Full text of H.16 Capital Market Developments : December 28, 1959

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AFTER SIX MOHTOS
1 H.lU
I
|

December 28, 1959 •

'
CAPITAL MARKET DEVELOPMENTS

(Including Monthly Review of Sources and
Uses of Funds of Financial Intermediaries)

. The usual seasonal lull in new financing is occurring# No
large public security issues were sold last week and none are scheduled
for sale this week. The calendar of sales scheduled for January, however, has already built up to substantial proportions, particularly
for State and local government bond issues.
\
Bond yields - Yields increased last week for all categories
of outstanding bonds, except those for high-grade corporate bonds which
remained stable. Yields on corporate and U. S. Government b onds are at
record peaks, while those on State and local government bonds are still
below their highs reached earlier in the year.
Mortgage and bond yields - The implied annual gross yield on
5-3A per cent PHA-insured new-home mortgages was 6*23 per cent in
November, a postwar high. Since April, yields on these mortgages available for immediate delivery in the private secondary market have risen
about 65 basis points, whereas they had shown little change in the
interval from October 1958 through April 1959. No yield data have been
published for September and Octpber this year pending a period of adjustment to the change in the contractual interest rate from $-l/h to 5-3/U
per cent, effective September 2k.
Stock prices - Stock prices fluctuated within a narrow range
last week, closing at 59*00 on December 2k. Trading activity declined
with the daily volume averaging 2.9 million shares a day.
Institutional investors - The inflow of funds to major savings
institutions in October was sharply reduced from Uiat of a year e^iier.
The combined growth of life insurance company assets, deposits at mutual
savings banks and share capital at savings and loan associations was $>771
million, one-thiajd less than .in October 1958. While the asset growth of
insurance companies of $559 million was only slightly smaller than in
1958, the $399 million increase in share capital of savings and loan
associations was one-fifth smaller than a year earlier, and savings bank
deposits declined $187 million in contrast to a small increase last year.
(Time and savings deposits at commercial banks, which had increased by
$200 million last October, declined by $200 million this year.)
<




Savings bank deposits had increased in all but one month in
the first three quarters of this year, but the monthly gains were much
smaller than in 1958. In October 1959, deposits declined substantially,
compared with a rise the year earlier. The decline apparently reflected
withdrawals by depositors in order tcf purchase the 5 per cent, It year,
10 month note sold by the U. S. Treasury in that month. The monthly
growth of savings capital at savings and loan associations this year
has been greater than the growth a year earlier in most months, and
the sharply reduced rise in October also appears to be associated with
the Treasury note issue.
Net acquisition of business securities by life insurance
companies this October totaled $208 million, one-third less than a
year jsarli$r. As in other recent months, these companies invested
most of their available funds jji mortgages; the increase in their mortgage holdings this year was &25l million compared with $186 million in
October 1958.
Mutual savings banks continued to increase their mortgage
portfolios in October—by $137 million—although at a reduced rate.
In view of the sharp decline in their deposits, continued acquisition
of mortgages required a $281 million reduction in their U. S. Government security holdings, the sharpest on record, and a continuance of
the net sales of business and State and local government securities
that had taken place in many of the earlier months of the year.
Net acquisition of mortgages by savings and loan associations
in October amounted to #621 million, slightly more than a year earlier.
With mortgage acquisitions high and growth in share capital reduced,
purchases of U. S. Government securities were negligible, compared with
a $101; million increase in their holdings in October 1958. Borrowing
from Federal Home Loan Banks and others rose #136 million, more than
twice as much as in 1958. At the end of October, advances of Federal
Home Loan Banks to these associations, which has surpassed the 1955
peak level of #l,!tl2 million in June, totaled $1,915 million.
More detailed information concerning recent capital market
developments is presented in the attached exhibits.
Developments in the Canadian capital market are presented in
Appendix 1 at the end of this report.

