Full text of H.16 Capital Market Developments : August 1, 1960

The full text on this page is automatically extracted from the file linked above and may contain errors and inconsistencies.

Wot for Publication D E C 0 , n ' R 0 L I ® ^ 1 1 1 . ^ 9
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August 1, i960.

UNITED STA
Part I - United States
Large public security financing for new capital during the
week ending July 29 totaled $113 million for corporations and $11 million for State and local governments. The calendar for this week
includes a $100 million bond issue of Southwestern Bell Telephone
Company and a $181 million issue by 'Chesapeake Bay Bridge and Tunnel
Commission. This State and local government issue has been tentatively
scheduled for sale numerous times in the past few years.
Long-term bond yields - Yields declined last week for all
categories of outstanding bonds. Only lower rated State and local
government bond yields were above the low reached earlier this year.
• Although yields on corporate bonds remained relatively stable
in early July, they declined in later weeks, with the decline for the
month being about 10 basis points. U. S. Government bond yields
declined throughout July and at the end of the month were 22 basis
points lower than at the end of June, State and JLodal- govfein?ment bond yields showed little net change during July.
Short- and intermediate-term interest rates - Yields on
Treasury bills and intermediate-term issues also declined last week.
For the month of July, market yields on 3-month bills showed no net
change; those on 6-month bills declined 12 basis points and yields
on 3- to 5-year issues declined more than 50 basis points.
Rates on directly placed finance company paper, 3-6 months
were lowered slightly in late July. Other major money market rates
remained stable last month.
Stock prices - Common stock prices fluctuated widely last
week and trading activity increased somewhat. Standard and Poor's
index of 500 common stocks closed at 55.51 on July 29, one per cent
higher than a week earlier. Trading volume averaged 2.8 million shares
a day.
Stock prices generally declined throughout July reaching
5U.17 last week, 5 per cent lower than at the end of June. Prices on
Friday; however, recovered about half of this decline. Trading activity
averaged 2.7 million shares a day in July as compared with 3.5 million
shares a day in June.




FNMA. secondary market operations - Offerings to FNMA. under
its secondary market operations during June changed little, while FNMA.
purchases declined further. Both offerings and purchases in the second
quarter were down about one-fourth from the near-record levels of the
preceding quarter, as market conditions eased somewhat. Reflecting this
trend, 2NMA. early in July raised by 1/2 point its prices for Federallyunderwritten home mortgages bought over-the-counter under immediate
purchase contracts. This was the first time such prices had been
raised since the secondary market program was reconstituted in 195k.
August security volume estimates - New financing for corporations is expected to be heavy in August, but moderate for State and
local governments.
Corporate security issues are estimated at.$1*1 billion, about
one-half larger than in July and two-fifths larger than in August 1959*
Large public issues are expected to total $600 million, including the
very large issues scheduled for sale by Southwestern Bell Telephone
Company, General Motors Acceptance Corporation and Republic Steel
Corporation.
State and local government security financing is expected
to total #550 million in July. This Volume would be the same as a
month earlier and slightly above the total a year ago. The calendar
of large issues scheduled for sale in August is ligit except for the
Chesapeake Bay Bridge and Tunnel Commission issue.
More detailed information concerning recent capital market
developments is presented in the attached exhibits.
Developments in the Canadian capital markets are presented
in Part II at the end of this report.

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




L O N G - T E R M B O N D YIELDS

HIGH-GRADE

( • U.S. G O V E R N M E N T

^X/

LOWER-GRADE




-5-

Exhibit B - Tables for Exhibit A
Long-term Bond Yields
High-grade

11.114

Date

Corporate
Aaa 1/

U. S. Oovt.
long-term 2/

Spread between
U. S. Oovt. and
Corporate State and
Aaa
local Aaa

State and
local govt.
Aaa y

( P « cent)
195k
1957
1958
1959

-

2.85 (V23)

Low
High
Low
High
Low
1960 - High
Low

il«B,

July
July
July
July
July

k.Uh
h.hh

1
8
15
22
29 £/

U.09 (1$)
U.6L (1/29)
lt.38 (7/29)

a

2.16 (8/6)

3.76 (10/18)
3.07 (1/25)
U.37 (12/31)
3.83 (1/2)
Ii.to (1/8)

II;

3.96
3.91
3.87
3.81,

3.30
3.30
3.32
3.32

3.81 (7/29)

l».i»3
I1.I1O
1..38

.22

5

3.06 (a/26)
3.53 (1/7)

3.28 (7/28)

ill

M

.66
.61

I

3.28

3.81

fy

.57
.19

1

.57

Lower-grade
Corporate
Baa 1/

Date

State and
local govt.
BM

}/

Spread between
Aaa and Baa
State and
Corporate
local govt.

