Full text of H.16 Capital Market Developments : November 16, 1959

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Not for Publication

DECONTROLLED AFTER SIX MONTHS

H.llt

November 16, 1959.
CAPITAL MARKET DEVELOPMENTS

The volume of new security financing is expected to be very
large this week, particularly in comparison with the volume of recent
weeks. Last week, ending November 13, only one large corporate issue
for $30 million and one large State and local "government issue for $lii
million were sold. This week, a $250 million AT&T debenture issue is
scheduled for sale in addition to two other corporate offerings totaling $61; million. A number of State and local government bond issues
with aggregate proceeds of $128 million are also included on the
calendar.
Bond yields'- Bond fields on outstanding bonds changed little
last week. Yields on U. S. Government obligations increased slightly
while yields on corporate and lower grade State and local government
bonds remained stable. Yields on high-grade State and local government obligations declined slightly.
Stock prices - Stock prices, as measured by Standard and
Poor's index of 500 common stocks, declined last week, closing at
56.85 on November 13. Trading activity also declined, averaging 3.2
million shares a day.
More detailed information concerning recent capital market
developments is presented in the attached exhibits.

Capital Markets Section,
Division of Research and Statistics,
Board of Governors of the Federal Reserve System.




HIGH-GRADE

LOWER-GRADE

BOND

BOND

YIELDS

YIELDS




u

Exhibit b

H.l4

Tables for Exhibit A
High-grade Bond Yields

Date

Corporate
Aaa 1/

U. S. Govt,
long-term 2/

Spread between
U. S. Govt, and
Corporate State and
Aaa
local Aaa

State and
local govt.
Aaa y

(Per cent)
19514 - Low
1957 - High
1958 - High
Low
1959 - High
Low

2.85
lt.Ht
U.13
.£

(4/23)
(9/27)
(10/10)
(5/
(11/I3)
I1.0? (1/9)

2.15
3.76
3.8U
3.07
1.30
3.83

Oct.
Oct.
Oct.
Nov.
Nov.

lt.56
4.56
1..56
1».S7
it. 57

4.13
4.06
It. 09
It. 09
it. 10

16
23
30
6
13 2/

(0/6)
(10/18)
(12/26)
(V25)
(9/18)
(1/2)

1.90
3.45
3.31
2.6U
3.65
3.06

(9/2)
(8/29)
(9/11)
(5A)
(9/2lt)
(3/26)

3.58
3.53
3.49
3.W
3.47

.30
.60
.51
.22
.50
.16
.43
.50
.47
.48
.47

.30
.47
.72
.34
.92
.53
'

.55
.53
.60
.61
.63

Lower-grade Bond Yields

Date

Corporate
Baa 1 /

State and
local govt.
Baa y

Spread between
Aaa end Baa
State and
Corporate
local govt.

(Per cent)
1954 - Low
1957 - High
1958 - High
Low
1959 - High
Low
Oct.
Oct.
Oct.
Nov.
Nov.

16
23
30
6
13 2 /

3.44
5.10
4.96
4.51
5.29
4.83
5.29
5.28
5.26
5.27
5.27

(12/31)
(11/29)
(1/3)
(7/11)
(10/16)
(4A7)

2.93
4.51
4.34
3.64
4.46
3.92
4.40
4.34
4.31
4.31
4.31

(8/5)
03/29)
(9/11)
(5/1)
(7/2)
(3/26)

.52
1.27
1.28
.77
.77
.56

.96
1.21
1.11
.93
.98
.79

.73
.72
.70
.70
.70

.82
.81
.82
.83
.84

"

1/ Weekly average of daily figures. Average term of bonds included is 25-26 years
2/ Weekly average of daily figures. The series includes bonds due or callable in
10 years or more.
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.




STOCK

MARKET

STOCK

MARKET

CREDIT
Change m Serifs

MORTGAGE

AND

An

BOND

CORPORATE




YIELDS

I0NDS

Exhibit 1) - Tables for Exhibit C
Stock Market

Date

Stock price
index 1 /

1953-1958 - Higfr
Low
1959 - High
Low

51i.ll
22.95
60.51
51.37

September
October
Oct. 23
Oct. 30
Nov. 6
Nov. 13 p/

57.05
57.00
56.56
57.52
57.60
56.85

Trading
Stock market customer credit
Common
Customers'
volume 2/
Bank
yields 2 / (millions
Total debit bal- loans to
(per cent) of shares)
ances h/ "others" 5 /
(Mil]Lions of dollars)

