Full text of H.16 Capital Market Developments : April 6, 1959

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H.lii

Publlcatlon

1)ECOirrROLIiED

AFTER SIX MONTHS

--

April 6, 1959
CAP H A L MA RKET DEVELOPMENTS

The volume of public security financing for new capital was
substantial last week and is expected to be slightly larger this week.
During the week ending April 3, corporations sold large issues amounting to $116 million and State and local governments offered bonds total ing $35 million. A # 0 million issue by Federal National Mortgage
Association was also sold. This week, large corporate issues, including
expiration of subscription rights, are expected to total $176 million.
State and local government offerings with aggregate proceeds of $.72
million are also scheduled for sale.
Bond yields - Yields increased last week for all categories
of outstanding bonds, with yields for Aaa-rated corporate bonds reaching a new postwar peak of U.17 per cent.
A new Aa-rated, first mortgage electric utility bond issue was
offered to investors last week to yield k*k7 per cent, slightly above
the yield for two comparable offerings made a week earlier. A new Arated issue with similar terms was offered to yield Ij.,67 per cent, somewhat below that for the last comparable issue for this category, an
offering made in early January.
Changes in bond yields during March and the first few days
of April were mixed. Yields for outstanding high-grade corporate and
U. S. Government obligations increased slightly to about their postwar
peaks. Yields for Aaa-rated State and local governments bonds declined
slightly and are currently 38 basis points below their postwar high.
Lower-grade corporate and State and local government bonds declined on
balance.
Housing starts - Exhibits C and D include a chart and table
showing monthly data on housing starts. This is the third in a series
of new tables and charts which will be included in this report, with different materials covered each week on a four-week cycle.
Private housing starts in February showed less than seasonal
strength and fell slightly to a seasonally adjusted annual rate of
1,320,000 units, according to preliminary estimates. This, however,
was the highest February rate in four years, and
per cent above the
recession low a year earlier. During January and February, starts were
38 per cent above the same 1958 period and the second highest on record
for these two months. Once again, Federally underwritten starts demonstrated their volatility as VA starts were 90 per cent higher than in
the first two months of last year .and FhA were 62 per cent higher.
Conventional starts, which held up well in 1958, were 28 per cent higher.




H.lU

Most new dwellings are financed mainly by mortgage loans, and
trends in housing starts tend to be reflected in the mortgage recordings
and loan series shown two weeks ago in this release. There is no exact
relation between the two series, however. One is given in terms of
numbers of new dwellings begunj the other, dollar amounts on new and
existing properties. Housing starts, for example, relate to the estimated number of dwelling units included in proposed homes and projects
on which initial work has begun and for which commitments have or have
not been obtained to make or underwrite permanent mortgage loans upon
completion or sale. The mortgage recordings series pertains to the
estimated amount of first and junior mortgages of $20,000 or less
secured by real estate, primarily 1- to It-family residences, but also
some nonresidential properties. It excludes residential or other recorded mortgages of more than $20,000 each.
The following discussion illustrates some of the differences
which may exist between housing starts and mortgage recordings and loans.
Starts refer to new permanent units begun at a wide rAnge of anticipated
selling prices. Recordings concern properties, whether or not with
permanent structures, and only when the mortgages amount to no more
than $20,000 each. Recordings also reflect operations involving refinancing, recasting, or even the financing of repair and modernization,
household equipment, a college education, or setting up a business.
A new dwelling unit enters the recordings series only if an
individual mortgage of $20,000 or less is originated on it and recorded.
New units acquired without mortgages are excluded. According to the
FRB's Survey of Consumer Finances, roughly 15 per cent of all new units
may be excluded for this reason.
A time differential is also involved. A mortgage made in
connection with a construction loan, for instance, may be recorded
before the unit is started, A mortgage may be initiated and recorded,
on the other hand, only.when the unit is sold well after excavation
has begun or even months after completion.
Finally, there is no precise relation among the component parts
of the two series. A unit started under one type of financing arrangement may be permanently financed later in another manner. A house
processed for a EHA-insured mortgage, for example, may eventually be
sold with a conventional mortgage, for cash, or, if eligible, to a
veteran under a VA-guaranteed mortgage*
Stock prices - Standard and Poor's index of $00 common
stocks increased last week, closing at SS.bk on April 3. The volume
of trading declined slightly, averaging 3.1 million a day.
More detailed information concerning 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.