(Per cent)
1951
1957
1958
1959

Low
High
Low
High
Low
1960 - High
Low
July
July
July
July
July

-

1
8
15
22
29 e/

.96
1.21

3.W* (12/31)
a

w

IS
1:81%'
5.28
5.27
5.26
5.20
5.15

f

3.92 (3/26)
1 U 6 ( 1/7)
lt.22 (V7)

k.2k
h.2h

4.27
li.26
lt.25

is

.8U
.71
.84

:8
.80
.77

•98

.79

.97
.92

tu
.97

Prellslaary.
Hackly inri|( ef dally figures. Average tern ef b*d* lnelnied Is tS-M yuri.
Weekly s w a g e o f <Mly figures. The series includes beads * w er mailable In 10 years er mere.
3/ Thursday figures. Only general ebllgatlen bende are ineludedt average tem Is 20 years.
Hote.—Hlghe and lews are fer Individual series and may be en different dates far different series.




SHORT-

AND

INTERMEDIATE-

TERM

INTEREST

RATES

GOVERNMENT

MARKET YltlDSA/r

v X . / V

w\

PRIVATE

Directly Placed

1957




1958

1959

I960

Exhibit D - Tables for Exhibit C

-7-

Short- and Intermediate-term Interest Rates
Qovernment
Date

Discount
rate 1/

3-month
bills 2/

Yields
6-month
bills 2/

3-5 year
issues 2/

Spread between yields on
3-month bills and yields on
6-mo. bills(3-5 yr. issues"

(per cent)
1951)
1957
1958
1959
i960

-

Low
High
Low
High
Low
- High
Low

July 1
July 8
July 1 5
July 22
July 29

n/

1.50
3.5o
1.75
it. 0 0
2.50
Loo
3.5o
3.5o
3.50
3.50
3.50
3.50

.61 ( 6 / 1 1 )
3.61* ( 1 0 / 1 8 )
.58 ( 5 / 2 9 )
4.57 ( 1 2 / 2 6 )
2.63 ( 2 / 2 0 )
4 . 5 9 (1/8)
2.18 ( 7 / 1 1 )

5.07
2.52

2.18

2.61*

2.27

2.85
2.87
2.62
2.56

2.1a

2.31
2.21*

3.02
4.91
2.92

1.66
4.04
(12/26) 2.14
(12/31) 5.00
(1/2)
3.70
(1/8)
i*.97
(6/17)
3.51*

(4/30)
(10/18)
(6/7)
(12/21*)
(1/2)

.79
.19

1.1*2
.1*0

(1/8)
(7/29)

.58
.16

1.81

.1*6

1.81
1.60

3.99
3.87
3.76
3.67
3.51*

.26

-

•66
.86
.Oil

.38

.58
.1*6

.89

.31
.32

1.36
.98

Private

Date

Stock Exchange
call loan 1/

Spread between 3-month
Prime Finance company Treasury bill yield and
rate 1/ paper J/
finance company
paper rates
(per cent)

-

Low •
High
1957
Low
1958
High
1959
Low
i960 - High
Low

3.00
l*.5o
3.50
4.75
3.75
5.5o
5.oo

July
July
July
July
July

1
8
15
22

5.oo
5.oo
5.oo
5.oo
5.oo

1951*

29 £ /

3.00
l*.5o
3.50
5.00
4.00
5.00
5.00

5.00
5.00
5.00
5.oo
5.oo

1.25 (12/31)
3.88 (11/16)
1.13(8/8)
i*. 88 ( 1 2 / 3 1 )
3 . 0 0 (4/6)
5.13 ( 1 / 2 2 )
2.94 (7/29)
3.00
3.00
3.00
2.96
2.94