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




LHj0H-0*ADE

BOND

YIELDS

A7

LOWER-GRADE

BOND

f

M
U.S.

GOVERNMENT

YIELDS

4.0

$.5

A

•

J

v

/
y
Z Vi
V
v_AV
V./
f
vV'
.7

M

J

J

ii57

S

D

M




J

use

S

D

M

;

-mr

S

4.5

4.6'

O

M

j .

11*0

v^V
5
D

rr

Exhibit Jl$
Tables for Exhibit A
High-grade Bond Yields

Dste

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 2/

(Per cent)
19514 - Low
1957 - High
1958 - High
Low
1959 - High
Low

2.85
4.14
4.13
3.55
4.59
4.09

Nov.
Dec.
Dec.
Dec.
Dec.

4.55
4.55
4.56
4.59
4.59

27
4
11
18
2h 2/

(4/23)
(9/27)
(10/10)
(5/2)
(12/24)
(1/9)

2.45
3.76
3.84
3.07
4.33
3.83

(8/6)
(10/18)
(12/26)
(4/25)
(12/24)
(1/2)

4.15
4.21
4.22
4.25
4.33

1.90 (9/2)
3.45 (8/29)
3.31 (9/11)
2.64 (5/1)
3.65 (9/24)
3.06 (3/26)

.30
.60
.51
.22
.50
.16

.30
.47
.72
.34
.92
.53

3.38
3.38
3.38
3.40
3.49

.40
.34
.34
.34
.26

.77
.83
.84
.85
.84

Lower-grade Bond Yields

Date

Corporate
Baa 1/

State and
local govt.
Baaj/

Spread between
Aaa and Baa
State and
Corporate
local govt.

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

3.44
5.10
4.96
4.51
5.30
4.83

Nov.
Dec.
Dec.
Dec.
Dec.

5.26
5.25
5.25
5.27
5.30

27
4
11
18
24 2/

(12/31)
(11/29)
(1/3)
(7/11)
(12/24)
(4/17)

2.93(8/5)
4.51 (8/29)
4.34 (9/11)
3.64 (5/D
4.46 (7/2)
3.92 (3/26) 4.29
4.33
4.33
4.35
4.42

.52
1.27
1.28
.77
.77
.56

.96
1.21
1.11
.93
.98
.79

.71
.70
.69
.68
.71

.91
.95
.95
.95
.83

2/ Preliminary.
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 morn.
J/ 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

el Dollort




STOCK

HAIKU

CIIDII
Cfunft in S*ri*s.

Exhibit D - Tables for Exhibit C
Stock Market
Trading
Stock market customer credit
Common
tiank
Customers1
stock
volume 2/
yields 2/ (millions Total debit bal- loans to
:ent)

Stock price
index 1/

Date

(Mil]Lions of do:Liars)

Low

22.95
60.51

54.37

3.30
6.25
3.08
3.34

4.9
0.9
4.3
2.1

h,k92
2,055
4,7 64
4,401

3,285
1,314
3,401
3,210

1,317
669
1,332 1,373
1,210 1,160

October
November
Dec. 11
Dec. 18
Dec. 24 d/

57.00
57.23
58.88
59.3ii
59.00

3.24
3.24
3.16
3.20
3.20

2.8
3.4
3.4
3.2
2.9

4,401
4,460

3,210
3,273

1,191
1,187
1,187
1,187

1953-1958 - High
Low
1959 - High

54.11

n.a.
n.a.
n.a.

n . a . — N o t available.
g/ Preliminary.
1/ Standard and Poor's «*~mposite index of 500. oorrmon stocks, weekly closing prloea, 1941-13=10. Monthly data
are averages of dally figures rather than of Fridaya' only. Highs and lows are for Fridays' data only.
2/ Standard and Poor's composite stock yield based on Wednesday data converted to weekly closing price u by
Federal Reserve. Yields shown are for dales on which price index reached its high or low.
3/ Averages of daily trading volume on the New York Stock Exolwngd.
4/ 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 member banks. Excludes loans for purchasing or carrying U, S.
Government securities. Prior to July 1, 1459, suoh loans are excluded only 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.

