Full text of H.16 Capital Market Developments : March 9, 1959

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Not for Publication DECONTROLLED AFTER SIX MO
H.lii

March 9, 1959.
CAPITAL MARKET DEVELOPMENTS
(Including Review of Corporate
Security Financing in 1958)

The volume of new public security financing was small during
the week ending March 6, but is expected to be much larger this week.
Large State and local government bond issues sold last week totaled
$81 million; no large corporate issues were offered. This week, corporations are expected to offer large issues, including expiration of, subscription rights, with aggregate proceeds of $103 million. State and
local government issues amounting to $153 million are also scheduled
for sale.
Bond yields - Yields declined last week for all types of
outstanding bonds. The decline was slight for yields on corporate
and U. S. Government obligations, but substantial for those on State
and local government bonds. State and local government bond yields
are now back to their mid-August 1958 levels.
Stock prices - Stock prices and trading activity increased
somewhat last week. Standard and Poor's index of 500 common stocks
closed at 56.21 on March 6, declining from a peak of 56.^3 reached on
Thursday. The volume of trading averaged i|.2 million shares a day.
Corporate Security Offerings in 1958
Net proceeds for new capital - Corporations sold $2.3 billion of security issues to obtain new capital in the fourth quarter of
1958, bringing the total for the year to $10.8 billion. This volume
for 1958 was one-eighth less than the record volume sold in 1957, but
slightly above the total of new issues sold in 1956.
Most major groups of issuers sold a smaller volume of offerings in 1958 than a year earlier. New issue volume by financial and
real estate companies showed the largest percentage decline. Most of
the decline is accounted for by the smaller volume of financing by
sales and consumer finance companies, -whose financing was particularly small in the last three quarters of 1958.
Electric, gas and water utilities were the most important
group of issuers, offering securities with proceeds of-$3*6 billion
and accounting for one-third of all corporate offerings. This total
was only 6 per cent below the volume in 1957 but kS per cent greater
than new issues sold in 1956. The volume of securities sold by these
utilities was unusually large in the first quarter of 1958 but was
smaller in the other three quarters than a year earlier.




H.ll*.

-

2

-

Table 1
Corporate Security Offerings for New Capital
by Type of Business of Issuer
19^-1958
(Net proceeds in millions of dollars)
1958

1957

3,296
600
1+08
306
233
220
219
218
116
139
135
75
73
111
53
390

k,10h
876
313
517
689
214;
111
1*8
51
129
106
169
3I48
1*
1*9
io50

All corporate offerings
Manufacturing
Petroleum and refining
Primary iron and steel
Primary nonferrous metals
Nonelectrical machinery
Chemicals
Paper
Other transportation equipment
Foods
Electrical machinery
Fabricated metal products
Stone, clay and glass
Motor vehicles and equipment
Beverages
Printing
Other 2/

1956

1955

1951

10,381*

8,821

7,1*90

3,336
U13
198
136
362
23k
298
9h
113
119
68
180
265
10
29
517

h m
100
313
107
168
163
119
95
91
195
93
60
1*16
17
30
1*27-

2%#
292
361*
11*5
252
21*7
125
30
101
72
35
66
102
16
18
179

Electric, gas and water utilities

3,598

3,821

2,1*71*

2,251*

2,675

Communication

1,29k

1,1*1*1

1,38k

i,ol*5

.651

Railroad

. 206

326

365

221

213

Other transportation

571

1*75

329

323

288

Commercial and other

61+2

309

281

382

362

Mining

2l*0

270

. 398

386

1*68

Financial and real estate
Sales and consumer finance cos.
Other

?1*1*
399
515

1,701
929
772

1,815
17125
690

1,812
1,227
585

788
332
1*57

~~
1/ Less than $500,000.
2/ Includes small volume of foreign issues not farther classified in the manxrfacturing group.
Note.—Details may not add to totals due to rounding.
Source.—Securities and Exchange Commission and Federal Reserve.