(12M/58)
(9/18/53)
(7/31)
(2/6)

3.30
6.25
3.08
3.3li

li.9
0.9
li.3
2.1

It,1*92
2,055
U,761t
l*,ltU3

3,285
l,31ii
3,li01
3,250

1,317
669
1,332 1 , 3 7 3
1,210 1,180

3.26
3.2k
3.28
3.23
3.22
3.27

2.7
2.8
2.8
3.8
3.5
3.2

1I,WI3

3,250

1,193
1,191
1,190
1,191
1,195
n.a.

n.a.
n.a.
n.a.
n.a.

1

n.a.—Not available.
g/ Preliminary.
1/ Standard and Poor's «*r>mposlte index of 500 ooirmon stocks, weekly closing prices, 1941-43=10. ' Monthly date,
are averages of daily figures rather than of Fridaya' only. Highs and lows are for Fridays' data only.
2/ Standard and Poor's composite stock yield based on Wednesday data converted to weekly closing prioeu by
Federal Reserve. Yields shown are for dates on which price index reached its high or low.
3/ Averages of dally trading volume on the New York Stock Exoliange.
4/ Bnd of month figure a for member firms of the New York Stock Exchange which carry margin accounts; 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 • Prior to July 1, 1959, such loans are excluded only at banks in New York and Chicago.
Weekly reporting banks account for about 70 per cent of loans to others. For further detail see Bulletin.

Mortgage and Bond Yields 1/
%1A
mortgages 2/
1953-1958 - High
Low
1959 - High
Low
1959

June
JulyAugust
September
October

Spread between now
Aaa corporate
corporate bonds and
bonds 1/
New 3/ I Seasoned bj F11A mortgages|Seasoned bonds

5 . 6 3 (11/57)
U.S6 (2/55)
5.80
5.57

li.61 ( 6 / 5 7 )
2.7b. (3/5W
5.29
h.29

k.12 (9/57)
2 . 8 5 (h/$h)
L #
h.12

1.96
.5b
1.29
.83

.90
-.12
.77
.15

1:8
5.80

1.82
14.80
h.7h
5.29
5.10

LU6
ii.U7
h.k3
li.52
U.57

.89
.95
1.06
n.a.
n.a.

.36
.33
.31
.77
.53

Moody'" Inventors Service. Monthly averts of daily data.
Digitized for4/FRASER


.

Exhibit E
Long-term Corporate and State and Local Government
Security Offerings and Placements
(In millions of dollars)

1959

Corporate 1/
1 1958
1

New capital
1957

1959

State and locfal 2/
1 195b
1 1957

January
February
March

8I4.O
7k5
631

i j s k

1,060
1,065
1,320

8
615

IS

April
May
June

899
791
874

1,11*0
#7
887

765
>,1I53

931
. 592
981

798
895
551

BA97

1,107
51*0
l,llk

1,003
9214
973

566
•- 516
2/h88'

806
U03
651

529
58k
k31

e/750
e/750

862
518
920

1,090
789
1,076

e/600
e/U75

k56
k7k
L35

698
633
698

2,216
. 2,%
6/1,888

3,139
2,623
2,760
2,300

3,kk5
3,lk9
2,899
2,95k

2,138
2,50k
p/1,571

2,276
2,2a
1,860
1,365

1,820
1,70k
1,5kk
2,029

5,762
8,522
10,823

6,59k
9,k93
12,kk7

k,6ii2
2/6,213

L520
6,380
7,716

3,52k
5,06?
7,099

July
August
September
October
November
December
1st
2nd
3rd
kth

quarter
quarter
quarter
quarter

1st half
Three quarters
Tear

. li,780
3/6,668

1

812

7k2
572
506
•

765
5k6
393

Excluding finance companies hj

-

1st
2nd
3rd
kth

s®

728

quarter
quarter
quarter,
quarter -

2,011
2,k09
e/1,588.

Year

2,899
2,586
2,731
2,213

3,237
2.809
2,582
2.810

10,129

11,518

e/ Estimated.
^
1/ Securities and Lxchange Commission estimates of net proceeds.
2/ Investment Bankers Association of America estimates of principal amounts.
3/ Includes $718.3 million AT&T convertible debenture issue.
5/ Total new capital issues excluding offerings of sales and consumer finance
companies.