Mortgage and Bond Yields 1/
FHA
mortgages 2/ •

1953-1958
1959:- High
Low

High
Low

1959 - July
August
September
October
November

5.63 (11/57)
-if. 56 ( 2/55)
IS
5.75
5.80
n.a.
n.a.

,

6.23 '

Digitized for4/FRASER
Hooey's Invaatoro Servlc#. Monthly


Spread between new
Aaa corporate
corporate bonds and
bonds 1/
" New 3/
[ Seasoned 117PtiA mort^apjes | Seasoned bonds

4.81 (6/57) 4.12 (9/57)
2.74 (3/54) 2.85 (4/54)
5-29
4.57
4.29
4.12

1.96
.54
1.29
.83

.90
-.12
.77
.15

4.80
4.74
5.29
5.10
5.07

.95
1.06

.33
.31
.77
.53
.51

4.47
4.43
4.52
4.57
4.56

a v e r t s of daily data.

See Exhibit B.

n-a.
1.16

Exhibit E

H.lij

Long-term Corporate and State and LdSal Government
Security Offerings and Placement a
.(In millions of dollars)

1959

New capital
Corporate 1/
State and locfal 2/
1 1950 1 1957
1 1956 1 1957
1959

January
Februaty
March

8U0 '
71*5
631

728
857 w
1,553#

April
Hay
June

899
791
871*

1,11*0
597
887

July
August
September

531
718
709

1,107
51*0
1,11k

E/826
e/850
e/850

862
518
920

October
November
December
1st quarter
2nd quarter
3rd quarter
lith quarter

2,216
.2,#l
1,958
^2,526

'3,1392,623
2,760
2,300

1st half
Three quarters
Year

. h,780
6,738
2/9,26k

5,762
8,522
10,823

•

.

1,060
1,065
1,320

636
856
61*5

812
953
511

71*2
572
506

•931
765
1,453

931
. 592
981

798
895
551

765
51*6
393

566
516
JU67.

806
1*03651

529
581*
1*31

2/573
e/h$0
e/h50

1*56
1*71*
1*35

698
633
698

2,138
. 2,501;
1
1,519
e/l,ii73

2,276
2,21,1*
1,860
1,365

1,820
1,701*
l,5Ui
2,029

. k,6h2
6,191
e/7,661*.

It,520
6,380
7,71*6

3,521*
5,06?
7,099

1,003
921*
973

•
.

1,090
789
1,076

'

3,1*1*5
3,1U9
2,899
2,951.
6,59b
9,193
12,1*1*7

Excluding finance companies h/
1st
2nd
3rd
4th

quarter
quarter
quarter
quarter

Year

2,011
2,to
• 1,695
e/2,376
e/8,U?l

2,89?
2,506
2,731
2,213
i o , to

3,237
2,889
2,582
2,610
11,518

1/ Securities and Exchange Commission estxioates of net proceedsv
2/ Investment Bankers Association of America estimates of principal amounts.
V Includes $718.3 million AT&T convertible debenture issue.
hj Total new capital issues excluding offerings of sales and consumer finance
companies.




H.llt

Exhibit F
Other Security Offerings 1/
(In millions of dollars)
Long-term
Federal agency 3/
Foreigii government 2/
1 1958 1 1957
1959
1959
1 1958 1 1957

