AND LOCAL GOVERNMENT (Cont'd)
Los Angeles, C a l i f . , Dept. cf
Water & Power
Great F a l l s , MontanaPas idena, C a l i f .
•K-Tulsa, Oklahoma
S a l t River P r o j e c t , Arizona
^Toledo, Ohio
Dade Co,, F l o r i d a , Special Tax
School D i s t . No. 1
Orleans P a r i s h , La.
^Cleveland, Ohio
Georgia Rural Roads AuthorityChesapeake Bay Ferry Commission
e s t a t e of C a l i f o r n i a
F l o r i d a S t a t e Turnpike Auth.
Oklahoma Turnpike AuthorityPennsylvania Turnpike Commission
^ Washington S t a t e To ll Bridge- Auth'.
W Inter-American Center Auth., F l a .

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

9.0
5.0
11.0
5.0
11.0
5.0

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

15.0
5.0
16.2
15.5
20.0
50.0
185.0
65.0
62.0
227.0
70.0

May
> May
May
May
May
May

2
7
8
8
15
16

" May 16
May 16
May 22
May
May
June 13
Summer
1956
1956
1956
1956

OTHER
None
*—Included in t a b l e f o r f i r s t time.
n.a.—Not a v a i l a b l e .
1 / Includes corporate and other i s s u e s of $15 m i l l i o n and over; S t a t e and local"government i s s u e s of $5 m i l l i o n and over.
2 j 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 .




I

Exhibit G
Yields on Mew and Outstanding
E l e c t r i c Power Bonds, Rated Aa and. A 1 /

Date

1952 average
1953-average
195h average
1955 average.
1956 - January
February
March 8
16
. 23
.
30
April L
k
11
•

2

?

Aa-rated o f f e r i n g y i e l d s . A-rated o f f e r i n g y i e l d s
Amount above
Actual 1
above
Actual
(per cent) seasoned y i e l d s
(basis points)
3.16
3.1*6
3.03
3.23

13
16
. 3
9

None
*3.15
3.19

3
5

3.37

18

3-77

ItO

I

3.3S
3.78
3.12
3-33

12
26
-3
12

None
3.23

-s

3.35

7

3.#
3.57
3-60
3.67

2$
23
26
29

*—Single observation, not an average.
1 / Covers only 30-year f i r s t mortgage bonds, as r e p o r t e d i n Moody's Bond
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 d u r i n g . t h e i n d i c a t e d period and of .
the 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 the same day. The number of new i s s u e s included i n the
monthly averages v a r i e s from 2 to U except f o r October 19 5U when 6 A-rated
i s s u e s were included. Average m a t u r i t y f o r the seasoned i s s u e s v a r i e s from.26
to 28 y e a r s .