Full text of H.16 Capital Market Developments : October 27, 1958

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Not for Publication

DECONTROLLED AFTER SIX MONTHS

H.lV

October 27, 1958.

CAPITAL MARKET DEVELOPMENTS
(Including Quarterly Review of State and
Local Government Security Financing)

The volume of public security financing for new capital is
expected to be somewhat larger this week than it has been in recent
weeks. During the week ending October 2hs large corporate issues, including expiration of subscription rights, totaled # 3 million and
State and local government issues totaled $35 million. A foreign government issue for $25 million was also sold. This week, corporations are
expected to offer large security issues amounting to $153 million, while
State and local governments are expected to offer bonds with aggregate
proceeds of $80 million. (Another large State government issue—New York
State Power Authority's $200 million bond issue—had been tentatively
scheduled for sale in October; however, reports how indicate the sale
will probably be later in the year.) A foreign government issue for
$28 million is also scheduled for sale this week.
Bond yields - Changes in bond yields were mixed, but minor
•last week. Yields on outstanding high-grade corporate and State and
local government and U. S. Government obligations increased, while those
for lower-grade corporate and State and local government bonds declined.
Stock prices = Stock prices declined last week after increasing in each of the previous nine weeks. Standard and Poor's index of
500 common stocks closed at 50.81 on October 2k--one per cent lower than
a week earlier. Trading:activity slackened somewhat from the unusual
pace of the previous week, but continued to be very heavy, averaging
3.9 million shares a day.
State and Local Government Security
Offerings in the.Third Quarter of 1958
State and local government security issues sold during the
third quarter of 1958 were in larger volume than in any earlier third
quarter, although as usual sales were smaller than in the first two
quarters of the year. State and local governments offered $1.9 billion
of long-term bonds in the third quarter, one-fifth larger than in the
corresponding period of 1957= Nearly all bonds sold were for the purpose of raising new capital, as refunding issues continued to be small
in volume. For the first nine months of 1958 $ State and local government security financing totaled a record $6„li billion—-one-fourth larger
than a year earlier.




H.lfc

- 2 Long-term Security Issues of State and Local Governments
Third Quarter
(In millions of dollars)
1958

Issuing authority:
State
County and township
Municipality
School District
Special authority
Unidentified 1/
Total

1i36

12k

695
332
301
1,888

I 1957
256
119
563
383
2li5
1,566

Purpose of issues
New capital total
Schools 2/
Highways, bridges, and tunnels
Residential buildings
Hospitals and institutions
Sewer and water
Misc. public service enterprises
Veterans' aid
Other
Unidentified 1/

571
235
19b

3k

271
95
120
329

5lk

272
37
20
287

kl

75
231

1 1956
119
87
295

29k

, 19b

1 1955

77
125
296
210
230
199

1,232

971

. 1*124

1.188-

ii06
155
9
5
170
91
2
- 184

273
200
129
7
183
18
8
109
199

272
271
lliO
13

64
10
106
159
a

—

—

—

22

17

12

Total

1,888

1,566

988

1,136

1,181*
488
192
ItO
99
156
2
215

1,110

680
2l±8
191
22
6
30

6k

-1,888

1,566

Total

m

30%
7
.21
61

35k

163

1,136

37

Type of issue:
General obligation
Revenue
Utility
Quasi-utility
Special tax
Rental
Public Housing Authority
Federal Government loans 3j

157.
96.
286
177

988

Refunding

'

1 195k

681

15k

1,232

59k

m

k21

61

122
1

136
3

988

1,136

1,232

n.a.—Not available.
1/ issues of less than $500,000 not further classified.
2/ Data for years prior to 1956 probably understate school issues by about
one-fourth because of unclassified small issues.
3/ Coverage for 1956-1958 is broader than for earlier years.
Note.—Details may not add to totals because of rounding.
Source.—195U and 1955, Bond Buyer and Federal Reservej 1956-1958, Investment
Bankers Association of America. Data for 1956-1958 not strictly comparable with
data for earlier years.