January
February
March
April
May
July
August
September
October
November
December

11
2

. 56
50
1*2
as
. a
29

Year

196
53

199

8
30

139
198
120

*3
42

9
5
17

28
7
30

58
123
74

4
60
1

992

507

April
May

June

July
August
September
October
November
December

190
428
295

FP
460
273

—

fi/234

Year

231
1*15

125
60

i

164
215
220
——

100

2,321

572

Federal agency 3/
359
500
489

371
208
i a

638
JU30
505

20$

486
675
289

209
161
329

336
L69
501

272
272

727

437
206
330

264

289
123
369

523

326
155
147

§ s S
246
^ 46?
__399

72

175

Short-iberm
State and.local government 4/
January
February
March

1,163
251

2$2

213

459

3,910

3,27k

Ul

66^

'

224
370
512

454
114
137

1,238
255
116

3,098

5,543

p/ 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.
J/ Issues not guaranteed by the U. Si Government. Source: long-term, Securities
and Exchange Commission; short-term, Federal Reserve.
.
&/ Principally tax and bond anticipation notes, warrants or certificates and Public
Housing^Authority
notes.
In
some
instances
PMA
notes
included
may
have
a somewhat

longer term than one year. Source: Bond, Buyer.



Exhibit G

H.lk

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

Corporate

Month

1958 - November
December
1959 - January
February
March
April
May

227
305
369
3W
215
359
3h2
28k
110
363
199
llOO
k21

July
August
September
October
November

Other 2/

100
79
17k
35
176
20
50
60
50
-98
175
20

259
229
335
551
369
563
258
635
19k
263
21U
29b
163

Large Individual Issues Offered December 1 through 2k

Issuer

Type y

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

CORPORATE
Consol. Edison Co. of N.Y. 1st ref.mtg.bds.
Gen. Telephone Co. of Cal. 1st mtg. bds.
Arkansas Louisiana Gas Co. 1st mtg. bds.
James Talcott, Inc.
Sr. notes
Arkansas Pwr. & Lt. Co.
1st mtg. bds.
Dallas Pwr. & Lt. Co.
1st mtg. bds.
Pub. Sv. Elec. & Gas Co.
Com. stk.
Bell Tel. Co. of Penna.
Deb.

75.0
30.0
16.0
15.0
15.0
20.0
29.1
30.0

1989
1989
1979
1979
1989
1989

5
5
5
5
5
5

1/8
1/2
5/8
lA

5.15
5.00
5.15
5.55
5.k5
: 5.10

199k

5 3/8

5.21

1A

Aa
A
A
^

A
Aaa
Aaa

STATE AND LOCAL GOVERNMENT
Salt River Project Agric.
Imp. & Pwr. Dist., Ariz.
Los Angeles Sch. Dists.,
California
Columbus, Ohio
Los Angeles Co., Calif.
State of Massachusetts




Rev.-Ut.

15.0

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

21.5
10.0
13.0
21.6

1963-92/69
1961-85
1962-86
1999/65
1960-89 -

k.05

3.10-U.15

3.89 2.90-3.90
3.1# 2.80-3.55
5.65
5.51
3.52 2.80-3.65

A
Aa
Aa
Aa

G-2

H.3LU

Large Individual Issues Offered December 1 through 2U (Cont'd)
Issuer

Type 3/

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

STATE AND LOCAL GOVERNMENT
(Cont'd)
Commonwealth of Puerto Ricc
Chicago Bd. of Educ., 111.
Houston Indep. S.D., Texas
State of New Jersey
DeKalb Co. Sch. Dist., Ga.
Wisconsin State Agencies
Bldg. Corp.

20.0

G.O.
G.O.
G.O.
G.O.
G.O.

10.0
16.9
66.8
11.5

G.O.

10.7

1962-90

3.92
3.41
14.-05

3.00-U.05
3.00-3.70, ,
3.00-L.00H/
2.90-3.W
3.10-U.10

1962-89

3.91

3.00-3.90

1979
198U

5 1/2

5.89
5.10

19.61-80/75
1962-79
1961-89
1963-75

U.05
3.68

A
A
Aaa
A

OTHER
Credit Foncier de France
Alberta Mun. Fin. Corp.