- 3 -

H.lii

New financing by manufacturing companies totaled $3.3 billion, one-fifth smaller than in 1957 and slightly below the volume in
1956. Petroleum and refining companies sold the largest volume of
securities, with more than fourth-fifths of the proceeds being accounted
for by veiy large issues of over $150 million. New issues by primary
iron and steel manufacturers, second largest in volume in 1958, were
larger than in other recent years.
New financing by transportation companies (other than railroads) and commercial and other companies was in larger volume than in
1957. The increased financing by commercial and other companies is
largely accounted for by the $346 million debenture issue of Sears,
Roebuck and Company sold in September 1958. New issues by railroads
and mining companies showed a decline in 1958. New capital financing
by communication utilities was also in smaller volume, in spite of
increased financing by AT&T.
Total gross proceeds - Gross proceeds from corpora!te offerings, which include refunding issues and costs of flotation, were
$11.6 billion in 1958, one-tenth below the volume a year earlier.
The bigger decline in the volume of net proceeds for new capital
offerings than in total gross proceeds largely reflects the increased
volume of refunding issues last year. These issues totaled $582 million in 1958 compared with $214 million in 1957, but were still substantially below the volume of refunding in 1954 and 1955.
Table 2
Total Corporate Security Offerings by Type of Issue
195W958

1958

1 1957

1 1956

1 1955

1 195k

Total corporate offerings

11,555

12,884

10,939

10,21*0

9,516

y s

6,763
3,477

If

(Gross proceeds in millions of dollars)
Type of issue

3,777

m
3,301

m

635

635

816

2,301

2,185

1,213

|

Type of 'offering
Public
Private

8,959
3,925

Type of security
Bonds and notes
Public
Private

m

3,839

Preferred stock

551

Common stock

3,351

1,320

. ltll
2,516

Note.—Details may not add to totals due to rounding.
Source.—Securities and Exchange Commission.. .




3,484

- h -

Publicly-offered issues totaled 08.1 billion last year and
private placements amounted to $3.5 billion. The proportionate share
of each remained the same as in 1957> with public offerings accounting for 70 per cent of total offerings and private placements 30 per
cent.
Debt financing was in only slightly smaller volume in 1958
than a year earlier as the increase in bonds offered to the general
public nearly offset the decline in privately-placed bond issues.
Common stock issues were smaller in every quarter of 1958 than in
the corresponding period of 1957, although there was some increase
late in the year. Volume for the year as a whole was nearly one-half
smaller than in 1957. There were no large stock offerings made in
1958, while three-issues of over $150 million were sold in 1957.
Financing through preferred stock issues increased last year, but
continued to be relatively small. The volume of convertible bond
financing increased in 1958, totaling $L.l billion and accounted for
one-eighth of all bond issues.
More detailed information_conceming 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.




4

-

HIGH-GRADE

BOND

YIELDS

A

LOWER-GRADE

BOND

YIELDS

/\




<

Ex) 1.1 bit b

H.lk

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

U. S. Govt,
long-term 2j

Corporate
Aaa 1/

(Per cent)
1954 - Low
1 9 # - High
1958 - High
Low
I ? # -High
Low

2.85 (4/23)
4.14 (9/27)
4.13 (10/10)
(5/2)\
4.16 (1/30)
4.09 (1/9)

Feb.
Feb.
Feb.
Feb.
Mar.

LIS
Lilt
4.14
ii.13
4.11

6
13
20
27
6 g/

2.15 (0/6)

3.76 (10/18)
3.81 (12/26)
3.07 (L/25)
3.96 (1/16)
3.83 (1/2)

1.90 (9/2)
3.45 (8/29)
3.31 (9/11)
2.64 (5/1)
3.20 (2/5)
3.06 (3/5)

.30
.60
.51
.22
.27
.16

.30
.47
.72
.34
.81
.65

3.20

.22
.22
.23
.23
.24

.73
.74
.78
.79
*81

3.93
3.92
3.91
3.90
3.87

3.18

3.13
3.H

3.06

Lower-grade Bond Yields

Date

Corporate
Baa 1/

State and
local govt.
Baa J/

Spread between
Aaa and Baa
State and
Corporate
local govt.