0

(12/18)

.59 ( 7 / 1 9 )
-.35(8/29)
.86 ( 1 0 / 9 )
.13(12/4)
1.02 (3/25)
.22 ( 4 / 1 5 )

---

.82
.73
.59
.65
.70

1/ N««kly rate shown la that in effect at end of period. Discount rate Is for Federal Reserve Bank of New York.
Stock exchange call loan rate is going rate on oall loans secured by customers' stock exchange collateral at
New York City banks. Prime rate is that charged by large banks on short-tern loans to business borrowers of
the highest credit standing.
y
Market yields weekly averages computed from dally closing bid prices. Series of 3-6 year Issues oonstste of
selected notes and bond*.
3/ Average of dally rates published by finance ceopaides for directly placed paper for varying maturities In the
90-179 day range.
Note.—Highs and lows are for individual series and may be on different dates for different series. Per spread*.
M g h refers to widest, and low to narrowest.




STOCK

MARKET

FEDERAL

NATIONAL

i SECONDARY

MARKET

/

MORTGAGE
OPERATIONS

PURCHASES




ASSOCIATION

Exhibit F - Tables for Ext libit E

-9-

Stock Market
Stock price
index 1/

1957-1959 - High
Low
I960 - High
Low

60.51
39-78
59.50
54.24

May
June
July 15
July 22
July 29 2/

55.22
57.26
56.05
54. 72
55.51

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

(7/31/59)
(12/27/57)
(1/8)
(3/11

3.07

4.66

3.18
3.51

3.1*2
3.35
3.46
3.55
3.50

%

I'X

!:!
2.5
2.8

4,764
3,554
4,365
4,132

3,401
2,482
3,198
3,021

4,132
4,214
n.a.
n.a.

3,021
3,082
n.a.
n.a.
n.a.

1,373

1,060

1,167

1,111

1,111

1,132
1,148
1,138

n.a.—Not available.
g/ Preliminary.
1/ Standard and Poor's composite index of 500.common stocks, weekly closing prices, 1941-43*10. Monthly data
are averages of daily figures rather than of M d a y s ' only. Highs and lows are for Fridays1 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 dales on which price Index reached its high or low.
3/ Averages of daily trading volune on the New York Stock Exchange.
4/ End of month figures for member firms of the New York Stock Be change which carry margin accounts; excludes
balances secured by U. S. Government obligations.
5/ Wednesday figures for weekly reporting member banks. Be eludes loans for purchasing or carrying U, S.
Government securities* Prior to July 1, 1959, such loans are excluded only at banks In New York and Chicago,
Weekly reporting banks account for about 70 per cent of loan# to others. For further detail see Bulletin.

Federal National Mortgage Association Secondary Market Operations 1/
Date

Estimated Offerings to FNmA
Immediate Standby
Total
purchase commitment

Purchases
by
MMA.

Sales
by
FNMA

(Millions of dollars)
1959 - June
July
Aug.
Sept.
Oct.
Nov.
Dec.
i960 - Jan.
Feb.
Mar.
Apr.
May
June 2/

84.4
109.5
123.1
141.3
108.3
105.6
116.3
137.6
135.8
133.2
103.4
98.5
100.2

76.6
92.5
109.9
134.8
101.8
100.3
111.4
128.3
128.9
124.6
96.1
93.8
94.0

7.8
17.1
13.3
6.5
6.5
5.3
4.9
9.3
6.9
8.6
7.3
4.7
6.1

49.4
62.3
71.7
85.4
105.5
92.6
92.2
86.1
116.7
135.0
102.6
91.9
60.8

.6
.3
.3
--

*
*

3.6
1.0

•—Less thnn |50,000.
1/ Dxta represent unp»ld principal balance• of the mortgages involved, exclusive of premiums,
dincounts, or other otwrges. Offerings are nMounts of attentions received during the period from
sellers proposing that KMMA execute ourehaninn eontraets. An immediate purchane contract covers
existing mcrV.nr.es which the seller muct deliver to F11MA within 45 days. A stendby commitment contract relates to proponed mortgages, on housing net yet under construction, "hioh the seller must
usually deliver within one y e w . Purchases Include those under both 1 mediate purchase and standby
commitment contract*. Data crclvde PUMA activity under Special Assistance and Management and —
Liquidating Programs.