Ext.loan bds^O.O
S.F. deb.
20.0

1/ includes corporate and other security offerings of §15 million and over;
State and local government security offerings of 410 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.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-utilities3
Rev.-S.T., revenue bonds secured by revenue from specific taxes only; Rev.-Rent.,
revenue bonds secured solely by lease payments.
h/- l/h % 1989 maturity not reoffered.




H.Ik

Exhibit H
Forthcoming Large Long-term Public Security Offerings for New -Capital
(Other than U. S. Treasury) 1/
Expected Proceeds from Forthcoming Large Issues

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

Subsequent to
During month following
date shown
date shown
State and
State and
Corporate local govt. Other 2/ Corporate local govt. Other 2/
301
210
270
198
396
21*6
287
165
238
198
37U
385
226

229
261
551
292
550
251*
2l*7
11*6
356
385
270
115
295

1*01
370
365
279
1*76
31*6
332
272
305
517
69I4
509
271

71
75
1*5
20
50
50
25
70

683
515
856
1*81
761
517
761
500
1*06
1*02
1*70
336
1*85

71
75
bS
20
50
50
25
70

Forthcoming Large Offerings, as of December 2h "

Issuer

Type

Amount
(millions Approximate date
of dollars) of offering

CORPORATE
Kansas City Power & Light Co.
1st mtg.bds.
C.I.T. Financial Corp.
Deb.
Northern Illinois Gas Co.
Pfd. stk.
•^Chesapeake & Potomac Tel. Co. of Md.
Deb.
Commercial Credit Co.
Notes
Commerce Oil Refining Corp.
Deb., bds. & com.

20.0
75.0
15.0
, 25.0
<50.0
1*5.0,

Jan. 7
Jan. 8
Jan. 13
Jan. 13
Jan.
Indefinite

10.0
11.8
13.6
200.0
23.1
32.0
100.0
28.1
11.1
15.0

Jan. 7
Jan. 11
Jan. 11
Jan. 12
Jan. 12
Jan. 12
Jan. 13
Jan. 20
Jan. 20
Jan* 20

30.0

Jan. 27

STATE AND LOCAL GOVERNMENT
Toledo, och. Dist., Ohio
Seattle, Washington
City and Co. of San Francisco, Cal.
New York State Power Authority
*State of Maryland
•*Tacoma, Washington
State of California
State of Washington
*State of North Carolina
*State of Louisiana
OTHER
-wMontreal. Metropolitan Corp., Canada




G.O.
Rev.-Ut.
G.O.
Rev.-Ut.
' G.O.
Rev.-Ut.
G.O. ...
Rev.-Ut.
. G.O.
G.O. .
Deb.

H-2
Footnotes
*—Included in table for first time.
1/ Includes corporate and other issues of $15 million and over; State
and local government issues of $10 million and over.
2j 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.




H.lli

Exhibit I
Yield? on New and Outstanding
Electric Power Bonds, Rated Aa and A 1/
Date

1952 - 1958
High
Low

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)
5.00 (9/lit/57)
2.93 13/31/5W ^

1959 - January
February
March
April
May 1
13
Ik
20
21
26

June It

17
26

July 9

10
15
30 :
Aug. 5
20
Sept. 18
Oct. 22

23
28
29
•30
Nov. 25
Dec. 8
9
10

87
-3

h.63'r : - *1*.35§6
k.kyj/fsh.sai/^

37-

L95
L95

38

5.00
L95

38
29

3k

li.93

31

L85
a. so

2h
22

—

'

2.25^,
k.952/

•

123
-15

*k.7&

23

*1.67

18

ii.85
5.06

17
, 13

5.13

27

5.10
• 5.10

k.n^

6
2k
19

5.10
5.00

19
13

5.65

60

5.25
5.W

35
50

16

ko

5.15
5.15
5.06
5.30

k6

5.50 (11/7/57)
3.00(3/17/51I)

k2 .
k2
63

-5.t5
S.bk

-

51

# .

*—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 2-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.
3/ Provides for a 7-year period during which issue may not be called for
refunding at a lower coupon rate.