(Per cent)
1954 - Low
1957 - High
1958 - High
- Low
1959 - High
Lo*

3.44
5.10
4.96
4.51
4.90
4.85

Feb.
Feb.
Feb.
Feb.
Mar.

4.90
4.90
4.89
4.89
4.87

6
13
20
27
6 g/

(12/31)
(11/29)
(1/3)
(7/11)
(2/13)
(1/9)

2.93
а. 51
б.34
3.64
4.13
3.95
4.13
4.11
4.05
4.03
3.95

(8/5)
(8/29)
(9/11)
(5/D
(2/5)
(3/5)

.52
1.27
1.28
.77
.77
.74

.96
1.21
1.11
.93
.98
.89

.75
.76
.75
.76
.76

.93
.93
.92
.92
.89

' g/ Prelimina zy.
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.
y Thursday figures. Only general obligation bonds are included5 average term
is 20 years.
Mote.—highs and lows are for individual series and may be on different dates for
different series.




STOCK

MARKET




Table for ExJ libit C
Stock Market
Stock price
• index 1/

"Trading
Conunon
Stock market customer credit
volume 2/
stock
Bank
Customers1
(millions
yields 3/ Total debit bal- loans to
of shares) (per cent)
ances 4/ "others" 5/
(Millions of dollars)

1953 - High
1954 - High
Low
1955 - High
1956 - High
Low
1957 - High
Low
1958 - High
Low
1959 - High
Low

26.5k (1/2)
22.95 (9/18)
. 35.98 (12/31)
24.93
15.89 (12/9)
35.28
49.64 i ® :
43.22
49.08 8 ®
39.W (12/20)
5U.il (12/26)
56:21
54.37

E

2.5
0.9
3.7
1.4
4.6
1.5
3.1
.1.5
4.2
1.4
4.9
k'.l
3.0

5.38
6.25
4.32

5.82

4.08
4.4l
3.62
4.3U
3.91
4.72
3.30
4.58
3.24
3.34

2,455
2,055
3,436
2,405
4.030
3,537
4,047
3,914
4.031
3,576
4,488
3,554
n.a.
n.a.

1,66 5

1,314
2,388
1,653
2,805
2,517
2,823
2,740
2,987

2,4 2

3,2f'l
2,487,
n.a.
n.a.

780
664
1,048
746
1,241

1,018

1,267
1,155
1,163
1,054
1,317
1,051
1,274

1,210

January
55.82
4.0
3.24
4,554
3,297
1,257
February
54.77
3.5
n.a.
3.32
1,274
Feb. 13
54.42
3.0
n.a.
3.35
1,259
Feb. 20
'
55.52
3.28
3.7
n.a.
1,256
Feb. 27
55.41
4.1
n.a.
3.29
1,274
Mar. 6 p/
_SW1
—ILlS,.—
n.a* ,
_1^L_
n.a.—Mot available.
- p7
i ' -Preliminary.
h.
1/ Standard and Poor's composite index of 500 common stocks, weekly closing
prices, 1$41-43=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
on which price index reached its hirrh or low.
b/ End of month figures 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 memler 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 Hulletin.
Note.—Highs and lows are for individual series and may ce on different dates
for different series.




Exhibit E

ti.ll*

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

19 59

New capital
State and local 2/
Corporate 1/
1 1958
1959
1 1958
1
1957
1
1957

i,*h/

1,060
1,065
1,320

April
May
June

1,11a
600
881

July
August
September

January
February
March

6/700
e/650
l/6$0

October
November
December
1st
2nd
3rd
Uth

quarter
quarter
quarter
quarter

e/2,000

1st half
Three quarters
Year

812

71*2

S "

S .