;

H.lli

- 3 "

Purpose of issue - School construction was the most important
purpose of financing as it has been in other recent years. Accounting
for 30 per cent of total^offerings, the volume of $571 million sold in
the third quarter was about the same as last year; this is in contrast
to the first two quarters of the year when school financing was in larger
. volume than a year earlier. Issues to obtain funds for sewer and water
construction were the second largest in volume and totaled $271 million,
slightly less than in the third quarter a year earlier.
Sales of bonds for residential building and miscellaneous public
service enterprises showed the largest percentage increases this year.
New financing for hospitals and institutions and veterans' aid was also
larger than a year earlier, but highway financing was in smaller volume.
Type of issuer - Most major types of issuing units sold a
larger volume of bonds this year than last. The only exception was school
districts, whose sales were more than 10 per cent smaller than a year
earlier. * While the volume of bonds floated for educational purposes was
about the same as last year, a larger proportion was sold by States and
special authorities. Municipalities were the most important group of
issuers, selling bonds totaling $695 million. This volume accounted for
- more than one-third of total offerings and was nearly one-fourth greater
than in the third quarter of 1958. Bonds sold by States, totaling $1*36
million, showed the largest increase from a year earlier. (Part of this
increase reflects a $100 million issue sold by California for financing
veterans' aid. No issue of this size was sold in the third quarter of •
1927.)
Type of issue - General obligations continued to be the most
important type of issue sold but were slightly less important than last
year. Totaling $1.2 billion, these obligations accounted for 63 per cent
of all offerings this year as compared with 71 per cent a year earlier.
Federal Government loans accounted for a larger proportion of the total
this year. The share of revenue bond financing was about the same in
both third quarters—accounting for one-fourth of total sales.
More detailed information concerning recent capital maricet
developments is presented in the attached exhibits.

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




EXHIBIT A

HIGH-GRADE BOND YIELDS

M

LOWER - GRADE BOND YIELDS




CORPORATE Boo

D LOCAL GOVT. Bao_

H.Ik

Exhibit B
Tables for Exhibit A
High-grade Bond Yields

Date

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

State and
local govt.
Aaa y

Corporate
Aaa 1/

U. S. Govt,
long-term 2/

3.1*2 (6/19)
2.85 (it/23)
U.lll (9/27)
It. 13 (10/10)
3.55 (5/2)

3.19 (6/5)
2.16 (8/6)
3.76 (10/18)
3.83 (10/3)
3.07 (it/25)

2.73
1.90
3.45
3.31
2.61t

it.ll
it. 13
it.13
it. 09
it. 10

3.7it
3.83
3.72
3.7it
3.77

3.2i;
3.25
3.25
3.21
3.23

(Per cent)
1953
195!)
1957
1958

-

High
Low
High
High
Low

Sept.. 26
Oct. 3
Oct. 10
Oct.. 17
Oct. 2k 2/

"

(6/25)
(9/2)
(8/29)
(9AD
(5/1)

.38
.30
.60
.51
.22

.83
.30
•U7
.62
.3it

.37
.30
.itl
.35
.33

.50
.58
.it7
.53
.5it

Lower-grade Bond Yields
State and
local govt.
Baa y

Date

Corporate
Baa 1/

High
Low
High
High
Low

3.89 (9/18)
3.itlt (12/31)
5.10 (11/29)
it.96 (1/3)
it. 51 (7/11)

3.79 (6/25)
2.93 (8/5)
lt.5l (8/29)
it.3it (9/11)
3.6k (5/1)

it. 90
it.92
it.9it
it.9it
it. 91

it. 29 .
it. 29
it. 30
it. 26
it. 2it

Spread between
Aaa and Baa
State and
Corporate
local govt.

(Per cent)
1953
1$5U
1957
1958

-

Sept. 26
Oct. 3
Oct. 10
Oct. 17
Oct. 2it 2/

.69
.52
1.27
1.28
.77

1.21
.96
. 1.21
1.11
.98

.79
.79
.81
.85
.81

1.05
l.Oit
1.05
1.05
1.01

1
g/ Preliminary.
'
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 obligations bonds are included; average tern
is 20 years.
Note.—Highs and lows are for individual series and may be on different dates for
different series.




