Full text of H.16 Capital Market Developments : December 8, 1954

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Not for Publication
H.llj.

. December 8, 19$h

CAPITAL LIARKET DEVELOPMENTS
No new capital issues l a s t week - No large securityissues f o r new capital were publicly offered during the week ending December 3. Several large State and local government o f f e r ings with t o t a l proceeds of 370 million dollars and corporate
issues aggregating 61+ million dollars are scheduled f o r f l o t a t i o n
t h i s week.
The estimated December,;volume f o r State and local o f f e r ings has been increased to 875> million dollars with the announcement of the 60 million dollar Michigan Veterans bonus bond issue
which was sold on December 7. This issue plus the expected proceeds from the Oklahoma Turnpike Authority and New York State
Power Authority offerings w i l l help make the December volume the
largest on record. No letdown is anticipated in State and local
government issues early in 19$$* Several very large offerings
are scheduled, namely, 390 million dollars by the I l l i n o i s Turnpike Authority, 200 million by the Texas Turnpike Company, 1J?0
million of the Sam Houston Company, and 135 million by the Public
Housing Authorities, I t may be noted that most of the issues mentioned above are revenue bond issues which are more directly comp e t i t i v e on a yield basis with corporate bonds than are general
obligations and t h a t the corporate calendar i s comparatively l i g h t
at t h i s time.
Bond yields - Yields on outstanding U. S. Government
long-term obligations, corporate Aaa and high-grade municipal
bonds increased one basis point l a s t week. Corporate Baa bond
yields remained unchanged. Daily figures showed a slight decline
on* December 7 for t h e Treasury bonds.
New high i n stock prices - Stock prices, as measured by
the SEC index of 26$ common stocks continued to r i s e , setting a
new high of 212.7 during the week ending December 3. Daily indexes
indicated continued gains through December 7» The average daily
trading volume remained a t the high level of 3'h million shares
per day.
.
Corporate Security-Offerings

•

Net proceeds of corporate offerings for new c a p i t a l Corporate security offerings for new capital were 2,021 million
dollars in the t h i r d quarter of 195kf as shown in Table 1, the
largest quarterly volume so f a r t h i s year and nearly 30 per cent
greater than the t h i r d quarter t o t a l l a s t year. Despite the




H.1U

.

-2-

increased f l o t a t i o n in the l a t e s t three-month period, the t o t a l for
the f i r s t nine months t h i s year i s almost 1*00 million dollars below
the volume for the comparable period in 1953.
For the f i r s t time in. over a year and one-half, manufacturing companies accounted f o r the largest proportion of corporate
offerings—?6^ million dollars—or 38 per cent of the t o t a l . The
nine-month t o t a l this year was 1,601 million dollars, about the
same level as for these three quarters a year ago* Communication
company issues increased to 355 million dollars from 136 million in
l a s t y e a r ' s t h i r d period. This increase was due to the 250 million
dollar debenture issue sold by American Telephone and Telegraph Company in September. E l e c t r i c , gas and water u t i l i t i e s , which hadbeen the largest type of issuer since the f i r s t quarter of 1953,
had sales in the t h i r d quarter this year of k$7 million dollars,
almost 90 million dollars less than in that period l a s t year. The
volume of offerings by public u t i l i t i e s for the f i r s t nine months
was 2,265 million dollars, s t i l l somewhat above that of l a s t year.
As in the second quarter, the largest decline i n the volume of
offerings from a year ago occurred in the f i n a n c i a l and r e a l estate
group. Proceeds from issues of t h i s group were only 119 million
dollars t h i s year in contrast t o bOk million dollars in the previous
t h i r d quarter, . The drop i s even more apparent in the cumulative
nine-month t o t a l which i s 38I4. million dollars t h i s year and 1,369
million in 1953* Consumer finance company issues, constituting
the largest portion of the financial group, have declined in almost
every quarter since the peak period of April to June of 1953- The
t h i r d quarter volume t h i s year was 80 million dollars, s l i g h t l y
larger than l a s t quarter, but s t i l l at a low level r e l a t i v e to 1953
offerings.
Iron and s t e e l companies offered the largest volume of
issues within the manufacturing group. One of»the companies,
United States Steel, sold 300 million dollars of s e r i a l debentures,
the largest single issue of the quarter. That offering was the
major factor in the increase over l a s t year's manufacturing t o t a l .
Automobile companies offered 79 million dollars of securities in
the t h i r d quarter t h i s year, accounted for mainly by the Chrysler
Corporation private placement of 62.5 million d o l l a r s . Petroleum
companies issued 70 million dollars in the t h i r d period, much more .
than in the same period l a s t year. For. the nine-month period, howeever, Die 195b volume was only 177 million dollars in contrast to
330 million in 1953* Machinery companies had large offerings in
the f i r s t half of both years but these did not continue a t that
level in either t h i r d period. Three^large private placements by
companies included in the other maniifacturing group helped to bring
the quarterly t o t a l t o 168 million dollars, namely,50 million placed
by Brown and Williamson, 20 million by Spartan A i r c r a f t , and 15 million by General Precision Equipment.




