Full text of H.16 Capital Market Developments : April 19, 1956

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

April 19, 1956
CAPITAL MARKET DEVELOPMENTS

The volume of l a r g e p u b l i c l y sold s e c u r i t y i s s u e s was
moderate l a s t week. One l a r g e corporate i s s u e with proceeds of
$U0 m i l l i o n and 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 $50 m i l l i o n were sold during t h e week ending A p r i l 13- This week the expected volume of l a r g e o f f e r i n g s i s small, t o t a l i n g $1+0 m i l l i o n f o r
corporations and $16 m i l l i o n f o r S t a t e and l o c a l governments.
Bond y i e l d s - Yields on n e a r l y a l l types of outstanding
bonds continued t o i n c r e a s e l a s t week. The i n c r e a s e was p a r t i c u l a r l y
sharp in y i e l d s on corporate and S t a t e and l o c a l revenue bonds, as
shorn i n Exhibit A and B* Yields on corporate s e c u r i t i e s increased
f u r t h e r t h i s week. During t h e r e c e n t p e r i o d of sharp i n c r e a s e s i n
y i e l d s the spread between corporate Aaa y i e l d s and U. S. Government
(old s e r i e s ) y i e l d s has narrowed from 27 to about 15 b a s i s p o i n t s .
Yields on newly o f f e r e d s e c u r i t i e s also i n c r e a s e d . A
new Aa-rated e l e c t r i c u t i l i t y bond i s s u e was reoff.ered Tuesday,
April 17, a t 3.68 per c e n t , a y i e l d about 30 b a s i s p o i n t s higher
than on a s i m i l a r i s s u e o f f e r e d i n mid-March and about 50 b a s i s
p o i n t s above new o f f e r i n g y i e l d s i n February and e a r l y March.
• P r i c e r e s t r i c t i o n s were removed Tuesday on an A-rated e l e c t r i c
u t i l i t y bond i s s u e i n i t i a l l y o f f e r e d l a s t week a t a y i e l d of 3=67
per c e n t , but l a r g e l y u n d i s t r i b u t e d , and t h e y i e l d increased to
about 3.85 per c e n t .
Stock market c r e d i t - C u s t o m e r c r e d i t i n t h e stock market
increased $h7 m i l l i o n during March to t o t a l &U,038 m i l l i o n a t the end
of t h e month. The r i s e i s a t t r i b u t a b l e almost e n t i r e l y to a $U6 m i l l i o n increase i n customers' n e t d e b i t balances, excluding balances
secured by U. S. Government s e c u r i t i e s . This i n c r e a s e canceled the
February d e c l i n e , bringing t h e t o t a l of d e b i t balances outstanding
back t o the l e v e l p r e v a i l i n g at the end of January. Money borrowed
by New York Stock Exchange f i r m s maintaining margin accounts, except borrowings on U. S. Government s e c u r i t i e s , declined somewhat,
while customers' n e t f r e e c r e d i t balances i n c r e a s e d . These and
other d a t a on stock market c r e d i t f o r February and March are shown
i n the t a b l e on t h e following page.




#

H.lli

End of month
February
March

Change

(Millions of d o l l a r s )
Customer c r e d i t
Excluding U. S. Govt, s e c u r i t i e s - Total
Net- d e b i t balances
Bank loans to "others"
Net d e b i t balances secured by U. S. Govt, s e c u r i t i e s
Bank loans t o others f o r purchasing or carrying
U. S. Govt, s e c u r i t i e s
Broker and d e a l e r c r e d i t
Money borrowed except on U. S. Govt, s e c u r i t i e s
On customer c o l l a t e r a l
Money borrowed on U. S. Govt, s e c u r i t i e s
Customers' n e t f r e e c r e d i t balances

# ^ 6
1,251

3k

).!.j038
27m

+U5

31

-3

1,2#

36

Uo

2,137
1,756
52
913

2,127
1,712
50
960

Stock p r i c e s - Common stock p r i c e s , as measured by the
SEC index of 265 s t o c k s , declined 5*2 points during the week ending
April 13. Daily indexes i n d i c a t e l i t t l e change in p r i c e s the f i r s t
t h r e e days of t h i s week.
More d e t a i l e d information concerning r e c e n t market developments i s presented in the attached e x h i b i t s .

Business Finance and C a p i t a l Markets Section,
Division o f ' Research and S t a t i s t i c s , .
Board of Governors of t h e Federal Reserve System.