Exhibit G
Long-term Corporate and State and Local Government
Security Offerings and Placements
(In millions of dollars)
Corporate 1/
I960
January
February
March
April
May
June
July
August
September

577
715

860

quarter
quarter
quarter
quarter

1st half
Three quarters
Year

1959
821
738

1

1958

I960

728

736
623
575

61+6

1,5532/

E/789

89k

1,110

e/1,100

785
887

597
887

e/675

535

1,107

J/570

e/1,050

October
November
December
1st
2nd
3rd
kth

I

New capital

7h0
703

1,11k

879

862

862*
900

2,151

e/S,l&9

ShO

2,20k
2,567

«lS

9,392

733

E/531
e/950

S/550
e/55o

2,760

is

10,823

1959

1

1958

639

812

858

953
511

932

798
895
551

6I16
593

1,006

S

806
1*03
651

165

1*56

920
3,139
2,623

J

1,934

e/2,21h

2,11*3

,

U7k f

519
1*55

518

2,300

e/l*,6l0

State and local 2/

W5

s

-

:

1,860
1,571

1,365

lt,67U
6,222
7,793

It,520
6,380
7,7l»6

I

•*,

Excluding finance companies k/
1st
2nd
3rd
kth

quarter
quarter
quarter
quarter

1,722
e/2,159

Year

1,999

2,899
2,586

2,503

2,213

8,630

10,1*29

2,112
1,716

2,731

]/ Securities and Exchange Commission estimates of net proceeds.
2/ Investment Bankers Association of America estimates of principal amounts,
3/ Includes 1718.3 million AT&T convertible debenture issue.
U/ Total new capital issues excluding offerings of sales and consumer finance
companies.




.-3-

.

-11-

H.U

Exldbit H
Other Security Offerings 1/
(In millions of dollars)
Long -tern
Foreign government 2/
Federal apency 3/
I960
I960
I
1959
1 1958
1 1959
1 1958

January
February
March

*
175
70

81
60
2

196
53

April
May
June

33
31

•58
50
1*2

139
198
120

July
August
September

85
1
35,

October
November
December
Year

—

182
150
150

—

523
—

—

161*

9
5
17

98
150

—

220

33
30
70

58
123
7l*

86

547

992

70?

—•
—

2,321

Federal agency 3/

190
1*28
295 /

233
1*60
273

1*79
1*63
512

359
500
1*89

371
208
lt*l*

563
1*11
21*5

357
351*
26/*

509
632
1*35

1*86
675
289

209
161
329

July
Aupust
September

21*6
1*67
399

289
1*23
369

727
365
665

1*37
206
330

October
November
December

235
31*3
358

?31
1*15
21*3

733
1*71
288

1*51*
111*
137

1*,179

3,910

6,01*7

April
May
June

268
345
365

175

1,163
251

ll*8

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

199

3#
2/267

Year

3,098

E/ Ppellalwry.
1/ tota presented in this exhibit differ from those 1* Exhibit E In that refunding Issues, an well an new
capital Issues, are .Included. Long-term securities ai*e defined as those natuHng In more than one year.
2/ Includes securities offered In the United States by foreign goverrments and their subdivisions and by
international organisations, .'•nurcai Securities ami Bxuhr.nge Commission.
3/ Isauts not guarantied by the 0. S. Qovirn-nart. Sources long-tens, Securities and Btehange Cor.nlsalon;
short-term, Federal Reserve,
4/ Principally tax and bond anticipation not*8, warrants or certificates ar.rl Public Housing Authority
not-*. In some instances PHA notes included may have a somewhat longer t » n than one year. Sourcei Bond Buyer.