K.lli

-3Table 1
Corporate Security Offerings f o r New Capital
by Type of Business of Issuer
Third Quarter and F i r s t Nine Months of 1953 and 195k
(Net proceeds in millions of d o l l a r s )
Type of business

Third quarter
195k

All corporate o f f e r i n g s

1

2,021

F i r s t nine months

1953

195k

1,561

5,662

1

6,050

1953

1,601

1,572

Manufacturing
Iron and s t e e l
Honferrous
Machinery Automobile
• Chemicals .
Petroleum •
Paper
• Other

70
k2
168

E l e c t r i c , gas and water u t i l i t i e s

k57

5k5

2,265

Communication

3#

136

' k93

2kk

37

k2

lk9

193

'

Railroad

765
327 .
5 '
hi.
79
32

292
.

;

25
22
10
31
15
k9
75

100

"357
lk7

51

221

90
117
177
101
391

.
.

228
15
426
330
107
315
2,13k

Other t r a n s p o r t a t i o n

118

51

266 .

208

Commercial and other

70

59

192

203

Mining

99

30

311

128

119

UoU

39

66

38k
225

1,369
17W
200

Financial and r e a l e s t a t e
Consumer finance companies
Other

"Bo

156

TvTVvko - - T l o + a i 1 e may
m o t r not
v
s add
+ to
z-x t4-o
z%t4»a«-il s due t o rounding.
Note.—Details

Source.—Securities and Exchange Commission and Federal Reserve.




H.lli

-1,-

Total gross proceeds of corporate o f f e r i n g s - Gross proceeds f r a n a l l corporate security i s s u e s were 2,695 and 6,983 mill i o n d o l l a r s in the t h i r d quarter and f i r s t nine months of 195b
r e s p e c t i v e l y , as shown i n Table 2 . These represent increases of
66 and 10 per cent above those periods l a s t y e a r . Most of t h e large
"difference between t o t a l gross proceeds and net proceeds f o r new
c a p i t a l in t h i s y e a r ' s t h i r d quarter i s due t o the heavy volume of
refunding issues—6b0 million d o l l a r s . Public o f f e r i n g s increased
s l i g h t l y in t h e i r proportion t o t o t a l corporate o f f e r i n g s , r e l a t i v e
t o b o t h l a s t y e a r ' s t h i r d quarter and t h e f i r s t half of t h i s y e a r ,
Kore debt i s s u e s were o f f e r e d in the t h i r d quarter of
t h i s year, compared with the t h i r d quarter of 1953, and unlike the
e a r l i e r period, public bond o f f e r i n g s accounted f o r more than half
of a l l the bonds f l o a t e d . During the f i r s t nine months, 5,5b2 m i l l i o n d o l l a r s of bonds and notes were issued in 195b and It,971 m i l l i o n i n 1953. Issues of p r e f e r r e d stock t o t a l e d 177. million d o l l a r s i n the t h i r d period and 663 million i n the f i r s t three quart e r s of 195^. The common stock volume was 179 million d o l l a r s from
July to September t h i s year and 196 million i n those months l a s t ,
y e a r . The proportion of common t o t o t a l o f f e r i n g s in both the t h i r d
quarter and in the f i r s t nine months i s smaller than in comparable
periods of 1953«

Table 2
Total Corporate Security Offerings by Type of Issue
Third Quarter and F i r s t Nine Months of 1953 and 195b
(Gross proceeds i n millions of d o l l a r s )
Type of issue

Third quarter
195b

Toi*al corporate o f f e r i n g s

1

1953

F i r s t nine months
195b

1

1953 .

2,695

1,62k

Type of o f f e r i n g
Public
Private

.1,766
929

935
689

b,bbb
2,539

Type of s e c u r i t y
Bonds and notes
Public
Private

2,339
1,U60
879

1,346
665
681

5,5b2
3,131
2,bll

Preferred stock

177

82

663

391

Common stock

179

196

777.

