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COpdbL X <r>Jbejc April 15, 1964. :hmite Security Financing of Corporations and State and Local Governments During 1963 ~(Supplement) Final data for 1963 show net proceeds (gross proceeds less costs of flotation) from corporate security financing totaled $12.1 billion, 14 per cent more than in 1962, but 6 per cent less than the record 1961 volume. Proceeds for new capital purposes amounted to $10.6 billion, 8 per cent larger than a year earlier, but one-eighth smaller than in 1961 and 15 per cent less than the 1957 record. Refunding volume, however,^totaled $1.5 billion, twice the 1962 total and the largest volume since 1954. (For further details on corporate security refundings in the capital markets, see Capital Market Developments in the United States for the week of January 20.) Included in the net proceeds total is a record $0.7 billion of security financing by foreign corporations, one-fourth more than in 1962. Most of this occurred prior to the proposal of an interest equalization tax on foreign securities last July; foreign financing in the second half of the year amounted to only $158 million. Industrial distribution of new capital issues. The year-overyear gain in new capital financing reflected a sharp rise in security sales by real estate and finance companies and smaller increases in manufacturing and transportation corporation offerings; on the other hand, these -gains were partially off-set by year-over-year declines in the volume of financing by utilities and communication corporations. New capital financing of manufacturing corporations totaled $3.3 billion in 1963, one-tenth more than in 1962, but one-fifth less than the record 1957 total, as these companies financed a larger portion of their plant and equipment expenditures with internal funds. Largely because of the sale of $200 million of debentures by Socony Mobil Oil Company, petroleum and refining company financing rose sharply last year and accounted for close to one-sixth of the manufacturing total; otherwise, there was no unusual concentration in any other sub-industry group in either 1962 or 1963. Flotations for new capital by electric, gas and water utilities aggregated $1.9 billion last year, about one-fifth less than in 1962, despite a rise in plant and equipment expenditures. Both security financing and plant and equipment expenditures by utilities have tended downward since their 1957 peaks, but the decline in the former has been much sharper because os substantial growth in internal funds. Corporations in the financial and real estate field sold a record $2.9 billion in securities during 1963, two-thirds more than a year earlier and one-fifth larger than the previous--I960--record. Long-term security offerings of sales and consumer finance companies totaled $1.1 billion, over twice the 1962 volume, but one-fifth less than in 1960. Last years 1 increase in sales finance company long-term financing reflected the funding of a portion of the 1962-63 increase in receivables, which had been financed i n i t i a l l y — a s is customary-largely by sale of short-term paper. Commercial banks sold about $0.3 -2- billion in securities (these data are probably incomplete because banks are not required to register new issues with the Securities and Exchange Commission), three times the year earlier volume; included were $230 million in capital notes and debentures--a type of financing only recently authorized by bank regulatory authorities. Other financial and real estate firms sold a record $1.5 billion in new issues, up three-tenths from 1962. Type of issues. Gross proceeds from corporate security offerings (including cost of flotation and refunding) totaled $12.2 billion, 14 per cent more than in 1962,. but 7 per cent less than the record 1961 total. All of the increase in financing from 1962 to 1963 was in private-placements; these were a record $6.4 billion, two-fifths larger than the previous year, and exceeded public offerings for the first time. Public offerings ($5.8 billion) were 5 per cent less than the previous year and one-third below the record 1957 total. Bond financing totaled a record $10.9 billion, one-fifth more than the previous year and almost one-tenth greater than the previous 1957 peak. Privately-placed bonds ($6.2 billion were up sharply from 1962, while publicly offered bonds, ($4.7 billion) were only moderately larger; as a result the ratio of privately-placed debt to total debt offerings rose from 50 to 57 per cent, the highest proportion since 1951. Despite the rise in stociCpfices^to new highs, common stock financing amounted to only $1.0 billion, three-tenths less than in 1962 and the smallest total for any year since 1950. Preferred stock financing of $342 million was off one -'fifth from 