H.llV

Exhibit J
Sources and Uses of Funds byLife Insurance Companies
(In millions of dollars) .

u. s .
Cash

Uses of Funds 1/
State and
Business
local govt. Mortsecurgages
ities
ities

Govt.
securities

2l*J*

1957 - Oct.

-17

Dec.

138

-181

258

212

10
10

170
132
237

110

1,29k

7,028

1*2,133

2,377

35,271

13,206

166
16
-121*
Ik
-71
k$
172
kk
k
11
19
-ll*2

229
158
2kk
216
lk3
201
191
129
21k
309
137
308

50
12
2k
lk
29
3k
2k
37
20
26
32
12

176
137
lk2
115
118
102
128
139
1U2
186
115
291

139
76
103
39
161*
1U8
Ii5
151
72
72
88
33k

Nov.

Value of Assets

at End of Year
- Jan.
Feb.
• Mar.
Apr.
May
June
July
Aug.
Sept.
Oct.
Nov.
Dec.
of Assets
d of Year
Jan. r/
Feb.
Mar.
Apr.
May
June
July
Aug.
Sept.
Oct.
Nov.
Dec.

22

-102
-ill
20
-18
81
-21*
22
-18
1
-17
55
110

13
-92

13

6

7

658
358
1*09
380
k6k
506
582
1*85
U53
587
1*76
913

1,363

7,182

kk,6l2

2,691

37,092

lk,6k0

107,580

-81
-57
-lit
-2k
10
3
-15
19
-31
22

303
-71
-185
22
-16
11
^ 13
95
-185
-22

188
223
251
2l*2
193
2k2
21k
75
95
208

53
30
66
k9
79
23
9li
30
15
8

119
139
136
116
135
157
2ll*
17k
211
251

-17
17U
108
80
97
60
208
101
95
92

565
1*38
362
1*85
1*98
1*96
728
1*9U
200

>f Assets
I of Year
£/ Revised.
..
1/ Uses of funds represent net changes In assets and therefore reflect net, rather than gross, uses.
Source: Institute of Life Insurance.




559

Exhibit K
Sources and Uses of Funds by
Savings and Loan Associations
(In millions of dollars)
Uses of Funds 1/
U. S.
Govt, MortCash
secur- gages
ities
1957 - Oct.
Nov.
Dec.

-18
86
431

Value of Assets
at End of Year

2,146

19582/ • Jan.
Feb.
Mar.
Apr.
MayJune
July
Aug.
Sept.
Oct.
Nov.
Dec.

-118
173
212
119
42
178
-290
-70
-77
-107
. 42
'335

if Assets 2,585
I of Year
1959^/-•,Jan.
Feb.
Mar.
Apr.
May
July
Aug.
Sept.
Oct.

-298
-26
-2
-182
26
245
-432
-43
-53
-68

Other

4l6
278
253

87
60
-5

3,173 40,049

2,770

'!
45
-19
37
12
81
42
110
146
io4
51
37

197
2h0
338
403
528
573
554
564
578
605
470
528

Sources of Funds
Total
Net
sources change
Borrowor uses savings ing 2/ Other
capital

-434

a,912

1,379

4,81*7

134
453
407
376
488
554 .
661
362
681
511
78 9
935
216
73
616
360
692
447
507
739
480
665
1,072
847

-375
-128
. -89
112
-29
165
-37
51
84
58
41
212

56
159
155
187
199
-311
180
205
161
174
144
-437

48,138

10
13
4
102
99
,-43
-90
12
45 ,
137 ,
.102
-53

3,819 45,627

3,108

55,139

402
427
593
705
754
840
783
727
670
621

-55
80
98
151
178
10
-108
22
65
88

346
578
765
779
981
1,091
347
723
675
648

76
105
23
-4
104 ~
17
-7
7

1

16
10
125

180
447.
614

361
378
923

47,976

1,444

5,719

-181
434
93
226
408
-56
- 241
529
-5
262
420
97
6o4
63
314
1,090
313 • -312
126
190 •
31
118
211
394
148
83
444
136
113
399

Dec.
Value of Assets
at End of Year
2/
1/
and lean
presue ad

Preliminary.
t/ Revised.
Usee of funds represent net changes in assets and therefore reflect net, rather than gross, uses. Saving#
associations do not Hold business securities and data on holdings of State and local government bond#,
to be small, are not available.