996

Note.—Details may not add to t o t a l s due t o rounding.
Source.—Securities and Exchange Commission.




6,358

SB. 11.

" 6,983 \

H-lii

Further d e t a i l s on capital market developments available
frcm exhibits - More detailed information concerning recent capital
market developments w i l l be found in the following exhibits which
are attached hereto;
-

,

'

A - Bond Yields
B - Stock Market
C - Corporate and State and Local
Government Security Offerings
and Placements
D - Large Public Security Issues
for Hew Capital (other than
U. S. Treasury)
E - Forthcoming Large Public Security
Offerings for New Capital (other
than U. S. Treasury) '
F - Yields on New and Outstanding
Public U t i l i t y Bonds, rated Aa
and A

Business Finance and Capital Markets Section,
Division of Research and S t a t i s t i c s ,
Board of Governors of the Federal Reserve System.




EXHIBIT

H.14

A

BOND YIELDS
PER CENT PER A N N U M

WEEKLY

CORPORATE

Baa

CORPORATE

U.S.

Aaa

GOVERNMENT
LONG-TERM

I h i g h - g r a d e

m u n i c i p a l

Corporate 3 /
Aaa

19 5 4

1953

1952

I Baa

long-term 2 /

Spread between
Corporate Aaa
and U . S . Govt.

Highgrade^

(Per cent per annum)
1951 - High
Loir
1952 •- High
1953 - Higi
195L - Hitfi
Lew
November
November
November
November
December
•

5
12
19
26
3

3-03
2.65
3.03
2.91
3-U2
2.99
3-09
2.85
2.88
2.89

lit
3.U8
3.89
3.50
3.7U
3.U5
3.U6
3.1»5

18

2.71*

2;38
in
lllk
2.1k
Z.hk

36

2.5U

\%
2.56
2.57

2.26
1.59
2.U3

2.00

3-3i«
2.2(3
2.56
2.23
2.30
2.28
2.28
2.28
2.29 •

1 / Moody's Investors Service; weekly average of d a i l y l i g u i e
2 / Federal Reserve; weekly average of daily f i g u r e s .
5 / Standard and P o o r ' s Corporation; Wednesday f i g u r e .

Note.—Highs and lows are for individual s e r i e s and may be on d i f f e r e n t c
for d i f f e r e n t s e r i e s .




STOCK MARKET

1947-49.100 —

Bank l o a n s
Customers' t o " o t h e r s "
Trading . Common s t o c k
f o r purchases
Stock p r i c e volume 2 /
yields 3 /
of s e c u r balances h/
index 1 /
(per c e n t
(millions
ities 5/
(millions
(192*7-^9-100) of s h a r e s ) per annum)
of d o l l a r s ) ( m i l l i o n s
of d o l l a r s )
1951 - High
1952 - High
Low
1953 - High
Loir
195U - H i #
October
November
November 19
November 26
December 3
~

158.6
11*0.3
165-3
151.7
167.1
liiU.O
212.7
156.5
196,6
205". 3
205.1
211.1
212.7

'

3.It
1.1
2.0
0.9
2.5
0.9
3.24
l.li
2.1
3.2
3.2i
3-U
3.it

5.55
5.77
- M
5.75
5.15
.
5.33

-

H 9
u.57
ii.39

1,297
. 1,219
1,328
l,2lil

1,66$
1,311
2,095
1,653
2,095

.

3U0
260

'£

327
252
It72

g

L6l

U65
U71
h72

1 / SEC i n d e x of 265 common s t o c k s , w e e k l y c l o s i n g p r i c e ,, 1 9 3 9 - 1 0 0 ; c o n v e r t e d t

19!i7-£9-100^by f o r a g e s S Qf d a i l y t r a d i n g volume on Mew York Stock Exchange.

l o a n s have f l u c t u a t e d more t h a n t o t a l l o a n s .
N o t e . — H i g h s and lows

for different series.


a r e f o r i n d i v i d u a l s e r i e s and nay be cn d i f f e r e n t d a t e s

H.ll*
Exhibit C
Corporate and State and Local Government Security Offerings and Placements
(In millions of d o l l a r s )
New c a p i t a l

Corporate
1954

January
February
March
April
May
June
July
• August
September
October
November
December
1st quarter
2nd quarter
3rd quarter
l*th quarter
Year

$hk

1*39

.