1962 and less than in any year since 1943. Part II: State and local government Total bond financing by State and local governments during 1963 totaled a rccord $10.5 billion, 19 per cent larger than the previous peak a year earlier. Bond sales to obtain new capital were also a record, rising 7 per cent to $9.2 billion. New financing to refund outstanding securities is usually quite small, but last year rose to a record - $1.4 billion (including advance refunding); this was over five times sales for this purpose in 1962 and ro.ughly three times the previous 1941 peak. (For further details on muncipal refunding in the capital markets, see Capital Market Developments in the United States for the week of January 27.) Purposes of issue. Financing of school building construction continued to be the most important single purpose of bond sales and, at $3.0 billion, last year, was in record volume, 2 per cent greater than the 1962 peak. Financing of sewer and water systems, miscellaneous public service facilities and residential building construction were also in record volume last year. Sales of sewer and water bonds amounted to $1.5 billion, up over one-fifth from the previous year and one-tenth larger than the 1961 peak; miscellaneous public service enterprise bonds totaled $0.9 billion, twice the. 1962 total and slightly larger than the 1959 record; bonds sold to finance construction of residential buildings had par value of $0.6 billion, 15 per cent more than in the previous year. Bond sales to finance highways, bridges and tunnels totaled $0.8 billion, but were one-fourth less than in 1962. Issuing authority. Largely reflecting the increased importance of refunding, most of the year-over-year increase in municipal bond sales was accounted for by special authorities; these authorities--units established by State law to perform a variety of specified functions and to sell bonds in their own name--sold a record $3.6 billion of bonds, up two-fifths from the previous year. Sales by municipalities totaled a record $3.1 billion, one-fifth more than in 1962. Offerings by States amounted to $1.6 billion, 14 per cent more than the previous year, but one-sixth under the 1961 peak. Bond sales by school districts ($1.6 billion), and by counties and townships ($0.6 billion), however, were in slightly smaller volume than in 1962. Type of issue. Reflecting to a considerable.extent the large volume of refunding financing by special authorities, revenue bond sales rose sharply last year to a record $4.2 billion, almost three-fifths more than in 1962. Sales of general obligation bonds, however, still accounted for the bulk of all State and local government bond sales and, at $5.9 billion, were in record volume, 5 per cent larger than the previous year and slightly above the 1961 peak. Capital Markets Section, Division of Research and Statistics, Board of Governors of the Federal Reserve System. CORPORATE SECURITY OFFERINGS USE OF NET PROCEEDS 1958-63 Billions of dollars 14.0, Refunding Money 1458 1959 I960 . 1961 1962 1963 CHART 2 CORPORATE SECURITY OFFERINGS FOR NEW CAPITAL BY TYPE OF BUSINESS 1958-63 Billions of dollars 14.0 12.0 10.0 Manufacturing Public Utilities 4.0 Real Estate Financial 1958 1959 1960 1961 1962 1963 (? CHART 3 CORPORATE SECURITY OFFERINGS BY TYPE OF ISSUE 1958-63 Billions of dollars 14. Or 12.0 10.0 Convertible 4.0 L._. PERCENTAGE DISTRIBUTION OF BONDS SOLD BETWEEN THOSE PUBLICLY OFFERED AND PRIVATELY PLACED 1958-63 Per cent 100 — I % CHART 5 LONG-TERM SECURITY ISSUES OF STATE AND LOCAL GOVERNMENT BY ISSUING AUTHORITY 1958-63 Billions of dollars 12. 0 | 10.0 Special Authority Municipality 1958 1959 1961 1962 LONG-TERM SECURITY ISSUES OF STATE AND LOCAL GOVERNMENT BY PURPOSE OF.ISSUE 1958-63 Billions of dollars 12.0 I Refunding Highways, Bridges and " Tunnels Sewer and 1958 1959 1960 1961 1962 1963 LONG-TERM SECURITY ISSUES OF STATE AND LOCAL GOVERNMENT BY TYPE OF ISSUE 1958-63 Billions of dollars 12.0 General Obligation Pub. H. Auth. PGCI. Govt. Loan? ^ 1958 1959 1960 • 2 1961 1962 1963 Table 1 Corporate Security Offerings by Type of Business of Issuer and Use of Proceeds 1958-63 (Net proceeds in millions of dollars) | 1963 1962 Total corporate offerings 12,081 New capital New money Other purposes Refunding 10,553 8,993 1,561 1,528 9,814 8,323 1,491 757 Foreign issues 718 3,312 2,596 716 190 Memo: Manufacturing New capital New money Other purposes Refunding Electric, gas & wtr. utilities New capital New money Other purposes Refunding | 1961 10,572 ' 12,874 | 1960 1959 1958 '9,924 94527 11,372 11,979 10,829 1,150 895 9,653 8,758 895 271 9,392 8,578 814 135 10,823 9,907 915 549 567 362 152 169 3,020 2,203 817 204 3,708 3,060 649 306 1,997 1,711 286 79 1,941 1,684 257 70 3,265 2,851 414 195 n.a. 1,935 1,912 24 699 2,357 2,199 158 445 2,892 