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Not f o r P u b l i c a t i o n j^nwTftnT.T.m AFTER SIX MONTHS H.lU September 13, 1956 CAPITAL MARKET DEVELOPMENTS The $25 m i l l i o n i s s u e of t h e Port of New York Authority was the only 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 during the week ending September 7. The calendar f o r t h i s week i n d i c a t e s a l a r g e volume of f l o t a t i o n s . Corporate s e c u r i t y o f f e r i n g s a r e expected t o t o t a l #20b m i l l i o n , comprised of e x p i i a t i o n of s u b s c r i p t i o n r i g h t s to $60 million in convertible debentures, a common stock i s s u e f o r §2l* million and new debt o f f e r i n g s amounting t o $120 m i l l i o n . S t a t e and l o c a l government i s s u e s t o t a l i n g $71 m i l l i o n a r e scheduled f o r s a l e . Bond y i e l d s - Yields on outstanding corporate bonds and U.. S. Government o b l i g a t i o n s continued to i n c r e a s e l a s t week, while y i e l d s on S t a t e and l o c a l bonds remained s t a b l e . Reoffering y i e l d s on new corporate i s s u e s a l s o continued t o r i s e . Two new Aa-rated 30-year f i r s t mortgage p u b l i c u t i l i t y i s s u e s were r e o f f e r e d t h i s week a t y i e l d s of U.20 and I4..I7 p e r c e n t , some 10 b a s i s p o i n t s above t h e o f f e r i n g y i e l d on a~ s i m i l a r o f f e r i n g i n l a t e August. The r e c e n t Port of New. York Authority o f f e r i n g of A-rated consolidated revenue bonds was b& p o i n t s above a comparable i s s u e by t h e A u t h o r i t y in May of t h i s year and 70 b a s i s p o i n t s above a comparable i s s u e i n May of 1955. The r i s e i n y i e l d s on t h e s e Autho r i t y i s s u e s over t h e i r 16-month period c l o s e l y approximates the i n c r e a s e i n y i e l d s on comparable outstanding revenue bonds. I t may be noted t h a t t h e underwriting s p r e a d — i . e . the d i f f e r e n c e between the r e o f f e r i n g y i e l d and t h e n e t i n t e r e s t cost—was wider f o r the i s s u e of t h i s month and. t h a t of November of l a s t y e a r , periods of s h a r p l y r i s i n g y i e l d s , than i t was f o r t h e i s s u e s of May 1955 and May 1956, when i n t e r e s t r a t e s were more s t a b l e . Amount (millions Maturity of d o l l a r s ) May 23, 1955 Nov. 30, 1955 May 21, 1956 Sept. 6 , 1956 30.0 16.0 30.0 25.0 1985 1983 1986 1986 Net interest cost 2.79 2.96 3.Ok 3.52 Yield New i s s u e j Outstanding 1/ 2.75 2.90 3.00 3.U5 1 / As measured by Dow-Jones 10 revenue bond averages. 2.77 2.92 3.0U 3.51 H.lli Stock p r i c e s - The SEC index of 265 common stock p r i c e s increased s l i g h t l y l a s t week, c l o s i n g a t 285.1 on September 7. Daily f i g u r e s through Wednesday of t h i s week i n d i c a t e a sharp dec l i n e in p r i c e s , w i t h t h e d a i l y indexes back to the l a t e June l e v e l s . More d e t a i l e d information concerning recent c a p i t a l market developments i s presented i n the attached e x h i b i t s . 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 t h e Federal Reserve System. H I G H - G R A D E B O N D YIELDS CORPORATE A a a GOVERNMENT: J \ j V " ! STATE AND LOCAL | GOVERNMENT A o a 0 . S. Govt., long-term AJ Date Corporate Aaa y New s e r i e s Old s e r i e s Spread between U. S. Govt, State and l o c a l govt. (old s e r i e s ) and CorporatelState and Aaa y Aaa 1local Aaa (Per cent) 3.U2 (6/19) 2.99 (1/9) 3.09 (1/8) 2.85 3.17 2.91 3.53 3.07 (h/23) (12/23) (1/7) (9/7) (3/2) if 3.U9 3.53 2.7U (1/9) 2 . B (8/7) 2.17 (2/23) .38 .19 .13 .32 .3k .13 .10 .13 .8U •30 .61 .29 .70 .5k .68 .1*5 2.U7 2.53 . 2.59 2.62 2.62 .29 .28 .26 .28 .31 .62 .61 .62 .59 .60 c !:?! c^lf 2.21 (6/10) 3.15 (6/6) 2.78 (12/26) n.a. 1.90 (9/2) 2.62 (9/6) 3.09 3.1h 3.21 3.21 3.22 1 / Weekly average of d a i l y f i g u r e s . i:iis 3.23 1:1 ) Average term of bonds included i s 25-Z& i s E i i e i r i s B ^ 1 9 § te b m d . are i n c h e d , a v . ^ . ™ Note?