; s
1,1*53

798
895
551

546
393

1,102
538
1,1 hh

1,003
921*
973

806
1*03
651

529
581*
1*31

858
1*73
91U

1,090
789
1,076

1*56
1*71*
1*35 :

698
633
698 0

3,135
2,622
2,781*
2,250

3,1*15
3,11*9
2,899
2,951*

5,757
8,5ia
10,791

6,591*
9,1*93
12, W

723

s g s
e/650

.
e/2,079

2,276
2,2W*
1,660
1,365

1,820
1,701*
1,5a
2>029

L520

3,521*
5,069
7,099

1%

Excluding finance companies h/
1st
2nd
3rd
jtth

quarter
quarter
quarter
quarter

a/1,800

Year

2,89 k
2,583
5:iS
10,391

3,237
2,889
2,582
2,810
11,518

1/ Securities and Exchange 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.
U/ Total new capital issues excluding offerings of sales and consumer finance
companies.




Exhibit F

H.ll*

- Other Security Offerings 1/
(In millions of dollars)
Long-»t e m
Foreign government 2/
Federal agency 37
"19^9
1958
"1959
1958
I l W
W
January
February
March

196
53

April
May
June

139
198
120

July
August
September

9
5
17

81*

k9
30
*8

72

523

125
60

1*2

161*
7
30

October
November
December

58
123
71*

60
1

Year

992

507

215
Id 20

1*.

Short-term
State and local government 1*/
January
February
March

1,163
251

100
2,321

572

Federal agency 3/"*

638

233
1*60
273

326
1*55
11*7

April
May

357
3 Sk
26k

205
337
153

209
161
329

336
1*69

July
August
September

289
1*23
369

272
272
252

1*37
206
330

221*

October
November"'
December

415
21*3

303
9k
k$9

1*51*
111*
137

3,910

3,271*

E/189

Year

270

371
208
11*1*

3,098

1*30
505

501

370
512

1,238
255

116
5,543

e/ Estimated.
g/ 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.
3/ Issues not guaranteed by the U. S. Government. Source: long-term, Securities
and Exchange Commission; short-term, Federal Reserve.
kf Principally tax and bond anticipation notes, warrants or certificates and Public
Housing
Authority notes. In some instances PtiA notes included may have a somewhat

longer term than one year. Source: Bond Buyer.



Exhibit G

H.Ik'

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

Corporate

Month

1958 - February
March
April
May

State and
local government

605
1,093
725
356
281
771
209
825
259
227
305
369
31*0

July
August
September
October
November
December
1959 - January
February

553
182
300
505
195
275
109
288
172
259
229
335 ^

551

J

Other 2/

266
653
161*
86
1*1
18
209
100
79
75
35

Large Individual Issues Offered March 1 through 6

Issuer

Type 3/

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

CORPORATE
None
STATE AND LOCAL GOVERNMENT
Detroit-Metro. Expressway
Philadelphia, Pennsylvania
Port of New York Auth.

Rev.-S.T.
G.o.
Rev.-Ut.

25.0
25.5
30.0

1960-81*
I960-89
1989/68

3-51*
3.27
3.68

1.90-3.65, , A
1.85-3.1*5^ A
3.63
A

OTHER
None
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/ Includes foreign government and International Bank for Reconstruction and
Development issues and non-guaranteed issues by Federal agencies. '
y In the case of State and local government securities, G.O. denotes general
obligationsj 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., revenue bonds secured by revenue from specific taxes only; Rev.-Rent., revenue bonds secured solely by lease payments.
h/ 1987-89 maturities not reoffered.
-




Exhibit ti

H.llf

Forthcoming Large Long-tera Public Security Offerings for New Capital
(Other than U. S. Treasury) 1/
Expected Proceeds from Forthcoming Large Issues
Date of
computation