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

Month

Corporate

1959 - June
July
August
September
October
November
December
i960 - January
February
March
April
May
June

State and
local government

28k
110
363
199
kOO

60
50
98
175
20

635
19k
263
214
29k
163
217
388
283
225
370
23k
561

hzi

230
279
262
38k
309
139
1*2

Other 2/

70
100
320
191
71
28
30

Large Individual Issues Offered during July
Issuer

Type 2/

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

CORPORATE
Illinois Bell Telephone Ca 1stratg.bds.
Sr. notes
Commercial Credit Co.
Northern Illinois Gas Co. 1st mtg. bds.
Deb.
American Can Co.
State Loan & Finance Co. S.F, deb.
Southern Counties Gas Co. 1st mtg. bds.
S.F. deb.
Seaboard Finance Co.
International Harvester
Deb.
Credit Co.

h.75

50.0
50.0
30.0
ko.o
20.0
23.0
W.o

1997
1979
1985
1990
1980
1985
1980

S.liO
l»-3/l»
5-l/ll

k.83
k.60
k.70
5.k0
k.60
5.25

50.0

1981

U-3A

k.73

11-7/8
lt-3/U
1.-5/8

lt-3A

Aaa
Aa
A

STATE AND LOCAL GOVERNMENT
Salt River Proj. Agric.
Imp. & Pwr. Dist., Ariz. Rev.-Ut.
G.O.
State of North Carolina
Dist. of Columbia Armory
Rev.-Ut.
Board 6/

Chicago,
Illinois
G.O. ;
G.O.
Santa Clara Co., Calif.
http://fraser.stlouisfed.org/

Federal Reserve Bank of St. Louis

19.0
10.7

1963-92/69
1961-80

3.92
3.01

2.90-lt.05^ A
2.90-3.102/ Aaa

19.8
37.0
11.5

1979
1962-79
1967-85

k.19
3.60
3.53

Aaa
It. 15
2.1i0-3.657/
2.20-3.6$U

1-2

H.lii

Large Individual Issues Offered during July (Cont'd)

Issuer

Type lJ

I Coupon
Amount
(millions tet
^LeTLterof
[est cost
dollars)

-13-

Offering
Rating
yield

STATE AND LOCAL GOVERNMENT
(Cont'd)
Nassau Co., New York
Carmen-Smith Hydro-J£Lec.
Proj., Oregon
Wash. Toll Bridge Auth.
Houston, Texas

G.O.

27.1

1961-89

3.86

2.20-L00 A

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

25.0
30.0
10.5

1965-200I/71
2000/65
1961-85

3.93
U.95
3.1J5

3.10-1*. 30 A
4.90 p / ~
2.90-3. 6O2/A

OTHER

V
u
y

JL

Includes corporate and other security, offerings of $15 million and over;
State and local government security offerings of $10 million and over.
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
obligations5 Rev.-Ut., revenue obligations secured only by income from
public utilities3 Rev.-Q.Ut., revenue bonds secured only by revenue from
quasi-utilitiesj Rev.-S.T., revenue bonds secured by revenue from specific
taxes only; Rev.-Rent., revenue bonds secured solely by lease payments.
1992 maturities not reoffered.
1961-70 maturities not reoffered.
Interest on these securities is not exempt from Federal income taxation.
l/k per cent bonds of 1985 not reoffered.
Bonds due 1961-65 and 1971-80 not reoffered.

I




_lii_

Exhibit J
Forthcoming Large Long-term Public Security Offerings for New Capital
(Other than U. S. Treasuiy) 3/
Expected Proceeds from Forthcoming Large Issues
Date of
computation

During month following
date shown
Corporate State and Other 2/
local govt.

1959 - July 31
Aug. 31
Sept. 30
Oct. 30
Nov. 30
Dec. 31
1960 - Jan. 29
Feb. 29
Mar. 31
Apr. 29
May 31
June 30
July 29

238
198
374
36%

226
210
207
.301
299
202
483
237
596

Ml

270
115
295

445
210
255
250

243
277
180
275

25

Subsequent to
date shown

406
402
470
336
485
545
310
385
280
258
502
380
324

305
517
69 4

70

45
35
30
30

#9
271
280
252
372

344

I

1,006

25
70

45
35
60
30

Forthcoming Large Offerings, as of July 29
Type.

Amount
date
(millions Approximate
of offering
of dollars)

Southwestern Bell Telephone Co.
El Paso Natural Gas -Co.

Deb.
Com. stk.

100.0

Consumers Power Co.