H.ll*

Exhibit F
Other Security Offerings 1/
(In millions of dollars)
Long-tern

Foreign government 2/
1959 F 195B I 1957"
January
February
March

11

April
May
June

56

S

3
120

July
August
September

73

9
5
17

2

196
.53

1

Federal agency 3/

ZHZ
199

ft
30

175

7

Year

992

507

July
August
September

1
21*6
167

2/325

October
November
December
Year

125

98

1*

215
220

100

1

2,321

Short-term
State and local government 1*/

April
May
June

523

60

30

60

190
128

72

161*

28

58
123
71*

295

1,163
251

1

October
November
December

January
February
March

W

3 E

572

Federal agency 3/

233
1*60
273

Sg

359
500
1*89

371
208
11*1*

638
1*30
505

357
351*
261*

205
337
153

1*86
675
289

209
161
329

336
1*69
501

289
8

272
272
252

727
365
665

1*37
.206
330

3
21*3

159

3,910

3,271*

326

%

1*51*
ill*
137
3,098

'

221*
370
512
1,238
S
5,5143

p/ Preliminary.
% / Data presented in this exhibit differ from those in Exhibit E in that refunding Issues, as well as new capital issues, are included. Long-term securities are defined as those maturing in more than one year.
2/ Includes securities offered in the United States by foreign governments and
their subdivisions and by international organizations. Source: Securities and Exchange Commission.
j/ Issues not guaranteed by the U. 3. Government. Source: long-term, Securities
and Exchange Commission* short-term. Federal Reserve.
y Principally tax and bond anticipation notes, warrants or certificates and Public
Housing Authority notes. In some instances BMA. notes included may have a somewhat

longer
tern than one year. Source: Bond, Buyer.



Exhibit Q

H.lii

Large Long-term Public Security Issues for New Capital
(Other than 0. S. Treasury) 1/
Proceeds of Large Issues Offered
(Millions of dollars)

Corporate

Month

1958 - October
November
December
1959 - January
February
March
April
. May
June
July
August
September
October

State and
local government

Other 2/

172
259
229
335
551
369
#3
258
635
19U
263
21k
29k

259
227
• 305
369
3W
215
359
3k2
281*
110
363
199
liOO

209
100
79
17U
35
176 •
20
50
60
50
98
175
20

Large Individual Issues Offered November 1 through 13

Issuer

Type y

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

CORPORATE
Sylvania Elec. Prod., Inc.
Tenn. Gas Transm. Co.^
$=

'

S.F. deb.
Pfd. stk.

25.0
29.5

198U

5 1/2

5.50

STATE AND LOCAL GOVERNMENT
Humboldt Bay Mun. Water
Dist., California
State of Mississippi
OffiER
None




0.0.
0.0.

10.7
lk.0

196U-98/7U 1*.12
1960-75
3.59

3.25-U.15 A
2.80-3.60 Aa

H.UU

G-2
Footnotes

n.a.—Not available.
1/ Includes corporate and other security offerings of $15 million and over;
State and local government security offerings of #10 million and over.
2/ I eludes foreign government and International Bank for Reconstruction and
Developif:v a .ssues and non-guaranteed issues by Federal agencies.
J/ In the case of St^te and local government securities, G.O. denotes general
obligations; Rev.-Ut., revenue obligations secured only by income from public
utilities; Rev.-Q.Ut., revenue bonds secured only by revenue from quasi-utilities;
Rev.-S.T.j revenue bonds secured by revenue from £pecific taxes only; Rev.-Rent.,
revenue bonds secured solely by lease payments.




H.ll*

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

Date of
computation

1958 - Oct. 31
Nov. 28
Dec. 31
1959 - Jan. 30
Feb. 27
Mar. 31
Apr. 30
May 29
June 30
July 31
Aug. 31
Sept. 30
Oct. 30

Subsequent to
date shown

During month following
date shown

^

Corporate
20k
301
210
270
198
396
2l*6
287
165
238
198
37b
385

'

258
229
261
551
292
550
251*
21*7
ll*6
356
385
270
115

y

Corporate Q
326
401
370
365
279
1*76
31*6
332
272
305
517
691*
509

71
75
1*5
20
50

5o
25

i/
675
683
515
856
1*81
761
517
761

5oo

1*06
1*02
1*70
336

71
75
1*5
20
50
'

50
25

Forthcoming Large Offerings, as of November 13
Issuer

Type

Amount
(millions Approximate date
of dollars) of offering

CORPORATE
U. S. Fidelity and Guaranty Co.