1

1953

623

623

660

666

I186
6#
859

779
675
1,123

898

1*83

31*6
776
#5

01
l,6li3
1,998
2,021
e/1,770
i/7,385

1

615
1*13
951

396
1*11

769

565
-

1,237 3 /
291

577

2/

1,912

519
259

261

3/875

1,372
2,331*
: 1,188
e/1,885
%780

358

300
156
>55

329
619

279

61*9

e:Sy

389
360
1*26.

1*3U

e/610
e/hOO

31*0
851

S t a t e and l o c a l
T 1 7 1 9 5 3 1 ? / 1952

853

390

; S - v
2/

731*
71*8

999

1,979

2,578

S8,195n

•1951*

870
990

M
1,1*38

1952

3%

630
'

21*1*

201
1*71*

1*75
1*53
1*08
771*
1,176
1,1*12

1,253
1,636
5,1*77

'

' 303
183
398

815
1,1*77
919
885

1*,096

Excluding finance companies 3 /
1st quarter
2nd quarter
3rd quarter
l*th quarter
Year

1,#2
1,931

1,911
5/1,720
e/7,130

1,669
1,991.
1,223
2,31*4

7,227

.

1,961
2,521
1,877
2,091*
8,1*52

issueo
2 / Includes 603 million d o l l a r AT&T debenture i s s u e .
3/ Total new c a p i t a l issues excluding o f f e r i n g s of s a l e s and ; personal finance
companies.
.
of Estimated.
r / Revised.
. Note,—Details may not add t o t o t a l s due to rounding.




i

. H.lU
Exhibit D
Large Public Security Issues for.New Capital
(other than U. S. Treasury) 1/.
Proceeds of Large Issues Offered
(Millions of dollars)
Month

Corporate

1953 - November
December
1 % - January
February
March
April
May
June
July •
August
September
October
November

96
963
289
103
160
169
32k
350
3# .
75
#5
i;13
0

State and
local government
.2#
571
I6h
213
378
557
557
603
92
86
455
388
268

'

Other 2/

19
50
119
50

Large Individual Issues Offered December 1 through 3
Issuer

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

Type

CORPORATE
None
STATE AND LOCAL GOVERNMENT

•

None
OTHER

¥

None
over;"state and local government security offerings of 5 million and over.
2 / Includes foreign government and International Bank for Reconstruction and
Development i s s u e s .




H.lli
Exhibit E
Forthcoming Large Public Security Offerings for N.esv«r Capital
(other than U. S. Treasury) 1/
Expected Proceeds from Forthcomiiig Large Issues
During month following
date shown
State and
Corporate local govt. Other 2/

Date of
computation
- Nov. 30
Dec. 31
— Jan. 29
Feb. 26
Mar. 31
Apr. 30
May 28
June 30
July 30
Aug. 31
Sept. 30
Oct. 29
Nov. 30

91*8
232
118
108
201*
323
332
336
100
334
3k3
15
9k

537
179
161
1*98
5#
#5
596
86
Sh
300
383
136
66l

73
123'
50
27

30

Subsequent to
date shown
Corporate
1,616
669
1*79
690
5#
61*7
: 526
• 532
303
608
klh
135
21*6

1,752
1,238
1,660
1,916
2,789
2,322
1,971
' 1,521*
1,553
1,876
2,158
1,957
2,682

88
138
50
27

- 30
30

Forthcoming Large Offerings, as"of December 3
Issuer

Type

Amount
Approximm&te date
(millions
of offering
of dollars)

CORPORATE
Long Island Lighting
1st mtg. bonds
Common stock
Virginia Electric and Power Co.
Tennessee Gas Transmission
Bonds
New England Telephone and Telegraph
Deb.
Commonwealth Edison
Conv. deb.
New England Power
1st mtg. bonds
Public Service of Oklahoma
1st mtgo bonds
Pfd. stock
Public Service Electric & Gas Co.
1st mtg. bonds
Kansas City Power and Light,
New England Telephone and Telegraph Common stock
Consumer Power Company
Bonds

15.0
17.U
32.0
30.0
50.0
25.0
20.0
25.0
16.0
15.8
30.0

December 7
!
December 8
December 8
December ll*
, January 11
January 18
„ January
• January
February 15 March
1955

STATE AND LOCAL GOVERNMENT '
*State of Michigan
New York Thruway
Oklahoma Turnpike Authority
Jefferson and S t . Tammany Parishes, La.