Conv. deb.

38.1

•^Michigan Bell Telephone Co.
Deb.
Natural Gas Pipeline Co. of America 1stratg.bds.
Pfd. stk.
Natural Gas Pipeline Co. of America
^General Motors Acceptance Corp.
Deb.
Southern California Edison Co.
1st ref. mtg, bds.
*McKesson 6 Bobbins, Inc.
Deb.
Deb.
•^Republic Steel Corp.
^Pacific Power & Light Co.
1st mtg. bds.
American Telephone & Telegraph Co.
Deb.
Texas Eastern Transmission Coip.
Deb.
Deb., bds. & com.
Commerce Oil Refining Corp.
Partic. certif.
Trustors' Corp.
Bds. & stk.
Liberian Iron Ore, Ltd.




33.0

35.0
25.0
15.0
150.0

60.0

15.0
125.0

20.0

250.0
25.0
45.0

40.0
30.0

Aug. 3
Aug. 11
(rights expire)
Aug. 12
(rights expire)
Aug. 17
Aug. 18
Aug. 18
Aug. 18
Aug. 24
Aug.
Aug.
Sept. 22
Oct. 25
Indefinite
Indefinite
Indefinite
Indefinite

-15J-S
Forthcoming Large Offerings, as of July 29 (Cont'd)
Issuer

Tfrpe

Amount
Approximate date
(millions, .
of dollars): of offering

STATE AND LOCAL GOVERNMENT
Chesapeake Bay Bridge & Tunnel Comm.
*Los Angeles Co., Califo&ia
State of Washington
East Bay Municipal Util. Dist., Cal,
*City & Co. of San Francisco# Calif.
Milwaukee, Wisconsin
•sAlameda-Contra Costa Transit Dist.,
California

Rev.-Ut.
G.O.
GiO;
G.O,
G.O;
G.O,

181.3
11.0
3l4.0
30.0
21.5
10.8

Aug. 21*
Sept. 12
Sept. 20

Rev,-tit.

16.5

Sept. 7

Aug. 1
Aug, 9
Aug. 23

OTHER

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




-16-

Exhlbit H
Yields on New and Outstanding
Electric Power Bonds, Rated Aa and A 1/
Date

1952-1959 - High
Low
1959 - July
Aug.
Sept.
Oct.
Nov.
Dec.
1960 — Jan. 7
Feb. 25
26
Mar. 15
16
18
29
Apr. 6
8
lit
21
27
May 10
12
25
June 17
28

29
July 8
13
20

Aa-rated offering yields A-rated offering yields
Amount above
Amount above
Actual
Actual
(per cent) seasoned yields (per cent) seasoned yields
(basis points)
(basis points)
5.30 (12/8/59)
2.93 ( 3 / 3 1 / 5 W
*it.93
it. 83

5.13^/
*5.08
*5.30

5.08

87
-3
31
23
36
it2
63

It. 90,
w
it. 73-

itit
it6
32
17

it. 85

33

it.9it

39

5.10

it.95
it.88

39
32

5.65 (9/18/59)
3.00 ( 3 / 1 7 / 5 W
5.07

17

*5.65
5.33

60
it3

5.it5 2/
5.3oZ/

51
28

5.00

11

it.93

7

it.98

21

5.30

50

5.10

26
33
11

5.20
it.82
L8it

25
27

123
-15

it.95

it.93
it.88

11

it. 30

*—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.




