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I
Not f o r Publication

DECONTROLLED AFTER SIX MONTHS

H.lii

April 5, 1956
CAPITAL MARKET DEVELOPMENTS•

The volume of publicly sold security issues was large
l a s t week, p a r t i c u l a r l y "for corporate s e c u r i t i e s , and i s expected
to be even l a r g e r t h i s week. During the week ending March 30, corporations sold l a r g e i s s u e s t o t a l i n g $>120 million, while S t a t e and
l o c a l government f l o t a t i o n s amounted to $h'5 m i l l i o n . This week
r i g h t s expire on two l a r g e corporate o f f e r i n g s t o t a l i n g $155 mill i o n and f i v e other issues with proceeds of $115 million are expected. S t a t e and l o c a l governments are scheduled to f l o a t l a r g e
issues t o t a l i n g $19 m i l l i o n .
April volume - The volume of corporate s e c u r i t y issues
i s expected to continue to be heavy i n April. The April volume i s
estimated at $800 million, somewhat smaller than t h a t of March but
nearly two-thirds greater than t h e volume of the corresponding month
l a s t y e a r . The volume of publicly offered issues i s unusually heavy,
and includes expected l a r g e i s s u e s with proceeds of $380 million.
State and l o c a l government bond issues during April are
expected to t o t a l only $350 m i l l i o n , s l i g h t l y l e s s than the March
volume and about o n e - f i f t h smaller than t h a t of April 1955* No very
large issues are currently scheduled f o r o f f e r i n g .
Bond y i e l d s - Yields on a l l types of long-term bonds rose
l a s t week, r e f l e c t i n g in p a r t the heavy corporate new i s s u e volume,
both actual and p o t e n t i a l , and the increase in r a t e s on bank loans
to brokers and d e a l e r s . The increases ranged from 2 basis points'
.on y i e l d s of corporate and State and l o c a l revenue bonds to 6 basis
points on y i e l d s of to p - r a t e d State and l o c a l bonds.
Daily data i n d i c a t e a sharp increase in U. S. Government .
bond y i e l d s on Monday and Tuesday of t h i s week, but some decline on
Wednesday. Corporate y i e l d s increased somewhat f u r t h e r . New securi t y issues r e f l e c t i n g the higher r a t e s reportedly have sold r a p i d l y .
This i s in contrast to the recent experience when a number of large
corporate and State and l o c a l government issues encountered considerable investor r e s i s t a n c e at t h e i r i n i t i a l o f f e r i n g y i e l d s . In a
number of instances underwriting syndicates were dissolved with a
considerable portion of the issue s t i l l unsold and r e o f f e r i n g y i e l d s
increased sharply in an attempt to d i s t r i b u t e the remainder. As a
r e s u l t of such price c u t t i n g , at t h e end of l a s t week dealers had
made some progress in reducing t h e i r heavy inventory of municipal
bonds.
With the recent r i s e in new issue y i e l d s , the spread between y i e l d s on new i s s u e s and outstanding issues of similar term




-2—

and q u a l i t y has widened. The o f f e r i n g y i e l d on a new 30-year
A-rated e l e c t r i c povrer u t i l i t y i s s u e sold on March 30 was 3*55
p e r c e n t , 30 b a s i s p o i n t s higher than t h a t of a s i m i l a r i s s u e
o f f e r e d i n . l a t e Februaiy. The y i e l d on t h e new o f f e r i n g was 2£
b a s i s p o i n t s above t h e y i e l d on outstanding bonds of s i m i l a r term
and q u a l i t y , while t h e Februaiy o f f e r i n g y i e l d was s l i g h t l y lovrer
than y i e l d s p r e v a i l i n g on s i m i l a r outstanding bonds a t t h a t time.
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 s l i g h t l y during the week ending
March 30. Trading volume continued heavy. Daily indexes i n d i c a t e
some i n c r e a s e i n p r i c e s through Wednesday of t h i s week.
More d e t a i l e d information concerning r e c e n t market d e v e l opments i s presented i n t h e 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.