2/ 1957 data adjusted to include mortgage pledged shares as currently reported.
3/ Advances from Home Loan Banks and other borrowing.
Sources Federal Savings and Loan Insurance



Corporation.

Exhibit L

H.lU

Sources and Uses of Funds by
Mutual Savings Banks
(In millions of dollars)
Uses of Funds 1/
Sources of Funds
State and
U. S. DualNet
Total
local
Govt.
change
govt. Mort- Other sources
Other
gages
or uses
in
ities ities 2j ities.
deposits
1957 - Oct.
Nov.
Dec.

-5k

-136
-136
-26

60
93
75

-3
7
-7

12U
100
llq

-Ll
38
-9

-20
108
299

36
li05

-106

Value of Assets
at End of Year 890 7,552

k,331

682

20,951

76l

35,168

31,695

3,k73

160
86
86
97
120

23
h
6
k

130

25
20
9
-29
kO
5

278

1958 - Jan.
Feb.
Mar.
Apr.
May
July
Aug.
Sept.
Oct.
Nov.
Dec.

-2U
6
125

-60

I
-5

k2

-66

-5

18

-»•
101

-21

a

%

-36
11
19
-27
-92
-32

3k

8

3h

-6

til

-2

Value of Assets 921 7,266
at End of Year
1959 - Jan.5/
Feb.
Mar.
Apr.
May
June
July
Aug.
Sept.
Oct.
Nov.
Dec.

-2U

k,973

-96
119
18
39
62
45
-ljli
-ilk
8
13
-85
k3
-13
-79
-12
3
-2 - -32
-27 -281

-16
6
-31
58
-20

72

-7

165
15U
195
253
193
198
181
195
151
nk

29
29
-k6
k3
-3

237
hO
123
309

23k
lk9
336
93
181
300
88
lk3
267
95
U2
ki8

725

23,039

855

37,779

3k,Old.

3,738

17
-k

208
125
175
155
161
115
179
156
160
137

-58
32
38
-32
k5
39
-12
33
31
-37

175
216
330
-10
217
161
32
192
163
-283

122
113
313
6
120
202
-5k
80
197
-187

53
103
17
-16
97
-kl
86
112
-3U
-96

t

8
2

2

-3

-1

a

-33
10
19
-tilk
-1
13
-2
8
-55 -20

1

269

261*

152

-28

251

a

102
7
1

It
88

108

:!
81

Value of Assets
at End of Year
1/ Usee of fundi represent net ohangea In asa.its and therefore raflect, net rather than gross, usee.
2/ Includes Canadian government- and political subdivisions, International Bank for Reconstruct!on and Deviloyient,
, . . .
nongmhc-ntfied Federal agency and other bonds as wall as corporate bonds and stopks.