#



+1

-10
-lU
+U7

EXHIBIT A

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

CORPORATE

\

\

U. S. GOVERNMENT

lono-lerm

*I

STATE AND LOCAL
GOVERNMENT A a a

U. S. Govt., long-term 'if
Corporate
Aaa 1 /

Old s e r i e s

New s e r i e s

Spread between
State and
U. S. Govt.
l o c a l govt. (old s e r i e s ) and
Corporate IState and
Aaa 3 /
Aaa
[ l o c a l Aaa

(Per cent)
1953 - High
Low
195U - High

1956 - High
Low

3.1*2
2.99
3.09
2.85
3-17
2.91
3-21
3-07

March
March
March
April
April

3.10
3.12
3.11*
3.16
3.21

1955 - High

16
23
30
6
13

(6/19)
(1/9)
(V8)
(V23)
(1^23)
(1/7)
(V13)
(J/2)

3.15
2.78
2.71*
2.hh
2.9U
2.62
3-06
2.80

(6/6)
2.73 (6/25)
(12/26)
n.a..
1.98 ( 1 / 8 )
2.21 (6/10)
(1/9)
(8/7)
1.90 ( 9 / 2 )
( 8 / 5 ) 3.03 ( 8 / 5 ) - '2.3* ( 9 / 8 )
(1/7) 2.89 (6/10)
2.05 (5/26)
2.38 (L/12)
( V 1 3 ) 3.09 (L/13)
2.17 (2/23)
(2/17) 2.92 (2/3)

2.89
2.93
2.96
3-03
3.06

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

2.97
2.99
3.01
3-07
3-09

.

2.25
2.27
2.33
2.38
2.38

.38
• 19
• 1*3
• 32
.31*
.13
.28
.13

.8U
.30
.61
.29
.70
•5U
.68
•56

.21
.19
.18
• 13
•15

•6U
.66
.63
• 65
.68

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 includes f u l l y taxable,
marketable 2 1 / 2 per cent bonds due or f i r s t c a l l a b l e a f t e r 12 years through
September 1955> and those due or callable in 10-12 years thereafter; the average
term to f i r s t c a l l of the bonds included declined from Hi years i n early 1953 t o
11 1 / 2 years i n early 1956. The new s e r i e s i s comprised of the 3 per cent bond
of 1995 and the 3 l / k per cent bond of 1978-83.
3/ Thursday f i g u r e s . Only general obligation bonds are included; average
term i s 20 years.
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 d i f f e r e n t s e r i e s .




EXHIBIT

LOWER - GRADE

BOND

B

YIELDS

STATE AND LOCAL GOVT.

V

!

STATE AND LOCAL GOVT. REVENUE

Corporate
Baa 1 /

Date

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. 3 /

(Per cent)
3-89
3.50
3.71
3.UU
3.63
3.L5
3-67
3.58

1953 - High
Low
195k - High
Low
1955 - High
Low
1956 - High
Low
March
March
March
April
April

16
23
30
6
13

(9/18)
(1/2)
(1/8)
(12/31)
(12/30)
(3/1U)
(L/13)
(3/9)

!

43-60
3.62
3.6k
3-67

3.79
2.96
3.32
2.93
3.26
3.02
3.35
3.20

(6/25)
(1/8)
(1/7)
(8/5)
(12/29)
(1/6)
(U/12)
(3/8)

3.23
3-26
3.29

is

fi cures.
l n d

1^TLsd"46lS£=s.

3-27
2.71
3.00
2.72
2.99
2.76
3.06
2.89

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

2.96
2.98
3.00
3.01
3.06
Averaige terra of bonds

Only general o b l i v i o n bonds are

I n e l ^ ^ v e ^ e ^ m i ^ W ^ U n g

of bonds included I s

i L T d m l s e r i e s and • *
be on d i f f e r e n t dates f o r d i f f e r e n t s e r i e s .




Stock price
index 1 /

Common
volume y
(millions yields 2 /
of shares) (per cent)

Stock market customer c r e d i F
Customers
Bank
debit bg^- loans t o
"others" 2J
(Millions of d o l l a r s )

1953 - High
Low
195k - High
Low
1955 - High
1956 - High
Low
February
March 30
April 6
April 13

167.1
lkU.0
221. U
156.5
270.7
217.4
290.8
257.U
266.3
283.2
287.8
290.8
285.6

:i II
2.5
0.9

1.5
3.1

2.0

4:?