EXHIBIT A

H I G H - G R A D E BOND YIELDS
W.ekly

Per cent p e r

: t\J ^

olD

GOVERNMENT A a a j.

1953

1954

1955

u. s .
Date

Corporate
Aaa 1 /

long-term 2/

Old 1 e r i e s
s

New s e r i e s

1956

Spread between
S t a t e and
U. S . Govt,
l o c a l g o v t . ( o l d s e r i e s ) and
Aaa 3 /
C o r p o r a t e [ S t a t e and
Aaa
1local Aaa

(Per c e n t )
1953 - High
1951 - High
Low
1955 - High
1956 - High
Low
March 2
March 16
March 23
March 30

3-1*2
2.99
3.09
2.85
3.17
2.91
3-Hi
3.07

(6/19)
(1/9)
(1/8)
(U/23)
(12/23)
(1/7)
(3/30)
(3/2)

3.07
3.08
3.10
1 3.12
3.1U

3.15
2.78
2.7k
2-1*1*
2.91
2.62
2.96
2.80

(6/6)
n.a.
(12/26)
(1/9)
(8/7)
(8/5) 3.03 (8/5)
( 1 / 7 ) 2.89 ( 6 / 1 0 )
(3/30) 3.01 (3/30)
( 2 / 1 7 ) 2.92 ( 2 / 3 )

2.73
1-98
2.21
1.90
2.3a
2.05
2.33
2.17

2.8U
2.86
2.89
2.93
2.96

2.91
2.96
2.97
2.99
3.01

2.18
2.18
2.25
2.27
2.33

(6/25)
(1/8)
(6/10)
(9/2)
(9/6)
(5/26)
(3/29)
(2/23)

• 38
.19
.1*3
32
.31*
.13
.26
.18

.81*'
• 30
.61
• 29
• 70
.51*
.68
.56

.23
.22
.21
.19
.18

.66
.68
.6U
.66
•63

2 / Weekly averages of d a i l y f i g u r e s . The old s e r i e s i n c l u d e s f u l l y t a x a b l e ,
m a r k e t a b l e 2 1 / 2 p e r c e n t bonds due or f i r s t c a l l a b l e a f t e r 12 y e a r s , through
September 1955, and t h o s e due or c a l l a b l e i n 10-12 y e a r s t h e r e a f t e r ; t h e average
term t o f i r s t c a l l of the bonds i n c l u d e d d e c l i n e d from l b y e a r s i n e a r l y 1953 t o
11 1/2 y e a r s i n e a r l y 1956. The new s e r i e s i s comprised of t h e 3 p e r c e n t bond
of 1995 and t h e 3 1 / h p e r c e n t bond of 1978-83.
3/ Thursday f i g u r e s . Only g e n e r a l o b l i g a t i o n bonds a r e i n c l u d e d ; 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
for different series.




EXHIBIT

B

L O W E R - G R A D E BOND YIELDS

Date

Corporate
Baa 1/

State and
local govt.
Baa 2/

State and
local govt,
rev. 3/

(Per cent)
1953 - High

1956 - High
Low

3.89
3.50
3.7U
3-a
3.63
3-U5
3.62
3.58

March 2
March 9
March 16
March 23
March 30

3.58
3.58
3.59
3.60
3.62

195k - High
1955 - High

(9/18)
(1/2)
(1/8)
(12/31)
(12/30)
(l/Ui)
( 3/30)
(3/9)

3.79
2.96
3.32
2.93
3.26
3.02
3.29
3.20
3.20
3.20
3.23
3.26
3.29

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

3.27
2.71
3.00
2.72
2.99
2.76
3.00
2.89

(6/26)
(1/2)
(1/1)
(8/13)
(12/30)
(1/7)
( 3/30)
(2/2U)

2.90
• 2.91
2.96
2.98
3.00

.
_
Average term of bonds
included i s 25-26 years.
2/ Thursday figures. Only general obligation bonds are
included; average term i s 20 years. .
3/ Friday figures. Average rating of bonds included i s
between Baa and A; average term i s 20 years.
Note.—Highs and lows are for individual series and may
be on different dates for different series.