F*deroi a ; =

!

wsaai

December 28, 1959
Appendix 1

i

*"

MONEY AND CAPITAL MARKET DEVELOPMENTS IN CANADA

Money market conditions - Last Thursday's average auction
rate for 3-month bills rose to 5.03 per cent from U«98 per cent the
week before. The rate on 6-month bills rose to 5.33 per cent from 5*29
per cent. The quite modest increases in bill rates in Canada during
the past four weeks, while United States bill rates have risen sharply,
have appreciably narrowed the money rate spreads between the two
countries. The sizable discount on the 3™months forward Canadian
dollar gave an incentive of roughly eight-tenths of one per cent f or
switching short funds from Canadian to United States Treasury bills.
Bond market developments - Two large pending Canadian issues
to fund loans from the chartered banks were reported last week.
Montreal Metropolitan Corporation was negotiating a private $30 million
sinking fund issue with First Boston Corporation of New York. The
issue will be payable in U.S., dollars in 1985. The Home Oil Co., Ltd.
filed a registration statement with the SEC for a public offering of
$20 million in convertible debentures due 1975* The debentures, to be
offered in Canada and the United States, will be convertible into
common shares of Trans-Canada Pipeline of which Home Oil is a major
stockholder. The terms of this issue have not yet been set.
Canadian Government bond yields rose over ths entire range
last week, but the rises were generally less than the rise in corresponding yields for U0S<> Government bonds. At midweek, spreads between
comparable Canadian and United States Government securities were (figures
In parenthesis refer to the previous week):
0.36 per cent on
0.39 per cent on
0.U2 per cent on
0.93 per cent on
0.9U per cent on

9$>-day bills (O.iUt)
182-day bills (0.1*6)
a 9-year bond (0.5U)
a 20-year bond (1.01)
a 36-year bond (1.02)

The chartered banks - General loans of the chartered banks
continued to fall last week reaching a level nearly 6 per cent below
their high level of August and September. The banks' total major
assets remained at roughly the level at which Bank of Canada policy
has kept them since October 1958. In recent months, the banks have
continued to add to their holdings of government insured mortgages
although it is reported that they had sharply cut back their commitments to buy such mortgages in future months. Last week's action by
the Government raising the maximum interest rate on guaranteed mortgages
to 6-3A per cent may, however, sustain the flow of bank money into
mortgages.




Appendix 1-2
Selected Government of Canada Security Yields

Date

3-month
Treasury
bills!/

Intermediate
Govt.
bonj2/

Govt.
bonfl3/

1957 - High
1958 - H i g h
Low
1959 - High
Low

U.08
3.65
0.87
6.16
3.25

U.81
4.52
3.31
5.30
U.U5

U.35
U.U2
3.78
5.30
U.U1

Dec. 2

U.93
5.02
U.98
5.03

5.12
5.19
5.23
5.28

5.12
5.20
5.23
5.26

9
16
23

Long-

Spread between ~ Discount
Canadian &. U.S. rates on 3-mo.
long-term
3-mo.
Canadian
bond#/
biUsgz dollar^/

1.19
0.U7
0.9U

1.02

1.01

0.93

2.96
0.30
0.U3

0.89

0.38

1.01

O.UU

1.25

0.36

1.13

f

Average yield at weekly tender on Thursday following Wednesday date shown.
Government of Canada 2—3/2+ per cent of June 15, 1967-78.
Government of Canada 3-l/k per cent of 1979.
%/ U.S. Government 3-lA per cent of 1978-83. Government of Canada 3-lA P®r
cent of 1979.
£/ Spread between average auction rates: on Monday preceding Wednesday date
shown for the United States; on Thursday following Wednesday date shown for Canada.
6/ Spread between 3-months forward and spot price of the Canadian dollar,
expressed as per cent per annum, on Friday following Wednesday date shown.
Sales of new Canadian Government Municipal and Corporate Bonds
(in millions of Canadian dollars)
1959
1958
to Dec. lU . to Dec. 15
Government
Provincial
Municipal
Corporation
Less short-term financing
(less than one year)

9,380
727
Ulh
3a
10,865

1957
to Dec. 16

alt, 900
790
166
69k
16,831
6,531
20,300

Of the above, the following have been sold in New York
Provincial
265
195
Municipal
112
167
Corporation
hi
112
1*18
U7U
Sources

A„ B. Ames & Co., Limited*




8,620
606
332
1,010
10,568
6,280
It, 288
97
95
365
557