2.8

2.8
2.6

&
S

1,048

7L6
1,21a
1,018

1,26?
1,2U9

1.251
1.252
1,252
1,252

n.a.—Not a v a i l a b l e .
'
.
,
1 / SEC index of 265 common s t o c k s , weekly closing p r i c e s , 1939-100; converted
to 19U7-U9-100 by Federal Reserve. The conversion f a c t o r i s 123.91.
Averages of d a i l y trading volume on the New York Stock Exchange.
Moody's 200 common stocks; 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 the New York Stock Exchange which
carry""margin accounts; excludes balances secured by U. S. Government o b l i g a t i o n s .
,
5 / Wednesday f i g u r e s for" weekly reporting member banks. Excludes loans f o r
purchasing or carrying U. S. Government s e c u r i t i e s at"banks i n New York and Chicago.
Weekly reporting banks account f o r about 72 per cent of loans to others.
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.

f




Exhibit, D

H.lU

Corporate and S t a t e and Local Government
Security Offerings and Placements
( i n millions of d o l l a r s )

1956

Corporate
1 1955
1

New c a p i t a l

S t a t e and l o c a l
1 1955
1

195U

195U

1956
UOU
e/650
e/375

535
312
538

Lll

e/350

U27
350
6U1

73U
7U8
853

396-

J anuary
February
March

U8?
708
e/875

5U6
. U36
1,261

5U7
U26
635

April
May
June

e/800

U9U
903
697

U97
6#
8U2

583
65U
680

909
,335
. f'7U7

170
2L9

U06

279
261
619

1,207
631
921

1,003
290

9#
658

59k
U23
877

2,2L3
2,09^
1,917
2,760
- 9,01U

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

July
August
September
October
November
December
^ ^ s t quarter
^ ^ n d quarter
3rd quarter
i;th quarter
Year

e/2,070

'

565

U08

60U

' e/l,L25

1,385
1,118

l,m

1,981
5,911

1,372

/

2,33a

1,188
1,891
6,789

Excluding finance companies 2 /
1 s t quarter
2nd quarter
3rd quarter
Uth quarter
. Year

e/1,670

1,791
1,912

i , a i

2,619
7,762

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

1/ Includes $637*2 million AT&T convertible debenture i s s u e .
1 / 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.




Exhibit E

H.lU

Large Public Security Issues f o r New Capital
(Other than U. S. Treasury) 1 /
Proceeds of Large Issues Offered
(Millions of d o l l a r s )
Month

Corporate

1955 - March
April
1
May
June
July
August
September
October
November
December
1956 - January
February March-

S t a t e and
l o c a l government

750
173
k83
175
101
W5
328
805
221
263
95
212
278

'337
238
152
U03
278
65
2 3k
716
396
205
192
u33
163

Other 2/

15

25
50

Large Individual Issues Offered April 2 through 13
Issuer

Type 3/

Coupon
Amount
(millions Maturity r a t e or
Offering Rating
of
net interyield
e s t cost
dollars)

CORPORATE
. Bank of America
S c o t t Paper
Plantation Pipe Line
Florida Power & Light
Duquesne Light
C a t e r p i l l a r Tractor
Columbia Gas

Com. stlc.
Conv. deb. -/ .
SF deb.
1st mtg. bds.
1st mtg. bds.
Com. s t k .
Deb.

56.0
98.7
25.0
15.0
20.0
3U.U
Uo.o

Rev.
L »L •
G.O.
G.O.
G.O.

7.0
12.0
12.0

1971
1986
1986
1986

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

3.00
3-50
3.57
3.U0

A
A
A
Aaa

1981

3 7/8

3.85

A

STATE & LOCAL GOVERNMENT
Escanabi, Michigan
. La. State Bldg.. Auth.
P h i l a . School D i s t . , Pa.
S t a t e of Massachusetts
D e t r o i t , Michigan
Omaha Public Power, Dist.,
Nebraska
OTHER
None



Rev.

18.0
5.U

1958-81
1957-86
1957-81

2.88
2.37
Tar.

3.00-3.80
2.90-3.00
2.00-3.10
1.80-2.35
2.00-2.90

15.0

1958-86

2.9U

2.10-2.95

1959-87 u /
1960-85%/

3.89

Baa
A
Aa.
A
Aa

H.lU

E-2

1 / Includes corporate and other 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 over; 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 Recons t r u c t i o n 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 gations 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 t y pledge of designated revenues.
V For 1961-66 m a t u r i t i e s only; 1967-85 n o t r e o f f e r e d .




Exhibit F

H.lii

Forthcoming Large Public Security Offerings f o r New Capital
(Other than U. S. Treasury) 1 /
Expected Proceeds from Forthcoming Large Issues
Subsequent t o
date shorn
S t a t e and
Corporate
l o c a l govt.