STOCK MARKET
Millions ot Dollars . Weekly

P*r Cent

J,

7 T

Date

Stock p r i c e

Trading
Common
volume 2/
(millions yields 3/
of s h a r e s ) ( p e r c e n t )

Stock market customer c r e d i t
Customers'
d e b i t b a l - loans to
ances h / " o t h e r s " 5 /

Total

( M i l l i o n s of d o l l a r s )
1953 - High
Low
195k - High
1955 - High
1956 - High
Low
February
March 16
March 23
March 30

167.1
lltU.O
221.lt
156.5
270.7
217.1
288.U
257.L

(1/2)
(9/18)
(12/31)
(1/6)
(12/30)
(l/lli)
(3/23)
(1/20)

266.3
283.2
286.0
288. L
287-8

2.5
0.9
3.7
l.lt
I4.6
1.5
3.1
2.0

5-75
5-15
5-33
U.20
L.22
3.78
U.08
3.93

2,Uh5
2,055
3,h36
2,1,05
U,030
3,537
li,0U0.
3,991

1,665
1,31k
2,388
1,653
2,805
2,517
2,786
2,7UO

2.3
2.7
3.1
2.8
2.8

3.93

3,991

2,7UO

.

n.a.

1

n.a.

780
661,
1,018
7U6
1,21,1
1,018
1,267
1,21,9
1,251
1,252
1,252

1 / 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 , 1939-130; converted
t o 19E7-U9-100 t y F e d e r a l R e s e r v e . The c o n v e r s i o n f a c t o r i s 1 2 3 . 9 1 .
2 / Averages of d a i l y t r a d i n g volume on t h e New York Stock Exchange.
3 / 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 f i r m s of t h e New York Stock Exchange which
carry*"margin a c c o u n t s ; e x c l u d e s b a l a n c e s s e c u r e d by U. S . Government o b l i g a t i o n s .
5 / Wednesday f i g u r e s f o r weekly r e p o r t i n g member b a n k s . Excludes l o a n s f o r
p u r c h a s i n g o r 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 p e r 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 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
for different series-




Exhibit D
Corporate and State and Local Government
Security Offerings and Placements
(In millions of dollars)

• 1955
J anuary
February
March
April
May
June

I

New, c a p i t a l

Corporate
1955
1

487
e/725
e/975

5k6
4.36
1,261

800

583
654
680

October
November
December

1,207 ~
631
921

1st .quarter
2nd quarter
3rd quarter
4th quarter
Year

e/2,185

1 s t quarter
2nd quarter
3rd quarter
4 th quarter
Year-

e/1,765

2,213
2,09k
1,917
2,760
9,OIL

.

-

1956

5U7
426
635

e/hOO
e/6S0
2/375

5#
312
538

396
411
565

L97
6 56
612

h9h
903
697

July
August
September

State and l o c a l
1 1955
1

1954

e/350

127
#0
641

73U
748
853

909
335
7U7

470
.219.
406

1,003
290
604
1,608
1,995
1,991
.1,896
7,190

-

1954

2#
261
649 .

919
6#
408
sA,k2$

59k
U23
877

1,385
l,kl8
i,124
1,984
5,911

1,372
2,33 k
1,168
1,894
6,789

Excluding finance companies 2/
1,791
1,912 .
l,4Ul
2,619
7,762

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

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




H.lL

Exhibit E
Large Public S e c u r i t y Issues f o r New C a p i t a l
(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
May
June
July
August
September .
October
November
December
1956 - January
February
March

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

750
173
U8'3,
175
101
W5
328
805 •
221
263
95
212
278

337
2#
152
U03
278
65
23U
716
#6
2#
192
U33
163

1

Other 2/

15

25
50

Large I n d i v i d u a l Issues Offered during March
• Issuer

Type 3/

Amount
Coupon
(millions Maturity r a t e or
O f f e r i n g Rating
of
net interyield
dollars)
e s t cost

CORPORATE
B e l l Telephone of Pa.
Deb.
Houston Lighting & Power 1st mtg. bds.
Fruehauf T r a i l e r Co.
Conv. sub. deb.
P a c i f i c Gas & E l e c t r i c
1st & r e f .
mtg. bds.
Whirlpool-Seeger
SF deb.
New York Tel.
Ref. mtg. bds.
Pa. S a l t Mfg.
SF deb.
Tide Water Associated Oil
SF deb.