--Highs and lows are f o r individual s e r i e s and may be on d i f f e r e n t dates for different series. L O W E R - GRADE B O N D YIELDS Per cent per annum Weekly CORPORATE B a a STATE AND LOCAL GOVT. B a a A \ Moody » | W t rTl STATE AND LOCAL GOVT. REVENUE RKUi Corporate Baa y S t a t e and l o c a l govt. Baa 2 / S t a t e and l o c a l govt. rev. 2/ (Per c e n t ) 1953 - High Low 195k - Higi Low 1955 - High Low 1956 - High Low 3.89 3.50 3.74 3-1*1* 3.63 3.1*5 4.01 3.58 August 10 August 17 August 24 August 31 September 7 3.90 3.91* 3.95 3.97 4.01 ts 1%' 3.32 2.93 3.26 3.02 3.60 3.20 3.1t6 i3.60 f 3.60 (1/7) (8/5) (12/29) (1/6) (9/6) (3/8) 3.27 2.71 3.00 2.72 2.99 2.76 3.51 2.89 (6/26) (1/2) (1/1) (8/13) (12/30) (1/7) (9/7) (2/24) 3.22 3.31 3.39 3.51 3.51 1 / Weekly average of d a i l y f i g u r e s . Average term of bonds included 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 a r e included; average terra i s 20 y e a r s . 3 / Friday f i g u r e s . Average rating of bonds included i s between Baa and Aj 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 Stock p r i c e index 1 / Common volume 2 / (millions yields y of shares) ( p e r cent) Stock market customer c r e d i t Customers' Total debit b a l a n c e s h / "others* 5 / ( M i l l i o n s of d o l l a r s ) 1953 - High Low 195U - High Low 1955 - High Low 1956 - High Low 167.1 lltlt.O 221.li 156.5 270.7 217.lt 295.5 257.lt July August August 2lt August 31 September 7 290.1 290.0 286.7 283.2 285.1 '3D 2.5 0.9 3.7 l.lt It.6 1.5 3.1 1.6 5.75 5.15 - 5.33 It. 20 It. 22 3.78 It. 21 3.86 2,ltit5 2,055 3,136 2,105 It,030 3,537 U,0lt7 3,991 1,665 1,3114 2,388 1,653 2,805 2,517 2,810 2,7ltO 780 661t l,0lt8 7lt6 l,2ltl • 1,018 1,267 1,196 2.2 1.9 1.8 1.6 1.8 3.87 It. 02 It,026 2,812 l,211t 1,205 1,205 1,196 n.a.—Not available V 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 19u7-tt9*100 by Federal Reserve. The conversion f a c t o r i s 1 2 3 . 9 1 . f Averages of d a i l y trading volume on t h e New York Stock Exchange. _J Moody's 200 common s t o c k s ; end of month f i g u r e s . %/ End of month f i g u r e s f o r member firms of t h e New York Stock Exchange which carry margin accounts; excludes b a l a n c e s secured by U. S. Government o b l i g a t i o n s . J y Wednesday f i g u r e s f o r weekly r e p o r t i n g n e u t e r banks. Excludes l o a n s f o r purchasing or 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^per c e n t of l o a n s t o o t h e r s . N o t e . - - H i g h s 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 dates for different series. Exhibit D Corporate and S t a t e and Local Government Security 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 ) 1956 January February March April May June July August September • New c a p i t a l 195k 1956 S t a t e and l o c a l 1 1955 1 195U : )396 111 565 579 ; 70U 790 535 It07 1,223 5U7 U26 635 hOh 696 390 8l6 1 , 1 Uh 830 178 886 .687 U97 656 8U2 377 L90 735 U27 #0 6ia 73U 7k8 853 909 335 7U7 e/380 ?215 e/350 U70 21+9 ko6 279 261 6ii9 919 658 108 59l 1*23, 877 e/1,120 e/700 e/850 October November December ^ 1 s t quarter w 2nd q u a r t e r 3rd q u a r t e r Uth q u a r t e r Year Corporate 1 1955 1 - 597 6UU - -• 670 . 1,162^ 632 900 2,073 2,790 e/2,670 2,165 2,052 1,911 2,695 8,821 1,003 290 60U 1,608 1,995 1,991 1,896 7A90 1,190 1,603 9li5 • 535 312 538 1,385 l,iil8 i,m 1,981 5,911 1,372 2,33k 1,188 1,89k 6,789 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 lith q u a r t e r Year 1,617 c/2,520 e/2,U70 1,727 1,870 1,U3U 2,55k 7,569 1,527 1,927 1,911 1,792 7,158 e / Estimated. ' \ 1 / Includes $637.2 m i l l i o n AT&T c o n v e r t i b l e debenture i s s u e . Total 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 personal f i n a n c e companies. . , c / Corrected. U o t e . — D e t a i l s may not add t o t o t a l s due to rounding. i H.llt Exhibit E Large Public Security Issues f o r New C a p i t a l (Other than U. S. Treasury) 1 / Proceeds of Large Issues O f f e r e d (Millions of d o l l a r s ) Month 1955 - August September October November December 1956 - January February March April ' May June July August Corporate • S t a t e and l o c a l government W5 328 805 221 263 95 : 212 278 395 623 185 592 217 65 2 3k 716 1*01 227 192 1M 163 157 ' 233 h63 161; 35 Other 2 / 25 50 50 20 WW 37 Large I n d i v i d u a l Issues O f f e r e d Sept. 1 through 7 Issuer Type 3 / Amount Coupon (millions r a t e or Offering Maturity Rating net i n t e r yield of dollars) e s t cost None STATE & LOCAL GOVERNMENT Port of New York Autho r i t y , N. Y. Rev. 25.0 1986 3.52 3.15 OTHER None 1 / Includes corporate 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 and over5 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 over. 