Cap. stk.

21*. 1

American Telephone & Telegraph Co.
Transwestern Pipeline Co.
Potomac Electric Power Co.
Gulf States Utilities Co.
Consolidated Edison Co. of New lork
General Telephone Co. of Calif.
^Arkansas Louisiana Gas Co.
New York Electric & Gas Co.

Deb.
Sub. deb. & stk.
1st mtg. bds.
1st mtg. bds.
1st ref. mtg. bds.
1st mtg. bds.
1st mtg. bds.
Com. stk.

250.0
1*0.0
15.0
16.0
75.0
30.0
16.0
15.0

•frjames Talcott, Inc.
Arkansas Power & Light Co.
#Dallas Power & Light Co.
Public Service Electric & Gas Co.
Commerce Oil Refining Corp.

Senior notes
1st mtg. bds.
1st mtg. bds.
Com. stk.
Deb., bds. & com.

15.0
15.0
20.0
25.0
1*5.0

Nov. 17
(rights expiro)
Nov. 18
Nov. 19
Nov. 21*
Nov. 25
Dec. 2
Dec. 3
Dec. 1*
Dec. 7
(rights expire)
Dec. 8
Dec. 9
Dec. 15
Dec. 16
Indefinite

STATE AND LOCAL GOVEHEMENT
State of South Carolina ^
State of Delaware
Illinois
forChicago,
FRASER

Digitized


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

10.0
16.1*
10.0

Nov, 17
Nov. 17
Nov. 18

H-2

H.lU

Forthcoming Large Offerings, as of November 13 (Cont'd)
Type

Amount
Approximate date
(millions
of offering
of dollars)

STATE AND LOCAL GOVERNMENT (Cont'd)
Los Angeles Dept of Wtr. & Pwr.,Cal.
State of New York
Philadelphia, Pa.
•^Alabama Highway Auth.
Los Angeles Sch. Dist.California
Columbus, Ohio
*-Los Angeles Co., Calif.
*State of California
Chesapeake Bay Ferry Commission

Rev.-Ut.
G.O.

0.0.

Rev.-Ut.
G.O.
G.O.
Rev.-Ut.
G.O.
Rev.-Ut.

12.0
55.1
2U.8
10.0
21.5
10.0
13.0
100.0
190.0

Nov. 18
Nov. 18
Nov. 19
Nov. 2k
Dec. 1
Dec. 1
Dec. 3
Dec. 9
Indefinite

OTHER

Included in table for first time.
1/ Includes corporate and other issues of $15 million and over; State and
local government issues of $10 million and over.
2/ Includes foreign government and International Bank for Reconstruction
and Development issues and non-guaranteed issues by Federal agencies.
'*
Note.—Deletions for reasons other than sale of issue: None.




Exhibit I

H.lli

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

Date

1952 - 1958
High
Low

1959 - January

February
March
April

Aa-rated offering yields I A-rated offering yields
Amount above
Amount above j A c t u a l
Actual
seasoned yields
(per cent)
(basis points)

5.00 (9/1V57)
2.93 (3/31/5U)

II.

87
-3
I
10

17

May 1
14
20
21
26
June 4
17

It. 95
4.95

5.00

4.95

38
29

' 26

July 9
10
15
30
Aug. 5
20
Sept. 18
Oct. 22
23
28
29
30

4.93
it. 8 5

4.80

31
24
22
46

5.50 (11/7/57)
3.00 (3/17/54)

123
-15

*4.75^/

23

*4.6?

18

5.06

4.85

17
13

5.13

27

4.922/
5.10 .

5.io

6
24
19

5.io

5.oo

19
13

5.65

60

5.25
5.4o

35
50

16

L95Z/
5.15

40

5.15

42

*—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. Average maturity for the seasoned issues
varies from 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. Monthly averages so marked include one or
more issues with such a provision. Other issues have no such provision.