35-0
30.0
37.5
25.0

1996
1996
1976
1988

3 1A
3 lA
h
3 3/8

3.20
3.19
U.oo
3.32

30.0
55.0
15.0
5o.o

1980
1996
1981
1986

3 1/2
3 3/8
3.U5
3 1/2

3.50
3.35
3-L5
3.50

Aa
. Aa
Baa
Aa
1

A
A
Aaa
A

STATE & LOCAL GOVERNMENT
San Antonio, Texas
Penn Township School
D i s t r i c t , Pa.
S t . Louis, Missouri




G.O.

5.o

:1957-76

2.7h

1.90-2.75

Baa

L.L.
G.O.

5.3
12.2

1957-86
1962-75

3.31
2.16

1.95-3.35
1.85-2.25

Baa.
Aa

H.lU

E-2
Large Individual Issues Offered during March (Cont'd)

Issuer

Type 3/

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

STATE & LOCAL GOVERNI-JENT
(Cont'd)
Santa Clara, C a l i f .
Denver Colo., School
D i s t r i c t jfl
Bethlehem Auth., Pa.
S t a t e of Alabama
State' of flew Hampshire
San Diego, C a l i f .
Milwaukee, Wisconsin
.State.of New Mexico
Dallas, Texas
Wash. State Toll
. Bridge Auth.
State of Delaware
S t . Louis Co., Mo.
Louisville, Kentucky

G.O.

5*2

1957-81

G.O.
Rev.
L«L •
G.O.
Rev.
G.O.
L.L.
G.O.

28.5
1957-75 •
8.0
1959-96
15.0
1958-75
1957-83
19.3
6.0
1956-75
8.0
1957-76
5.0 . 1957-61
8.5
1957-76

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

9.3
10.8
10.7
6.0

1961-71
1957-76
1957-76
1957-96

2;29

1.60-2.35

Aa

2.27
2.81
2.96
2.25
2.57
2.2k.
2.08
2.69

1.60-2.30
2.00-2.82
2.00-2.90
1.60-2.35
1.80-2.60
1.60-2.30
1.65-2.00, /
1.80-2.70=/

Aa
A
A
Aaa
Aa
Aaa
Aaa
A

3.32
2.1*5
2.52
2.53

3.00-3.20
1.70-2.1+0
1.80-2r50
1.50-2,65

Aa
Aa
Aa

OTHER
None1/ Includes corporate and other s e c u r i t y o f f e r i n g s of $lp million and over; .
State""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 million and over.
2/ Includes foreign government and International. Bank f o r Reconstruction and
Development i s s u e s .
3/ In the 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 gene r a l obligation; Rev., revenue bonds; G.R., general obligations additionally
secured by f a c i l i t i e s revenues; _L.L.,_ limited l i a b i l i t y obligations secured by.
pledge of designated revenues.
h / 1976 maturity not r e o f f e r e d .