STOCK MARKET




Exhibit D
Table for Exhibit C
Stock Market

Date

1953 - High
Low
195U - High
Low
1955 - High
Low
1956 - High
Low
1957 - High
Low
1958 - High
Low
August
September.
Oct. 10
Oct. 17
Oct. 2b 2/

Stock price
index 1/

26.51*
22.95
35.98
2l*.93
15.89
35.28

(1/2)
(9/18)
(12/31)
(1/8)
(12/9)
(l/ll*)

•k9.6k (8/3)

1*3.22 (1/20)

1*9.08
39.1*8
51.1*6
1*0.37

(7/12)
(12/20)
(10/17)
(1/10)

1*7.70
1*8.85
51.39
51.1*6
50.81

Trading
Common
stock
volume 2/
yields V
(millions
of shares) (per cent)

2.5
0.9
3.7

1.1*

1*.6
1.5

3

1*.2

1

Stock market customer credit
Customers
Bank
Total debit bal- loans to
ances!:/ "others" 5/
(Millions of dollars)
2,1*55
2,055
3,1*36
2,1*05

1*.08

1*,030

1*.1*1

3,537
l*,0l*7
3,911*

3.82

l*.3l*

.2$

3.50
1*.58

s

1.7

3.0
3.1*
3.8
1*.9
3.9

3.78
3.69
3.50
3.50
3.51*

1*,199
1*,313
n.a.
n.a. _
n.a.

1.1*

k.9

1*,313
3,551*

1,665
1,311*

780
661*

2,388

1,01*8

1)653
2,805
2,517
2,823
2,71*0
2,887
2,1*82
3,111*
2,1*87

71*6
1,21*1

3,013
3,111*

1,018

1,267
1,155
1,163
1,051*
1,317
1,051

1,186
1,199

1,166
1,180

p/ Preliminary.
'
n.a.—Not available.
1/ Standard and Poor's composite index of 500 common stocks, weekly closing
prices, I9ltl-lt3"10. Monthly data are averages of daily figures rather than of
Fridays' only. Highs and lows are for Friday's data only.
2/ Averages of daily trading volume on the New York Stock Exchange.
2/ Standard and Poor's composite stock yield based on Wednesday data converted to weekly closing prices by Federal Reserve. Yields shown are for dates
oh which price index reached its high or low.
h/ End of month figures for member firms of the New York Stock Exchange which
c a n y 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 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.
Note.—Highs and lows are for individual series and may be on different dates
for different series.




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

1959
January
February
March

i,!£y

April
May
June

1,110.
600
881

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

quarter
quarter
quarter
quarter

1st half
Three quarters
Year

1

723

•
X
e/1,100
e/550

3,135
2,622
e/2,672

'

5,757
e/8,l*29

New capital
Corporate 1/
State and local 2/
1
1956
1
1956
1957
1958
1
1957
1,060
1,065
1,320

573 .
712
817

812
953
511

7U2
572
506

1*04
696
390

?§
1,453

818
1,11*6 .
841

798
895
551

765
546
393

3781*90
735

1,003
921
973

. 1,063
65U
838 .

803
>03
2/61*5

529
581*
1*31

1*08
206
357

1,090
789
1,076

71*5,/
1,0892/
1,088

e/650

698
633
698

3,W*5
3,119
2,899
2,95k

2,102
2,805
2,556
2,922

2,276
2,2ltl*
2/1,851

6,59b
9,1*93
12,W*7

1,907
7,163
10,381

> 5 2 0
2/6,371

.

639
31*7
1*09

1,820
1,701*
1,51*U
2,029

1,1*90
1,603
971
1,395

3,521*
5,069
7,099

3,093
1*,06U
5,1*59

Excluding finance companies
1st
2nd
3rd
lith

quarter
quarter
quarter
quarter

2,891*
2,583
3/2,622

Year

3,237
2,889
2,582
2,810

1,6U7
2,511
2,216
2,826

11,518

9,260

e/ Estimated.
1/ Securities and Exchange Commission estimates of net proceeds.
2/ Data through June 19$6 are Pond Buyer data classified as new capital by
Federal Reserve; later data are from the Investment Bankers Association of America
and are somewhat more complete as to coverage than the earlier data, particularly
for Federal Government loans.
3/ Includes $718.3 million AT&T convertible debenture issue.
U/ Includes $571.5 million AT&T common stock issue.
Total new capital issues excluding offerings of sales and consumer finance
companies.
** /




H.1U

Exhibit F
Other Security Offerings 1/
(In millions of dollars)
Long-term
Foreign government 2/
Federal agency 3/
1956
1956
~1957
1958
1957
I