3/ Provides for a 7-year period during which issue may not be called for
refunding at a lower coupon rate.
http://fraser.stlouisfed.org/

Federal Reserve Bank of St. Louis

November 16, 1959
Appendix 1
MONEY AND CAPITAL MARKET DEVELOPMENTS IN CANADA
The Canadian bond market continued receptive to new issues
last week as bond prices remained firm or rose moderately. The Government's Savings Bond drive was building up cash balances beyond expectations and seemed to ensure that the Treasury would not need to borrow
again in the present fiscal year ending March 31. Chartered bank
loans continued little changed and the banks' liquid assets ratio
remained well above the 15 per cent minimum required. Last Thursday's
91-day Treasury bill rate rose slightly but other short rates continuei
to fall.
Money market rates - Last Thursday's auction rate on 91-day
bills inched up to U.88 per cent from U.83 per cent the week before.
The 182-day bill rate dropped slightly, however, falling to 5.2U per
cent from 5.29 per cent 7 days earlier. The average of closing rates
for day-to-day loans by the chartered banks fell to it.13 per cent for
the week ending last Wednesday compared to U.UO per cent the preceding
week. Short-term bond yields also fell further.
Bond market developments - The market continued to be receptive
to new issues last week! A #20 million corporate issue was placed
privately and a $35 million telephone issue was reported in the negotiation stages. In addition, a $15 million provincial guaranteed issue
of noncallable 25-year debentures was reported to have been placed
privately in the United States. Government bond yields (to midweek)
were either unchanged or fell slightly. At midweek, spreads between
comparable Canadian and United States Government securities were*
0.79
0.71
0.68
1.11
1.07

per
per
per
per
per

cent
cent
cent
cent
cent

on
on
on
on
on

91-day bills
182-day bills
a 9-year bond
a 20-year bond
a 36-year bond

The Government's Savings Bond drive appeared to be going even
better than had been hoped last week. Total purchases for the first
19 days of the campaign were $677 million compared with $U65 million
for the comparable period in 1958 and $65U million in 1957#
Stock prices - Canadian uranium shares fell sharply early
last week following the announcement that sales contracts with the U.S.
Atomic Energy Commission would not be extended. Other-segments of the
market showed little change on limited trading. At Thursday's close the
Montreal industrial average was 1-1/2 per cent higher than the week
before.




Appendix 1-2
Selected Government of Canada Security Yields
Spread between
Canadian & U.S. rates
long-term
3-mo..
bondW
billsj/

3-month
Treasury
billsl/

Intermediate
Govt.
bond£/

Longterm
Govt,
bond2/

195L-55 - Low
1957 - High
1958 - High
Low
1959 - High .
Low

0.78
U.08
3.65
0,87
6.16
3.25

2.81
U.81
U.52
3.31
5.30
U.U5

3.13
U.35
U.U2
3.78
5.30
U.Ui

1.19
0.U7

2.96
0.30

Oct. 21
28
Nov. U
11

U.93
5.02
ii.83
li.88

5.16
5,22
5.21
5.16

5,16
5.17
5.19
5.15

1.191.15
1.16
1.11

0.83
1.00
0.69
0.79

Date

Discount
on 3-mo.
Canadian
dollar£/

1.66
1.1*2
1.06
0.77

Government of Canada 2-3 A per cent of June 15, 1967-68.
3/ Government of Canada 3 - l A per cent of 1979.
5/ U.S. Government 3 - l A per cent of 1978-83. Government of Canada 3 - l A per
cent of 1979.
5/ Spread between average auction rates: on Monday preceding Wednesday date
shown for the United States; on Thursday following Wednesday date shown for
Canada.
6/ Spread between 3-months forward and spot price of the Canadian dollar,
expressed as per cent per annum, on Friday following Wednesday date shown.
Averages of Selected Bond Yields

Date
195U-55 - Low
1957 - High
1958 - High
Low
1959 - High
Low

10
Provincialsj/
3.27
5.18
5.08

h.h6

6.19
5.1h

10
Municipalsj/
3.65
5.77
5.30
5.02
6.60
5.38

10
Public
Utilities^/
3.69
5.50
5.03
U.81
6.01
5.1k

10
Industrialsj/
3.93
5.77
5.12
U.78
6.05
5.22

Govt, of
Canada
long-term^/
3.18
U.29
U.78
3.88
5.61

U.7o

July 31
5.61
5.86
5.57
5.6o
5.05
Sept. 1
5.97
6.20
5.78
5.78
5.52
Oct. 1
6.19
6.60
6.01
6.05
5.61
Nov. 2
6j06
6.53
6.00
6.03
5.52
1/ Average term of bonds included is lL-16 years. Source: McLeod, Young,
Weir and Co., Ltd,
2/ Government of Canada 3 - 3 A per cent of January 15, 1975-78.