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

Subsequent to
During month following
date shown
date shown
State and
State and
Other 2/ Corporate
Other 2/
Corporate
local govt.
local govt.
1,123
555
356
266
768
161
785
113
20k
301
210
270
198

131*
298
1*93
177
225
.
55
2l|l
295
258
229
261
551
292

110
150
36

71
75
1*5
—

1,208
670
561
1*61*
1,018
381
911*
216
326
1*01
370
365
279

31*1
330
1*93
208
235
125
1*35
521*
675
663
' 515
856
1*81

**

110
150
36

71
75
1*5

Forthcoming Large Offerings, as of March 6
Type

Amount
Approximate date
(millions
of oifering
of dollars)

CORPORATE
Northern Indiana Public Service Co.
KLM Royal Dutch Airlines
American Natural Gas Co.
Colorado Interstate Gas Co.
Texas Eastern Trans. Corp.
Cleveland Electric Illuminating Co.
Ohio Edison Co.
Ohio Power Co..
Monongahela Power Co.
*Food Fair Stores, Inc.
•^Columbia Gas System, Inc.
Montana Power Co.
Commerce Oil Refining Corp.




1st mtg. bds.
Conv. sub . deb
Common stk.
1st mtg. p. 1. bds.
Pfd. stk.
1st mtg. bds.
1st mtg. bds.
1st mtg. bds.
1st mtg. bds.
Conv. sub. deb.

25.0
17.0
28.0
33-0
15.0
25.0

30.0

25.0

16.0
21.8

Common stk.

2*0.0

1st mtg. bds.
Deb., bds. & common

1*5.0

20.0

Mar. 11
Mar. 12
Mai-. 12
(rights expire)
Mar. 12
Mar. 20
Mar. 25
Mar. 26
Mar. 31
Apr. 1
Apr. 10
(rights expire)
Apr. 20
(rights expire)
Spring
Spring

H.lli
Forthcoming Large Offerings, as of March 6 (Cont'd)
Issuer

Type

Amount
Approximate date
(millions
of offering
of dollars)

STATE AND LOCAL GOVERNMENT
New York, N. Y.
Metro. Water Dist. of So. Calif.
State of California
Phoenix, Arizona
^Baltimore, Md.
*State of Delaware
Milwaukee, Wisconsin
Pennsylvania General State Auth.
*Los Angeles Sch. Dists., Calif.
West Virginia University
Buffalo, New York
Chesapeake Bay Ferry Commission
State of New Jersey
Memphis, Tennessee

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

26.3
26.ii
100.0
10.0
28.9
12.5
18.8
30.0
27.0
10.2
10.2
lUi.O
25.0
10.0

Mar. 10
Mar. 10
Mar. 11
Mar. 17
Mar. 17
Mar. 18
Mar. 31
Mar. 31
Apr. 7
'Apr. 9
Apr. 9
Spring
Spring
Spring

OTHER
None
"—Included in table for first time.
1/ Includes corporate and other issues of $15 million and over; State and
local government ipsues 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
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
28
29
Dec. 17
1959 - Jan. 7
20
28
Feb. 18

Aa-rated offering yields A-rated oJffering 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^
1.08
• 3.91

-8
22
35
18

3.90

21

3.85
3.85

16
16

3.85
3.82
3.95

17
12
2k

lt.00
It. 10
li.10
It,57 it. 50
lt.lt02y
lt.lt 2-^
It. Ult

25
28
29
25
22
12
lit
23

It. 60
M l /

.

5.50(11/7/57)
3.00(3/17/5U)
3.962/
lt.07
It. 1 6
lt.01
lt.00

123
-15
3
9
-1
8
' 3

lt.07
It.35

It
32

It. 00
3.95

-1
-6

3.982/

1

It,352/

31

It. 752/

23

3lt
"2

*—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.