January
February
March
April
May

196
53
139
198

120

81

37

30

8

U9

123

h&
U2

523

125

56

28
7
30

2
39

October November
December

60
1

h

iiii
5

21

507

300

April
May
June
July
August
September

233

U60

60

16k
109
215

100
169

572

Short-tern
State and local government h/
January
February
March

19*55"

60

95

July
August
September

. Year'

1,163
251

72

Federal agency 3/

196
357
2U9

1UU

161

371

208

638
lj-30
505

380
220
283

336
I469
. 501

323
31U
260

22Ji
370
512

222
125
273

273

lltf

357
35U

205
337
153

125
252

289
U23
2/362

272
272
252

195
207
179

303
,91
159

1U8

2 9h
328

1,238
255

116

107
222
128

3,27k

2,706

5,513

3,157

; 26U

October
' November
December
Year

176

209

329

601
206

e/ Estimated.
jo/ Preliminary.
1/ 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.
Issues not guaranteed by the U. S. Government. Source: long-term, Securities
and Exchange Commissionj short-term, Federal Reserve.
jj/ Principally tax and bond anticipation notes, warrants or certificates and Public
Authority notes. In some instances PHA notes included may- have a somewhat
DigitizedHousing
for FRASER
longer term than one year. Source: Bond Buyer.



hxhibit 0

Large Lontf-toi-m public Security issues for New Capital
(Other than II. S. Treasury) 1/
Proceeds ol". Large Issues Offered
(Millions of dollars)

Month

Corporate

1957 - September
October
November
December
1958 - January
February
March
April
May
June
July
August
September

State and
local government

Other 2/

21,5

133
393

537
57k
U20
399
318 .
605
1,093
725
356
281
771
209
. 8#

3hh
hoh
hio

151*
1,357
266

5#
182
300
"505
195
275
109
288

653
161*
86

hi

18

Large Individual Issues Offered October 1 through 2k

Issuer

Type y

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

Rating

CORPORATE
•American Cement Corp.
S.F. deb.
Public Service Co. of Ind.
Pfd. Btk.
Idaho Power Co.
1st mtg. bds.
Peoples Gas Lt. & Coke Co. Cap. stk.
Cincinnati-Suburban Bell
Deb.
Telephone Co.

20.0

1978

5

5.16

A

2ii.3
15.0
18.3

1988

h 1/2

U.50

Aa

25.0

1993

1* 1/2

k.ko

Aaa

23.7
12.0
18.0
13.0
25.0
10.0

1959-78
1988
1959-70
1959-78
1959-68
1959-83

STATE AND LOCAL GOVERNMENT
Boston, Massachusetts
Venice, Illinois
Met. Wtr.Dist.of So.Calif.
State of South Carolina
Cook County, Illinois
Oakland Unif .Sch.Dist.,Cal.




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

3.80
3.Olt
3.06
3.29
3.28

2.20-3.85
5.oo
2.00-3.10
1.90-3.15
2.15-3.35
2.00-3.1*0

A
Aa
Aa
A
Aa

.

H.Ik
Large Individual Issues Offered October 1 through 2k (Cont'd)

Type 2/

Amount
Coupon
rate or
Offering
'millions
Maturity
net interyield
of
dollars)
est cost

Rating

OTHER
Commonwealth of Australia

Bds.

25.0

1978

5

5.20

A

" n . a . — N o t 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/ Includes foreign government and International Bank for Reconstruction and
Development .issues and non-guaranteed issues by Federal agencies.
In the case of State and local government securities, G.O. denotes general
obligations3 Rev.-Ut., revenue obligations secured only by income from public utilities; Rev.-Q.Ut., revenue bonds secured' only by revenue of quasi-utilities5 Rev.S.T., revenue bonds- secured by revenue from specific 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
Subsequent to
date shown

During month following
date shown

Date of
computation

Corporate |

1957 - Aug. 30
Sept. 30
Oct. 31
Nov. 29
Dec. 31
1958 - Jan. 31
Feb. 28
Mar. 31
Apr. 30
May 29
June 30
July 31
Aug. 29
Sept. 30

%\

1*58
383
378
198
1,123

I266!