2,809 84 105 2,754 2,656 99 51 3,189 3,057 132 15 3,605 3,441 164 138 Communication New capital New money Other purposes Refunding 726 607 119 356 1,281 1,221 60 10 1,427 1,408 19 378 1,036 1,032 4 1 707 703 4 1/ 1,294 1,265 28 118 Railroad New capital New money Other purposes Refunding 345 323 23 82 208 200 9 29 156 148 7 21 174 174 172 172 206 206 35 -- 29 Other transportation New capital New money Other purposes Refunding 527 509 19 1 343 341 2 1 524 478 47 5 497 451 46 4 769 747 22 15 572 474 97 9 Commercial and other New capital New money Other purposes Refunding 565 500 66 54 616 520 96 26 842 730 112 43 563 437 125 21 670 526 144 15 630 585 45 11 <3 Table 1 (con't) Corporate Security Offerings by Type-of Business of Issuer and Use of Proceeds - 1963 Mining New Capital New money Other purposes Refunding Financial and real estate New capital New money Other purposes Refunding Memo: 1962 1961 208 158 50 1 217 203 14 4 254 182 72 3 231 154 77 8 142 120 23 12 237 184 53 2 2,933 2,388 545 1,773 1,438 335 2,176 2,015 161 2,401 2,143 258 1,801 1,569 232 1,014 900 114 1,119 339 1,475 144 512 111 1,150 39 717 199 1,260 36 1,437 135 828 71 758 155 888 6 394 97 523 47 1960 1959 1958 New Capital by- (Sales and consumer finance cos.) (Banks) /(Othercos.) Refunding 1 1/ Less than $500,000 Note. Details may not add to toals due to rounding. Source.- Securities and Exchange Commission and Federal Reserve. H. 14 Table -2 Security Offerings for New Capital by Manufacturing Companies 1958-63 (Net proceeds in millions of dollars) All Manufacturing Petroleum and refining Chemicals Nonelectrical machinery Foods Primary nonferrous metals Other transportation equipment Electrical machinery Textiles and apparel Paper Rubber products Printing Beverages Stone, clay and glass Lumber, wood products Primary iron and steel Fabricated metal products Motor vehicle and equipment Tobacco Other 1/ 1/ 1 1963 1 3,312 509 363 304 263 221 220 176 130 121 109 •89 87 72 68 68 63 49 1 399 1962 | 1961 | 1960 3,020 234 494 263 143 76 .46 253 183 158 .49 52 .45 116 114 141 71 28 ; 3,708 407 246 289 210 149 170 322 152 180 45 97 132 159 47 492 31 48 47 485 1,997 63 232 135 71 142 116 219 108 88 98 30 14 39 67 258 119 14 554 284 Includes issues of foreign manufacturers not further classified. Note.--Details may not odd to totals due to rounding. Source.--Securities and Exchange Commission and Federal Reserve. | 1959 | 1958 1,941 46 198 125 103 73 128 251 69 91 52 37 20 70 44 298 67 22 50 197 3,265 600 220 233 116 306 218 139 T31 207 12 53 111 75 34 408 135 73 26 268 Table 3 Total Corporate Security Offerings by Type of Issue 1958-63 (Gross proceeds in millions of dollars) Type of issue Total corporate offerings 1963 1962 1961 I960 12,237 10,770 13,147 10,154 9,748 11,558 5,823 6,413 6,127 4,643 8,149 4,999 6,657 3,497 5,993 3,755 8,068 3,490 10,872 4,714 6,158 (346) 9,016 4,487 4,529 (429) 9,425 4,706 4,720 (704) 8,081 4,806 3,275 (462) 7,190 3,558 3,632 (628) 9,653 6,332 3,320 (1,147) I 1959 1958 Type of offering Public Private Type of security Bonds and notes Public Private (Memo: Convertible) Preferred stock Common stock 342 436 449 409 531 571 1,022 1,318 3,273 1,664 2,027 1,334 Source.--Securities and Exchange Commission. lie Table 4 Long-term Security Issues of State and Local Governments 1958-63 (In millions of dollars) - Issuing authority: State County and township Municipality School district Special authority Total Purpose of issue: New capital total Schools Highways, bridges and tunnels Residential buildings Hospitals and institutions Sewer and water Misc. public service enterprises Veterans 1 aid Other Refunding Total General obligation Revenue Utility Qua_sir utility Special tax Rental Public Housing Authority Federal Government loans Total 1963 | 1962 1960 1959 1958 1,620 603 3,111 1,567 3,636 1,419 639 2,611 1,575 2,600 •1,928 611 2,444 1,418 2,165 1 ,110 538 2 ,165 1 ,495 1 ,984 1 ,686 501 2 ,058 1 ,331 2 ,121 1 ,993 540 2 ,152 1 ,471 1 ,371 10,538 8,845 8,566 7 ,292 7 ,697 7 ,526 9,151 8,568 8,463 7 ,247 7 ,589 7 ,441 3,029 812 598 22L 1,455 889 2,963 1,114 521 139 1,218 450 125 2,037 2,821 1,167 385 102 1,313 387 478 1,811 2 ,405 1,,007 426 99 1,,049 266 201 1, 792 2 ,318 844 401 110 1,,123 862 355 1, 575 2 ,617 1,,164 251 216 1,,079 333 339 1, 441 -- 2,148 1,386 276 103 45 108 86 10,538 8,845 8,566 7, 292 7, 697 7, 526 5,855 4,180 1,883 1,512 43 742 254 249 5 ,582 2 ,681 846 1.,315 100 420 437 145 5 ,724 2:,407 859 1,,179 57 312 315 120 4,771 2,095 989 833 79 194 302 125 4,782 2,407 1,599 404 240 165 332 176 5 ,447 1 ,778 1.,007 165 330 276 187 115 10,538 8,,845 8,,566 7,292 7,697 7,,526 N o t e . — D e t a i l s may not add to totals because of rounding. Source.--Investment Bankers Association of America. 1961 .
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