HIGH-GRADE

LOWER-GRADE

BOND

BOND

YIELDS

YIELDS




H.ltt

Exhibit b
Tables for Exhibit A
High-grade Bond Yields

Date

Corporate
Aaa 1/

U. S. Govt,
long-term 2/

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

State and
local govt.
Aaa y

(Per cent)
195U - Low
1957 - High
1958 - High
Low
1959 - High
Low

2.85 U / 2 3 )
it.lit (9/27)
It. 13 (10/10)
3.55 (5/2)
It. 17 (it/3)
lt.09 (1/9)

2.lt5
3.76
3.8it
3.07
3.96
3.83

Mar.
Mar.
Mar.
Mar.
Apr.

It. 11
it.13
lt.13
it. lit
it. 17

3.87
3.92
3.92
3.9it
3.95

6
13
20
27 y
3 2/

(8/6)
(10/18)
(12/26)
(4/25)
(1/23)
(1/2)

1.90 (9/2)
3.U5 (8/29)
3.31 (9/11)
2.61* ( 5 A )
3.20 (2/5)
3.06 (3/26)

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

.30
.it?
.72
.3U
.88
.65

3.06
3,06
3.06
3.06
3.07

.2it
.21
.21
.20
.22

.81
.86
.86
.88
.88

Lower-grade Bond Yields

Date

Spread between
Aaa and Baa
State and
local govt.

Corporate
Baa 1/

State and
local govt.
Baa y

3.itit (12/31)
5.10 (11/29)
it.96 (1/3)

2.93 (8/5)
It. S i ( 8 / 2 9 )
lt.3lt (9/11)

.52
1.27
1.20
.77
'.67

Corporate

(Per cent)
195U - Low
1957 - High
1958 - High
Low
1959 - High
Low

ts ©Si
4.83 (3/26)

3.92 (3/26)

Mar.
Mar.
Mar.
Mar.
Apr.

It. 87
It. 87
It. 85
It. 83
It, Bit

3.95
3.93
3.92
3.92
3.97

6
13
20 •
27
3 eZ

:K
1

.96
1.21
. 1.11

1
:8
.89

.86
.90

%/ Preliminaiy.
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 obligation bonds are included; average term
is 20 years.
Note.—highs and lows are for individual series and may be on different dates for
different series.




<
STOCK

MARKET




Exhibit D - Tables for Exhibit C
Stock Market
Common
Stock price

Date

Trading

Stock market customer credit
Customers1
Bank
debit balloans to

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

index 1/

Total

ances 4 /
"others" 5 /
(Mil:Lions o f do]Liars)

1953-1958 - High
Low

54.11 (12/24/58)
2 2 . 9 5 ( 9 / 1 8 / 5 3 )i

3.30
6.25

4.9
0.9

4,492
2,055

3,285
1,314

1959 - High
Low

56.67 (3/13)
54.37 (2/6)

3.21

4.3
3.0

4,554
4,527

3,297
3,253

February

54.77
56.15
56.67

3.32

3.5

3.25
3.21
3.22

3.9
4.2

4,527
n.a.
n.a.
n.a.
n.a.
n.a.

3,253
n.a.
n.a.
n.a.
n.a.
n.a.

March
Mar. 13
Mar. 20
M a r . 27

56.39
55.76

Apr.

56.44

3 £/

3.34

3.31

4.3
3.2

3.27

3.1

1,317
669
1,292
1,210
1,274
1,292
1,271
1,289
1,292
n.a.

n.a.--Not available,
g/ Preliminary.
1/ Standard and Poor's composite Index of 500 oomnon stocks, weekly closing prices, 1941-43=10. Monthly data
are averages of dally figures ratter than of Fridays' only. Hlgha and lows are for Fridays' data only.
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 high or low.
8/ Averages of dally trading volune on the New York Stock Exchange,
4/ tod 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 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.
Private Permanent Nonfara Dwelling Units Started

Date

1958 - Feb.
Mar.
Apr.
MayJuly
Aug.
Sept.
Oct.
Nov.
Dec.
1959

- Jan.
Feb.