H.lU

Exhibit F

Forthcoming Large Public Security Offerings f o r New Capital
(Other t h i n U. S. Treasury) 1 /
Expected Proceeds from Forthcoming Large Issues
Subsequent to
During month following
date shorn
date shorn
Corporate
J Other 2 / j Corporate
|other 2 /

Date of
computation

211
125
160
67
107
222
805
202
215
70
176
123
380

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

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

50

922
1,1U1
850
830
1,135
920
909
hl2
230
85
376
233
1,013

2,009
1,917
1,861
1,81*5
2,018
1,971
2,205
i,65o
756
618
917
785
811

50

—

Forthcoming Large Offerings, as of March 30
Issuer

type

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

CORPORATE
Bank of America

Com. stock

56.0

Scott Paper

Conv. deb. -

98.7

SF deb.
1 s t mtg. bds.
1 s t mtg. bds.
Com. stock
Sub. deb.
Deb.
1st &ref. mtg.bds.
1 s t mtg. bds.
1st & ref.mtg.bds.
Conv. deb.

25.0
15.0
20.0
3U.lt
20.5
UO.O
Uo.o
30.0
30.0
53.0

P l a n t a t i o n Pipe Line
Florida Power and Light
Duquesne Light
C a t e r p i l l a r Tractor
VJestcoast Transmission Ltd.
Columbia Gas
Southern C a l i f o r n i a Edison
Wisconsin E l e c t r i c Power
*-Duke Power
^General. -Telephone
^General E l e c t r i c
^*American Telephone and Telegraph




Deb.
Deb.

300.0
250.0

April 2
( r i g h t s expire)
April 3
( r i g h t s expire)
April 3
April h
April U
April U
April 5
April 10
April 17
April 2k
Hay 7"
May
( r i g h t s expire)
Spring
June

H.Ik

F-2
Forthcoming Large O f f e r i n g s , as of March 30 (Cont'd)
Issuer

Type
•

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

STATE A D LOCAL GOVERNMENT
N
Escanaba, Michigan
Louisiana S t a t e Building Auth.
Philadelphia School D i s t r i c t , Pa.
-^•State of Massachusetts
Omaha P u b l i c Power D i s t . ^ Neb.
^ D e t r o i t , Michigan
-^Stat.e of Ohio .
-^-Philadelphia, Pennsylvania
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
Washirgton S t a t e Toll Bridge Auth.
S a l t River P r o j e c t , Arizona
Ihter-American Center Auth., F l a .

Rev. L»L«
G.O.
G.O.
Rev.
G.O.
G.O.
G.O.
Rev.
Rev.
Rev.
Rev.
n.a.
Rev.

7-0
12.0
12.0
16.0
15.0
$.h
50.0
12.3
15-5
20.0
209.0
65.0
62.0
227.0
11.0
70.0

April b
April 5
April 10
April 10
April 11
April 12
April 25
April 25
May
Spring
Summer
1956
1956
1956
1956
1956

None
•x—-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 .
l/."Ineludes corporate and other i s s u e s of $15.million 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 foreign 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 .




ExMbit G

K.lU

Yields on New and Outstanding
E l e c t r i c Power Bonds, Rated Aa and A 1 /
Date

Aa-rated o f f e r i n g y i e l d s
A-ratM offering yields
Amount above
Actual I Amount above
Actual
(per c e n t ) Reasoned y i e l d s (per cent) seasoned y i e l d s
|(basis points)
(basis points)

1952 average

3.16

13

3-35

12

1953 average

3*U6

16

3-78

26

195U average

3.03

3

.

3.12

1955 average

3.23

9

.

3.33

*3.15
*3. Ik
*3.17
None
*3.22
| *3.20
1 None
None
*3.32
*3.25
*3-27
*3.32

13
7
8

1955 - January
February
March
April
May
June
July
August
September
October
November
December
1956 - January
February 15
28
29
March 8
16
30

.

10
7
.10
7
7
12

None

None
*3.23
3.29
3.31
3- 35
*3.30
- None
*3.5%
*3.50
3-28
None
None

-3
-

12
9
lk
16
lk
10
30
23
-5
—

None

3.15

3

3.19

—

3.20
3.25

-8
-3

c/3.35
3.55

7
25

5

_L
-^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 , t h e 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 t h e 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 195U when 6 A-rated
i s s u e s were included. Average m a t u r i t y 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 .





Federal Reserve Bank of St. Louis, One Federal Reserve Bank Plaza, St. Louis, MO 63102