August 1, I960
-17Part II - Canada
The spot Canadian dollar advanced for the fourth consecutive
week and closed at 102,66 U.S. cents on July 28. Canadian Treasury bill
yields fell appreciably during the week. The net incentive to hold Canadian
bills over United States bills was negligible on July 28 (see Table).
There was a substantial reduction in the bill holdings of the general
public. The Bank of Canada added to its bill holdings during the week and
total bills outstanding were reduced. Shorter-term bond yields had an
easier tendency but intermediate- and longer-term yields edged upward.
Government accounts bought bonds during the week. Industrial stock prices
showed little improvementj prices declined
further on the Toronto exchange but slight gains were reported on the Montreal
exchange.
Money market conditions. The average yield on the 3-month Treasury
bill declined at last Thursday's auction by 27 basis points to 2.92 per cent
from 3.19 per cent the previous week. The 6-month bill rate also declined
to 3.15 per cent from 3«Ul per cent the previous week. During the week
the general public Fold $37 million of Treasury bills while the Bank of
Canada increased its holdings of Treasury bills by $18 million and the
chartered banks by $U million (see Table). Total bills outstanding were reduced by $15 million. The average closing rate on day-to-day loans during
the week was 3,18 per cent compared with 3.35 per cent a week ago*
The spread favoring the Canadian over the U.S. short Treasury
bill narrowed during the week to 0.69 per cent from 0.85 per cent the week
before, and the discount on the 3-month forward Canadian dollar increased
slighly. As a result, the net incentive to hold the Canadian bill declined
to 0.33 per cent per per annum from 0.£>lt per cent the week before, the
lowest net incentive recorded since June 16.
Canadian commercial paper continued to offer incentives for shortterm investment in Canada. According to commercial sources, some examples
of short-term (90-day) commercial paper yields and the covered arbitrage as
of July 22 were:
Yield
General Motors Acceptance Corporation
Continental Guaranty Corporation
United Dominions
Imperial Investments
Industrial Acceptance Corporation
Pacific Finance Corporation
Union Acceptance Corporation
Traders Finance Corporation
Source: Wood, Gundy and Co.




3.73
UoOO
U-oo
3-75
3-75
3.75
3-75
3.75

Covered
arbitrage
3oUU
3-69

3.69
3.W

3-Wt
3«Wi
3.16

3.B

Bond market conditions. Bond yields for the shorter maturities
j^ell while intermediate- and long-term issues showed some tendency to rise.
The spread between selected comparable Canadian and United States securities
(Thursday yields for bills and Wednesday yields for bonds) were as follows
(figures in parentheses refer to the previous week):
0<,69 per
O06I per
Oo92 per
loll per
1.25 per

cent
cent
cent
cent
cent

on
on
on
on
on

a 91-day bill (0.85)
a 18'2-day bill (0.77)
an 8-year bond (0.85)
a 20-year bond (1.12)
a 35-year bond (1.2U)

During the week the Canadian Government accounts purchased $25 million of
bondse The Bank of Canada made net sales of $13 million, the chartered
banks sold $3 million, and the general public sold $10 million.
While there have been few new issues in recent weeks, the
Hudson's Bay Co. Acceptance Ltd0 $10 million offer of 20-year, 6 per cent
debentures was heavily over subscribed.
Stock exchangeso The prices of industrial stock on the Canadian
exchanges continued at low levels, with the Toronto index falling to a new
low for the year and the Montreal index up only slightly from the year's
record low of last week.
New York
Standard & Poor

Toronto

Montreal

- High
Low

532.9k
U72.38

320.0
260.6

65.02
57.00

20
21
22
25
26

L80.25
177.56
U73»75
172.81
172.38

267.0
265.5
262 .L
260.6
261.5

58.90
58.31,
57.95
57.140
57.80

The total turnover of mining and industrial stock on the Toronto exchange
fell to 30,000 shares in both April and May, the lowest level in 10 yearse
The trading value was just over $90,000,000, about the level of two days'
trading in the 1955=56 boom. Average daily volume so far this year is
about $2 million,- about two-thirds the level usually experienced„ According
to the press, at least part of the decreased demand for Canadian stocks is
attributable to a sharp fall off in American interest in the Canadian market.
The total value of shares on all Canadian exchanges in May was $liiU million,
unchanged from April but substantially below the first-quarter level (see
Table)o During May, customer credit declined by about 7 per cent, mostly
because of reduced brokers loans.
Exchange rates. The spot rate on the Canadian dollar rose during
the week and closed at $1*0289 Wednesday, July 27, the highest since mid-May
(see Table). The discount on the 3-month forward dollar continued to increase
during the week and closed at 0.36 per cent per annum (see Table).




-19-

Selected Canadian Money Market and Related Data
3-mo. Treas. bills
Canada
Spread
u . s J s / over U.S.