Seasonally
adjusted
annual rate

s

983
1,039
1,057
1,17k

1,228

1,255
1,303
1,427
6/1,h3D
EA,350
i/1,320

1/

Unadjusted

Total
Unadjusted

Conv,

VA

IHA

(Thousands of units)

61
94
101
101
109
115
111
113
107

SB

11

3
3

8
11

I

35
26

13
14
15
11

70

25
20
20

9
7
6

17
23
26
28
30
30
32

'

6

68

1

i

1/ Total starts are BLS estimates. A dwelling unit is started when excavation begins; all units
in an apartment structure are considered started at that time. FHA and VA starts are units started
under commitments by these agencies to insure or guarantee the mortgages. As reported by FHA and VA,
a unit is started when a field office receives the first compliance Inspection report, which is made
before footings are poured in some cases but normally after the foundations have been completed.
Capehart military housing units are excluded. Conventional starts are derived as a residual, although
total and FHA and VA starts are not strictly comparable in concept or timing; they include both units
financed by conventional mortgages and units without mortgagee.




Exhibit E

H.lU

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

1959

January
February
March
April
May
June

5® J v
i/650
e/700

July
August
September
October
November
December
1st
2nd
3rd
l*th

quarter
quarter
quarter
quarter

New capital
Corporate 1/
State and local 2/
19
I
1957
"1939
I
19%
1 w

e/2,082

1st half
Three quarters
Year

1,060
1,065
1,320 •

63U

812

71*2
572
506

£

1,11*1
600
881

1,U53

1,102
538
1,11*1*

1,003
92k
973

g
g

806

529
581*
1*31

858
1*73
911*

1,090
789
1,076

b$6
1*71*
1*35

698
633
698

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

3 ,UU5
3,lUS
2,899
2,95k

2,276
2,21*1*
li860
1,365

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

5,757
8,511
10,791

6,59k
9,1*3
12,1*1*7

1*,520
6,380
7,71*6

3,521*
5,069
7,099

?£

e/750

e/2^26

798

-

765
51*6
393

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

quarter
quarter
quarter
quarter

e/1,882

Year

2,89b
2,583

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

10,391

11,518

K8

„
2/ Preliminary.
3/ 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.
% / Total new capital issues excluding offerings of sales and consumer finance
companies.




H.ll*

*

Exhibit F

Other Security Offerings 1/
(In millions of dollars)
Long-tem
Foreigi1 government 2 /
Federal agency 3/
1956
I1 1957
1959
F
1959
1
1956
1
1957
January
February
March

77

196
53

8U
1*9
30

—

April
May
June

139
198
120

123
1*8
1*2

9
5
17

28
7
30

October
November
December

58
123
74

1*
60
1

Year

992

July
August
September

199

1,163
251

72
,

125

523

60

—

161*

-

215

—

220
100
—

2,321

507

572

Short-t
Federal agency 3 /
January
February
March

190
E/to

233

326

638
1*30
5tiS

273

11*7

371
208
11*1*

April
May
June

357
351*
261*

205
337
153

209
161
329

336
1*69
501

July
August
September

289
JU23
369

272
272
252

1*37
206
330

221*
370
512

October
November
December

231
1*15
21*3

303
91*
1*59

1*51*
111*
137

1,238
255
116

Year

165

m

3,910

/

3,271*

359
500

3,098

5,51*3

2 / Preliminary.
l/ 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.
2/ Issues not guaranteed by the U. S. Government. Source: long-term, Securities
and Exchange Commission5 short-term, Federal Reserve.
b/ Principally tax and bond anticipation notes, warrants or certificates and Public
Housing Authority notes. In some instancesfifctAnotes included may have a somewhat
longer
than one year. Source: Bond Buyer.
Digitized
for tern
FRASER



Exhibit 0

H.Ut

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

Corporate

Month

State and
local government

605
1,093
725
356
281
771
209
825
259
227
305
369
3k0

1956 - February'
March
April
May
June
July
August
September
October
November
December
1959 - January
February