. G.O.
Rev.
Rev.
Rev.

60,0
50.0
211*.0
1*6.0

December
December
December
December

7
7
3
8

H.m
E-2
Forthcoming Large Offerings as of December 3 (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 AND LOCAL GOVERNMENT (Cont'd)
Spokane County, Washington
Tampa, Florida
Puerto Rico Water Resources Auth.
New Orleans, Louisiana
New York S t a t e Power Authority
S t a t e of C a l i f o r n i a
Public Housing A u t h o r i t i es
Los Angeles Dept. of'Water & Power
I l l i n o i s Turnpike Authority
Texas Turnpike Company ___
3am Houston Company
Los Angeles School D i s t s . , Cal.
Inter-American Center Auth.,. F l a .
Michigan Turnpike Authority
S t a t e of Louisiana
Metropolitan Water D i s t . of So. Cal.
*New York S t a t e Bridge Authority
Dade County P o r t Authority, F l a .
Springfield,; Illinois
Allegheny County, Pennsylvania
Sanitary Authority
C a l i f o r n i a Toll Bridge Authority
Texas Turnpike Authority
" F l o r i d a State Turnpike Authority
Jersey City Sewerage Auth., N. J .
North Carolina Turnpike Authority

315 oO
60.0
135.0
18.0
390.0
200.0
150.0
20.0 .
60.0
186.0
80.0
8-10.0
15*9
21.0
' 9.0

December lij.
December llj.
December lit
December 15
December 15
January 5
January 11
January 26
January"
January
January
January
Spring
Spring
Spring
Spring
1955
1955
1955

Rev.
Rev.
n.a.

85.0
. 235.0.
59.0
89.0
16.0
200.0

1955
1955
1955
1955 •
1955
1955 .

Bonds

30.0

G.O.,
Rev.
Rev.
G.O.
Rev.
n.a.
n.a.
Rev.
Rev.
Rev.
Rev.
Rev.
Rev.
n.a. '
G.O.
• Rev.
Rev.
nva.
Rev.
Rev.

5.0

10.0

1 i

OTHER
Kingdom of Belgium

December 15

1/ Includes corporate and other issues of 15 million d o l l a r s and over3 S t a t e
and l o c a l government issues of £ million and over.
2 / includes f o r e i g n government and I n t e r n a t i o n a l Bank f o r Reconstruction azid
Development i s s u e s .
n.a.—Not a v a i l a b l e .
-*—Included in t a b l e f o r f i r s t time.




E x h i b i t , p*

Yields on New and Outstanding
Public U t i l i t y Bonds, Rated Aa and A 1/
Date

A-rated o f f e r i n g yields
Aa-rated offering yields
Amount above
Amount above .
Actual
Actual
seasoned yields (per cent) seasoned yields
(per cent) (basis points
(basis, points)

1952 average

• 3.18

1U

3.37

12

1953 average

3.4*1

16

3.78

25

1953 - January
February
March
Apr i l ,
May
. June
July
August
September
October
November
December

3.2S
3.39
3.bo
3.U8 ' .
3.79

11
19 •
17
16
28

*3.68
None
None
3.3b
*3.28
*3.30

195U - January
February
March
April"
May
June
July
August
September

3.20
3.02
*2.93
2.99
3.00
*3.00
None
None
3.02,

October j?
6
6
• 14
15
19
21
26.
28

:

November

29
6
7
5
6
0
0
2
h
1

'

3

3.03
3. oh
3.04

h
h
h

3.00

1

None

—

None
None
3.59
3.88
3.99
h.10
*U.oo
None
3:92
3.56
3.1t2
3.51

23
hi
37
39
30
29
7
2
10

3.3k
*3.20
3.05
3.10
3.H;
3.Hi
*3.13
3.11
*3.10

2
-1
-10
-6"
-1
-2 .
. -1
-1
' -3

3.12

-1

3.12
3.10

0
-2

3.08
3*07
3.08

-3
-h
-h

None

—

-

:

0
December 1
3.11
1/ Covers only 30-year f i r s t mortgage bonds, as reported i n Moody's Bond"
Survey. Except where indicated, the actual y i e l d f i g u r e and the amount above
seasoned yields are averages of offerings during the indicated period and of
the differences between these new o f f e r i n g yields and yields on seasoned issues'
of similar q u a l i t y f o r the sane day.
•k—Single observation, not an average.