768
161
785
113

2/ [corporate
183
331
339
363
3U5
370
131*
298
1*93
177
225
55
2ia
295

30
30
18
150
110
150
36

—

81*5
61*7
815
1,193
1,161
1,378
1,208
670
561
1*61*
1,01*8
.
3%
911*
216

|<»her 2/
379
551
51*3
558
561*
1*87
31*1
330
1*93
208
235
125
1*35
521*

30
15
1*5
63
165

110
150
36

—

Forthcoming Large Offerings, as of October 21*

Issuer

Florida Power & Light Co.
International Harvester Credit Corp.
Glidden Co.
Puget Sound Power & Light Co.
Hartford Electric Light Co.
J. I. Case Co.
Columbia Gas System, Inc.
Indiana & Michigan Electric Co.
Natural Gas Pipeline Co.
?
^Pacific Telephone & Telegraph Co.
^Pacific Telephone & Telegraph Co.
Consumers Power Co.
Montana Power Co.
Commerce Oil Refining Corp.
Martin Co.




Type

Amount
Approximate date
(millions
of offering
of dollars)

Common stk.
Deb.
S.F. deb.
Deb.
1st nitg. bds.
Conv. deb.

20.0
50.0
30.0
15.0
18.0
20.1

Deb.
1st mtp. bds.
1st mtg.p.l. bds.
Deb.
Common stk.

25.0
20.0
30.0
80.0
16.6

Pfd. stk.
1st mtg. bds.
Jeb., bds. & common
S.F. deb.

15.0
20.0
1*5.0
25.0

Oct. 29
Oct. 30
Oct. 30
Oct. 30
Oct. 30
Oct. 30
(rights expire)
Nov*_. 7
Nov. 7
Nov. 8
Nov. 19
Dec.
(rights expire)
1958
1958
1958
1958

H.lli
Forthcoming Large Offerings, as of October 2h (Cont'd)

Type

Amount
Approximate date
(millions
of offering
of dollars)

. STATE AND LOCAL GOVERNMENT
City & Co. of San Francisco, Calif.
^Chicago Metro. Fair & ExpositionAuth
City & Co. of Denver, Colorado
Los Angeles Dept. of tftr. Pwr.,Calif.
St. Louis, Missouri
New York State Power Authority
^Chicago, Illinois
^Baltimore Co., Maryland
Public Housing Authorities
*State of Maryland
^Allegheny Co. Sanitary Auth., Pa.
^Philadelphia, Pennsylvania
Florida State Board of Education
Chesapeake Bay Ferry Commission
State of California
Detroit-Metro. Expressway
*Los Angeles Sch. Dist., Calif.
OTHER
Monetreal, Canada

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

26.k
20.0
12.8
10.0
10.8
200.0
25.0
11.5
1+5.3
16.8
20.0
17.U
12.5
lliii.O
50.0
35.0
28.0

Deb.

28.0

Oct.
Oct.
Oct.
Oct.
Oct.
Oct.
Nov.
• Nov.
Nov.
Nov.
Nov.
Nov.
Nov.
Nov.
Dec.
Nov.
Nov.

27
27
29
29
29
5
6
6
12
13
20

3

Oct. 29

*—Included in table for first t
i
m
e
.
~
'
'
1/ Includes corporate and other issues of $15 million and over3 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: Republic of Panama's
$16.7 million bond issue—proceeds for new capital less than $15 million.




H.lii

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

Date

1952 - 1957
High
Low
1958 - January
February
March
April
May 7
13
15
16
20
21
22
28
June 10
17
25
July 2
9
18
23
Oct. 7
15

Aa-rated offering yields
A-rated offering yields
Amount above
Amount, above
Actual
Actual
seasoned yields
seasoned yields
(per cent)
(per cent)
(basis points)
(basis points)
5.00(8/llt/57)
2.93(3/31/51)

87
-3

*3.60 ,
3.89^/
It. 08
3.91

-8
22
35
18

3.90

5.50(11/7/57)
3.00(3/17/51I)
3.96^
1.07
4.16
U. 01
it. 00

3
9
-1
8
3

it.07
it. 35

it
32

it.00
3.95

-1
-6

21

3.85
3.85

16
16

3.85
3.82
3.95

17
12
2it

it.00
it. 10
it. 10
It.57
it. 50

25
28
29
25
22

123
-15

3.982/

1

31
I

*—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.