Other 2/

266

553
182
' 300
505
195
275
109
288
172
259
229
335
551

653
16U
86
1*1
18
209
100
79
174
~ 35

Large Individual Issues Offered March 1 through April 3

Type y

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

Rating

CORPORATE
No. Indiana Pub. Serv. Co. 1st mtg. bds.
25.0
Conv. sub. deb. 18.5
KLM Royal Dutch Airlines
Com. stk.
28.0
American Natural Gas Co.
Colorado Interstate Gas Co, 1st mtg.p.l.bds.33.0
Pfd. stk.
15.0
Texas Eastern Trans. Corp,
Cleveland ti.ec. Ilium. Co 1st mtg. bds. 25.0
Montana Power Co.
1st mtg. bds. 15.0
Ohio Edison Co.
1st mtg. bds. 30.0
Ohio Power Co.
1st mtg. bds. 25.0
Monongahela Power Co.
1st mtg. bds. 16.0
Armco Steel Corp.
S.F. deb.
75.0

1989
1979

4 1/2
4 3/4

4.40
4.75

Aa

1979

4.70

4.67

A

1994
1989
1989
1989
1981;
1984

4 3/8
4 1/2
4 1/2
4 5/8
4 3/4
4.35

4.29
4.43
4.43
4.47
4.65
4.35

Aaa
Aa
Aa
Aa
A
Aa

—

STATE AND LOCAL GOVERNMENT
Detroit-Metro. Expressway
Philadelphia, Pa.
Port of New York Auth.
New York, N. Y.

Rev.-S.T.
G.O.
Rev.-Ut.
G.O.




25.0

25.5

30.0

26.3

1960-84
1960-89
1989/68
1960-74

3.54
3.27
3.68
3.17

1.90-3.65, , A
1.85-3.45=^ A
A
3.63
A
1.90-3.37

H.U

G-2
Large Individual Issues Offered March 1 through April 3 (Cont'd)

Issuer

type 3/

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

Rating

STATE AND LOCAL GOVERNMENT
(Cont'd)
Metro.Wtr.Dist.of So.Cali£
State of California
Phoenix, Arizona
West Virginia Univ.
Baltimore, Md.
State of Delaware
Milwaukee, Wisconsin
Penna. Gen. State Auth.
Shelby Co., Tennessee
Territoiy of Hawaii
Pennsylvania State Univ.

Rev.-Ut.

G.0.

Rev.-Ut.
Rev.-Q.Ut.
G.0.
G.0.
- G.0.
Rev.-Rent.
G.0.
Rev.-Q.Ut.
Rev.-Q.Ut.

26. k
100.0
10.0
10.2
28.9
12.5
18.8
30.0
11.0
lh.0
11.0

1960-71

1960-88/68
1960-89/69
1960-81
1960-79
1960-79
196l-65/6k
1960-81-

2.96
3.55
3.69
It. 27
3.11
2.96
2.98
3.58
3.16

1961-8^,99

n.a.

1960-8L/79

1981/69

l*.Uo

Aa
1.90-3.05
1.90-3.60
2.00-3.80. . A
3.25-W02/ —
1.90-3.20
Aa
1.80-3.05
Aa
1.85-3.10
Aaa
2.25-3.70,, —
I.9O-3.252/ Aa
k.32
2.25-3.80,3.90—

OTHER
Federal Land Banks
Farm loan bds.86.0
Deb.
Fed. Nat'1. Mortgage Assocj
90.0

1968

196°

hl/k

it 3/8

ho 3$
j4.l1?

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.
3/ In the case of State and local government securities, G.0. denotes general
obligations; Rev.-Ut., revenue obligations secured only by income from public utilities; Rev.-Q.Ut., revenue bonds secured only 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.
V 1987-89 maturities not reoffered.
W 1989 maturities not reoffered.
0/ Is of I983-8I1 reoffered to yield ii.00 per cent.




H.14
Forthcoming Large Long-term Public Security Offerings for New Capital
(Other than U. S. Treasury) 1/
Jkqpected Proceeds ftom Forthcoming Large Issues
Subsequent to
During month following
date shown
date shown
State and
Coiporate
Other 2/ Corporate
g ^ J o t h e r 2/
local govt.