During month following
date shown

Date of
computation

211
U25
160
67
U07
222
805
202
215
70
176
123
380

1955 - Mar. 31
Apr, 29
. May 31
June 30
July 29
Aug. 31
Sept. 30
Oct. 31
Nov. 30
Dec. 30
1 9 # - Jan. 31
Feb. 29
Mar. 30

208
116
339
3hh
100
18U
8U3
330
205
121
327
220
132

——

—

*

50

—

922
1,111
850
830
1,135
920
909
U12
230
85
376
233
1,013

other

2,009 •
1,917
1,861
1,81:5
2,018
1,971
2,205
1,650
756
618
917
785
811

2

-

- —

50

—,

Forthcoming Large Offerings, as of April 13
Issuer

Type

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

CORPORATE
Southern California Edison
Wisconsin E l e c t r i c Power
Westcoast Transmission Ltd.
Duke Power
General Telephone

1st & r e f . mtg.bds.
1 s t mtg. bds.
Sub. deb.
1st & ref. mtg. bds.
Conv. deb.

C a l i f o r n i a Oregon Power
General American Transportation

1st mtg. bds.
Conv. deb.

*Kaiser Aluminum and Chemical
•^Pacific FinanceGeneral E l e c t r i c
American Telephone and Telegraph

Conv. p r e f . s t k .
Deb.
Deb.
Deb. -

UO.O

30.0

20.5

30.0
53.0

16.0
23.8

30.0
25.0

300.0
250.0

April 17
April 2k
April
May 7
May 7
( r i g h t s expire)
May 8
May 9
( r i g h t s expire)
. May
May
Spring
June

STATE.AND"LOCAL GOVERNMENT
*Purdue University, Indiana
^Oklahoma City School D i s t . , No. 89
"Wichita, Kansas.
-Oakland, California




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

9.0

6.8

6.9
5.0

April
• April
April
April

18
19
2U
2h

/

H.lU
Forthcoming Large O f f e r i n g s , as of April 13 (Cont'd)
Type

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

STATE AND LOCAL GOVERNMENT (Cont'd)
Florida Development Commission
S t a t e of Ohio
P h i l a d e l p h i a , Pennsylvania
•stiempstead, N. Y., Union Free
School D i s t . No. 3
^Columbus, Ohio
T e r r i t o r y of Hawaii
Allegheny County Sanitary Auth
Pa.
*Balvimore, Maryland
-*Los Angeles, C a l i f . , Dept. of
Water & Power
•*C-reat F a l l s , Montana
Pasadena, C a l i f .
*Dade Co., F l o r i d a , Special Tax
School D i s t . No. 1
Georgia Rural Roads Authority
^Chesapeake Bay Ferry Commission
F l o r i d a S t a t e Turnpike Auth.
Oklahoma Turnpike Authority
Pennsylvania Turnpike Commission
Washington State Toll Bridge Auth
S a l t River P r o j e c t , Arizona
Inter-American Center Auth., F l a .

Rev.
L«L«
G.O.

5-5
50.0
12.3

April 2k
A p r i l 25
April 25

G.O.
G.O.
J3.0.
Rev.
G.O.

6.0
5.2
7.5
25.0
25.0

.April 25
April 26
April 26
May 1
May 1

9.0
5.0
11.0-

May 2
May 7
May. 8

Rev.
G.O.
G.O.

•

Rev.

15.0
15.5
20.0
209.0
65.0
62.0
227.0
11.0
70.0

Deb.

50.0

G.O.
Rev.
n . a.
n.a.
Rev.'
Rev.
Rev.

May 16
May
Spring
Summer
1956
1956
1956
1956
1956

OTHER
Province of Ontario

April 25

*—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
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 .

#



H.lii

Exhibit G
Yields on Hew 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
Actual I Amount above
Actual 1 Amount above
seasoned
y
i
e
l
d
s
(per cent), Iseasoned y i e l d s
(per cent)
1(basis p o i n t s )
(basis points)

Date

1952
1953
195U
195#

average
average
average
average-

1955JanuaryFebruary
March 8
16
23
' 30
April k
h
11

3.16
3.16
3.03
3.23
None
*3.15
3.19
.

1

3-37

13
16
3
9
3
5 .
18

3.#
3.78
3-12
3.33

12
26
-3
. 12

None
3.23

-5

——

3.35

7

3.#
3.S7
3.60
3.67

25
23
26
29

—Single observation, not an average.
. 1 / Covers only 30-year f i r s t mortgage bonds, as reported 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 during the 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 in the
monthly averages v a r i e s from 2 to U except f o r October. l?5h when 6 A-rated
i s s u e s were included. Average maturity 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 .
•
»