Canadian dollar
Spot
3-mo. discount (-1
forward premium(+)<y

19$9 - High
Low
I960 - High
Low

6.16
3.2$
$.1U
2.6$

U.49
2.80
U063
2.19

2.96
0.30
0,90
-0.69

10$.$1
102.$8
10$.27
101.31

July 7

3»17
3o2U
3-19
2.92

2»3U
2.37
2.3lt
2.23

0.83
0.87
0.8$
0.69

101.8U
102.03
102.30
102.66

1U

21
28

Net incentive to
hold Can#
bill*/

-

0.31
-0.72

0.9b
-0.$7

101.86
102.03
102.22
102.$6

0.06
0,0
-0.31
-0.36

0.89
0.87
0.$U
0.33

.

a/ Average yield at weekly tender on Thursday,
.
2/ Composite market yield for the U.S. Treasury bill on Thursday close of business,
c/ In U.S. cents.
cf/ Spread between spot rate and 3-month forward Canadian dollar on Thursday
closing, expressed as per cent per annum.
e/ Spread over U.S. Treasury bill (column 3), plus 3-month forward discount or
premium (column 6).
Selected Government of Canada Security Yields
6-mo. Treas. bills
Spread
Canada
u?ri/
19$9 - High
Low
I960 - High

Low

Ik

21
28

a/
V
bj3l
0/
<y
e/
y
g/
n/

3.3$
3.1$
3«U
3.1$

oIs$

-0.69
0.U2
0.77
0.77

0.61

$.37
U.S0
$.$$

hoh9

U.$U
U.$U

k.$$
U.$7

Long-term bonds
year)
135 year)
Spread
Spread
Canada
over. Canada
e/
U.S^Z
(20

$.0$
U.73

$.30

kohh
1.11
0.21

0.60
0.86
0.8$
0.92

$.U2
a.8$

XnXAOOcO
CO CO CO CO

July 7

6.2k
$.11
$.33
2.89

Intermediate
bonds (8 yr.)
Spread
over
Canada
U.S.d/

1.22
0.87
1.02

1.0U
lol2
1.11

$.28
U.86

1,61
0.98

U.9U
Uo90
U.86.
• U.87

1.27
1.23
1.2U
1.2$

Average yield at weekly tender on Thursday.
' .
Spread between Canadian auction rate and composite market yield of U.S.
on close of business Thursday.
Government of Canada 2-3A per cent of June 1967-68.
Spread over U.S. Government 2-1/2 per cent of 1963-68.
Government of Canada 3-lA per cent of October 1979.
Spread over U.S. Government 3-lA per cent of 1978-83.
Government of Canada 3-3A per cent of Septenber 1996 - March 1998.
Spread over U.S. Government of 199$.




Canadax Changes in Distribution of Holdings of Canadian
Government Direct and Guaranteed Securities
Imillions of Canadian dollars, par value;
Bank of Canada
Tteae*
bills
Bonds
May 25
June 2
9
16
23
30
July 7
lii
21
28

Sources

0
- 5U
- l
+ 20
-

h

+ 5
+ 18
- 2
- 15
+ 18

Government
Total

- h
- U8
0
+ 13
+ 13
* 5
+ U8
+ 12
- 5
- 13

- 3<
- 2
- 9
- 12
- 17
0
+ 13
- 2
+ 13
+ 25

Chartered banks
Treas.
Bonds
bills

+ ko

+ 32
- 9

- hi

*

+
•

5.
U6
21
2U
U

k

+
+
•
•
+
•
-

General nubile
savings M a s .
bonds bill* Bonds

1.
8
5

- 39
- U
+ 9
- 52
- l
+ Uo

$

2
11 ,
27
6
it
3

-

- k9

2
6
6

+ 2L
• U
- 37

Bank of Canada* Weekly financial. Statistics.

Credit Provided Through Members of the Stock Exchanges
(millions of Canadian dollars)

Customers
debit
balance
January
February
March
April
May.
Sources

158
152
152
158
1U8

Chief sources
of funds
Customers
Brokers
free credit
loans
balances
77
76
68
77
71

35

3k

U2
36
38

Bank of Canada Statistical Summary, June I960*




Value of
shares
traded
179
160
172
HOt
lUi

+
+
•
-

5
73
3
11
U
17
25
15
u
10

f