Date of
computation

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

5#

%
266
768
161
785
113
20k
301
210
270
198
396

298
1*93
177
225
55
2 4l
295
258
229
261"
551
292
550

110
150
36

71
75
45
20

670
561
46k
1,01*8
381
911+
216
326
401
370
365
279
476

330
493
208
235
125
U35
524
675
683
515
856
481
761

110
150
36

71
75
45
20

Forthcoming Large Offerings, as of April 3
Issuer

Type

Amount
Approximate date
(millions
of offering
of dollars)

CORPORATE
Glickman Corp.
Tennessee Gas Transmission Co.
W. T. Grant Co.
Texas Eastern Transmission Corp.
Natural Gas Pipeline Co. of America
Food Fair Stores, Inc.

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

Apr. 7
Apr. 8
Apr. 9
Apr. 9
Apr. 10
Apr. 10
(rights expire)
Conv. deb.
20.0
Philco Coip.
Apr. 16
Columbia Gas System, Inc.
Com. stk.
Apr. 20
39.1
(rights expire)
•^General Telephone & Electronics Corp
Com. stk.
5o.o
Apr. 21
Public Service of Colorado
1st mtg. bds.
20.0
Apr. 29
1st mtg. bds.
^Alabama Power Co.
20.0
May 1
1st mtg. bds.
*Idaho Power Co.
15.0
May 13
Deb., bds. & common 45.0
Commerce Oil Refining Corp.
Spring




31.0
44.0
15.0
45.0
20.0
21.2

H.lli

H-2
Forthcoming Large Offerings, as of April 3 (Cont'd)
Type

Amount
Approximate date
(millions
of offering
|bf dollars)

STATE AND LOCAL GOVERNMENT
Los Angeles Sch. Dist., Calif.
Alabama Highway Authority
^Puerto Rico Water Resources Auth.
State of Connecticut
Buffalo, New York
Florida Development Commission
^Massachusetts Turnpike Auth.
State of Minnesota
Commonwealth of Massachusetts
State of Mississippi
Oakland Co., Michigan
State, of New Jersey
New York State Power Auth.
^Houston Navigation Dist., Texas
State of Tennessee
*State of Louisiana
Los Angeles, California
Cincinnati, Ohio
*King Co. Sch. Dist. No. 1, Wash.
Chesapeake Bay Ferry Commission
Memphis, Tennessee

G.O.
Rev.-S.T.
Rev.-Ut.
G.O.
G.O. ,
Rev.-Ut.
Rev.-Ut,
G.O.
G.O.
G.O.
Rev.-Ut.
G.O.
Rev.-Ut.
Rev.-Ut.
G.O.
G.O.
Rev.-Ut.
G.O.
G.O.
Rev.-Ut.
G.O.

27.0

20.0
20.0
16.9

10.2
25.0

Apr. 7
Apr. 7
• Apr.
fpr-1
8

10.0

Apr. 9
Apr. 9
Apr. 9
Apr. lit
Apr. lit
Apr. 15
Apr. 20
Apr. 20
Apr. 21
Apr. 23
Apr. 28
Apr. 30
May 12
May 12
May 13
Spring
Spring

20.0

Apr.

52.-812.0

60.2
20.0
12.7

25.0
200.0
212.5

15.0
10.0

15.0
26.9
1 U.5
liUt.o

OTHER
•^Southern Italy Development Fund

Bonds

*—Included in table for first time.
1/ Includes corporate and other issues of $15 million and over; State and
local government issues of $10 mill ion 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.




8.14

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

Date

A-rated offering yields
Aa-rated offering yields
Amount above
Amount above
Actual
Actual
seasoned
yields
(per cent) seasoned yields
(per cent)
(basis points)
(basis points)

1952 - 1957
High
Low
1958 - January
February
March
April
May
June
July 2
9
18
23
Oct. 7
15
28
29
Dec. 17
1959 - Jan. 7
20
28
Feb. 18
Mar. 11
25
26
31 •
Apr. 3

5.00(9/14/57)
2.93(3/31/54)

87
-3

*3.60,,
3.893/
4.08
3.91
3.87
3.87

-8
22
35
18
18
17

4.00
4.10
4.10
4.57
4.50
4.40,/
4.42^/
4.44

25
28
29
25
22
12
14
23

4.6o
4.65?/

34
40

4.43
4.43
4.47

9
9
13

5.50(11/7/57)
3.00(3/17/511)
3.962/
lt.07
lt.16
li.01
I1.07

123
-15
3
9
-1
8
6
i

k.35^

31

li.75^

23

I1.67 .

• 18

*—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.