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 . 3 / In t h e 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 o b l i g a t i o n ; Rev., revenue bonds; G.R., general o b l i g a t i o n s a d d i t i o n a l l y secured by f a c i l i t i e s revenues; 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 Digitizeddesignated for FRASER revenues. H.UU Exhibit F Forthcoming Large Public Security Offerings f o r New Capital (Other than U. S. Treasury) 1/ Expected Proceeds from Forthcoming Large Issues Date of computation During month following Subsequent t o date shown date shown Sta e an S t a t e and Corporate ^ ? Other 2/ Corporate l o c a l govt. l o c a l Rovt. 2__ - Aug. 31 Sept. 30 Oct. 31 Nov. 30 Dec. 30 - Jan. 31 Feb. 29 Mar. 30 Apr. 30 May 31 June 30 July 31 Aug. 31 222 805 202 215 70 176 123 380 568 198 1:37 2b7 369 18U 813 330 205 121 327 220 132 173 332 81 131 50 37 920 909 10-2 230 85 376 2# 1,013 818 168 567 1,096 1,202 1,971 2,205 1,650 756 618 917 785 811 832 910. 690 726 c/958 50 37 Forthcoming Large O f f e r i n g s , as of September 7 ^ Type Amount (millions Approximate date of o f f e r i n g of dollars) CORPORATE Gulf States U t i l i t i e s Co. General Telephone Co. of C a l i f . Southern California Edison Co. Northern States Power Co. Procter & Gamble Co. Detroit Edison Co. 1 s t mfcg. bds. 1 s t mtg. bds. Common s t k . 1st mtg. bds. Deb. ; Conv. deb. Tennessee Gas Transmission Co. Southern P a c i f i c R.R. Co. North American Aviation, Inc. 1 s t mtg. bds. 1st mtg. bds. Cap. s t k . Virginia E l e c t r i c & Power Co. New England Tel. & Tel. Co. United A i r c r a f t Corp. -^Columbia Gas System, Inc. .American Tel. & Tel. Co. 0 1 s t mtg. bds. Cap. s t k . Conv. p f d . s t k . Deb. Common s t k . 15.0 20.0 21.3 15.0 70.0 59.8 50.0 35.0 1*3.5 20.0 18.9 33.1 25.0 580.0 September 11 September 12 September 12 September 13 September 13 September lU ( r i g h t s expire) September 18 September 19 September 2k ( r i g h t s expire) September 25 September 28 ( r i g h t s expire) October 2 ( r i g h t s expire) October November 5 ( r i g h t s expire) H.lii F-2 Forthcoming Large O f f e r i n g s , as of September 7 (Cont'd) Issuer Type Amount (millions Approximate date of o f f e r i n g of d o l l a r s ) CORPORATE (Cont'd) j . P. Stevens & Co. CIT F i n a n c i a l Corp. P a c i f i c Finance Corp. Michigan Wisconsin Pipe Line Co. Commercial Credit Co. S.F. deb. Deb. Deb. 1 s t mtg. bds. Notes 28.7 75.0 25.0 25.0 50,0 1956 1956 1956 1956 1956 . STATE AND LOCAL GOVERNMENT Allegheny Co. I n s t . D i s t . , Pa. Oakland Unified School D i s t . , Cal. New York, New York S t a t e of Michigan Los Angeles School D i s t s . , Cal. ^Nassau Co., New York. ^Kansas C i t y , Missouri F l o r i d a Development Commission J a c k s o n v i l l e Expressway Authority Memphis, Tennessee Washington S t a t e T o l l Bridge Auth. F l o r i d a S t a t e Turnpike Authority Oklahoma Turnpike Authority Pennsylvania Turnpike Commission Washington S t a t e T o l l Bridge Auth. Inter-American Center A u t h . , F l a . New Jersey Highway Authority New York S t a t e Thruway Authority G.O. G.O. . G.O. L. L. . G.O. G.O. Water r e v . Bridge r e v . Rev. Elec. rev. Rev. Rev. Rev, . Rev. Rev. Rev. Rev* G.O. 6.3 10.0 30.0 25.0 29.0 19.6 9.5 5.5 U2.0 135.0 • $.k 185.0 65.0 62.0 227.0 31.0 25.0 50.0 Septeiiiber September September September September September September September Fall Fall Fall Fall 1956 1956 1956 1956 1956 1956 11 11 12 13 18 18 19 20 OTHER None 1 / Includes corporate and o t h e r i s s u e s of $15 m i l l i o n and over; S t a t e and l o c a l government i s s u e s of $5 m i l l i o n and over. 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 . c / Corrected. —
@FedFRASER