Full text of H.16 Capital Market Developments : December 8, 1958
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Not for Publication rm„ DECONTROLLED AFTER SIX.MONTHS H.II4. December 8, 1958 CAPITAL MARKET DEVELOPMENTS The volume of publicly-offered securities for new capital was substantial last week, and is expected to be only slightly smaller this week> After that, however, the usual seasonal lull in public security financing is expected until the first of the year. During the week ending December 5, corporations sold large issues totaling $113 million and State and local governments sold issues amounting to ^130 million. Two large foreign government issues with aggregate proceeds of $50 million were also sold. This week, large corporate issues, including the expiration of subscription rights are -expected to total «?1kS million and State and local government issues for $99 million are scheduled for sale. A foreign government issue for ^29 million is also on the calendar. ' Bond yields - Changes in yields on outstanding bonds were mixed last week, lields on U. S. Government obligations increased b basis points while those for State and local government and lower grade corporate bonds remained stable. Yields on high-grade corporate bonds continued to decline slightly. Stock prices - Stock prices showed little net change last ueel. in reduced activity. Standard and Poor's index of 500 common stocks closed at 52. U6 on December 5. Trading volume averaged 3.5 million shares a day, the lowest weekly average since mid-September, but still sharply above the 1957 daily average of 2.2 million shares. 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. ' tXMIBU A H I G H - G R A D E B O N D YIELDS L O W E R - G R A D E B O N D YIELDS 1953 1954 V\ 1955 1956 1957 195B H.lU 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 local Aaa State and local govt. Aaa y (Per cent) 1953 1954 1957 1958 - High - Low - High - High Low 3.42 (6/19) 2.85 (4/23) h.lk (9/27) 4.13 (10/10) 3.55 (5/2) 3.19 (6/5) 2.45 (8/6) 3.76 (10/18) 3.83 (10/3) 3.07 (1/25) 2.73 (6/25) 1.90 (9/2) 3.2*5 (8/29) 3.31 (9/11) 2.64 (5/1) .38 .30 .60 .51 .22 .83 .30 .1)7 .62 .34 Nov. Nov. Nov. Nov. Dec. 7 14 21 28 5 2/ 4.11 4.10 4.08 4.07 24.-06 3.75 3.71 3.69 3.67 3.73 3.19 3.17 3.17 3-lii 3.H .36. .39 .39 .40 .33 .56 .54 .52 .53 .59 Lower-grade Bond Yields Date Corporate Baa 1/ High Low High Riga Low 3.89 3.44 5.10 L96 1.51 State and local govt. Baa y j Spread between Aaa and Baa State and Corporate local govt. (Per cent) 1953 1S54 1957 1958 - Nov. Nov. Nov. Nov. Dec. 7 lit 21 28 5 d/ (9/18) (12/31) (11/29) (1/3) (7/11) 4.89 4.88 4.86 4.85 4.85 " 3.79 (6/25) 2.93 (8/5) 4.5-1 (8/29) 4.34(9/11) 3,6^(5/1) 1.12 1.12 4.11 4.10 4.10 .69 .52 1.27 1.23 .77 1.21 .96 1.21 1.11 .93 .78 .78 .78 .78 .79 • 93 .95 .94 .96 .96 ' 2/ Preliminary. 2/ Weekly average of daily figures. Average term of bonds included, in J?.?-;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 obligations bonds are included; average :,era is 20 years. Note.—highs and lows are for individual-series and may be on different dates for different series. STOCK MARKET Exhibit D Table for Exhibit C Stock Market Date Stock price index 1/ Trading Common stock volume 2/ yields j/ (millions of shares) (per cent) Stock market customer credit Customers' Bank debit bal- loans to . ances h/ "others" 5/ Total (Millions of dollars) (1/2) 1953 - High Low 1951* - High Low 1955 - High Low 1956 - High Low 1957 - High Low 1958 - High Low 1*9.08 7/12) 1*.2 39.1*8 (12/20) 1.1* 53.09 (11/lU 1*.9 hO. 37 (1/10) 1.7 October November Nov. 21 Nov. 28 Dec. 5 e / 50.95 52.50 52.70 52. W 52. U6 26.5k 22.95 35.98 2U.93 1*5.89 35.28 19.61* 2.5 0.9 . liS! 1*3.22 |l/20) & 1*.6 1.5 3.1 1.5 h.'l l*.l JU.l 1*.2 3.5 l*.3k 3.91 1*.72 3.39 L58 3,537 l*,0l*7 3,911* 1*,031 3,576 1*,369 3,551* 1,665 1,311* 2,388 1,653 2,805 2,517 2,823 2,71*0 2,887 2,1*82 . 3,188 2,1*87 3.52 1*,369 3,188 5.38 6.25 U.32 5.82 U.08 1*.1*1 3.82 3.1*2 •3-ia 3.1*2 3.1*2 2,1*55 1:21 2,1*05 1*,030 780 661i 1,0U8 71*6 1,2 ia 1,018 1,26? 1,155 1,163 1)051* 1,317 1,051. 1,101 1,179 1,176 1,179 n.a.—Not available. jo/ Preliminary. 1/ Standard and Poor's composite index of 500 common stocks, weekly closing prices, I9la-l*3e10. Monthly data are averages of daily figures rather than of Fridays' only. Highs and lows are for Friday's data only. 2/ Averages of daily trading volume on the New York Stock Exchange. 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. h/ 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 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. Note.—Highs and lows are for individual series and may be on different dates for different series. Exhibit E Long-term Corporate and State and Local Government Security Offerings and Placements (In millions^ of dollars) 1958 January February March 723 1 New capital Corporate 1/ State and local 2/ 1 1956 1957 1958 1 1956 1 1957 1,060 1,065 1,320 573 712 817 812 953 511 742 572 506 404 696 390 765 1,453 818 1,146 , 841 798 895 551 765 546 393 378 490 735 1,063 654 838 804 403 667 529 584 431 408 206 357 698 633 698 639 347 409 April May June i,iia 600 881 July August September 1,144 1,102 538 1,003 921* 973 October November December 3/700 e/600 e/950 1,090 789 1,076 1,088 2/447 e/500 3/450 3,135 2,622 2,784 e/2,250 3,445 3,149 2,899 2,951 2,102 2,805 2,556 2,922 2,276 . 2,244 1,874 e/1,397 1,620 1,704 1,5144 2,029 1,490 1,603 971 1,395 5,757 '6,591 9,4?3 12,117 4,907 7,463 10.384 . 4,520 6,394 e/7,791 3,524 5,069 7,099 3,093 4,064 5,459 1st 2nd 3rd 4th quarter quarter quarter quarter 1st half Three quarters Tear 8,51a 3/10,791 Excluding finance companies %/ 1st 2nd .3rd 4th quarter quarter quarter quarter Year 2,89li 2,583 e/2,734 e/2,175 3,237 2,889 2,582 2,810 1,647 2,541 . 2,246 2,826 5/10,386 11,519 9,260 1/ Securities and Exchange Commission estimates of net proceeds. 2/ Data through June 1956 are Bond Buyer data.classified as new capital by Federal Reserve; later data are from the Investment Bankers Association of America and are somewhat more complete as to coverage than the earlier data, particularly for Federal Government loans. 3/.Includes #718.3 million AT&T convertible debenture issue. U/ Includes #571.5 million AT&T common stock issue. % ] Total new capital issues ev blading offerings of sales arid consumer finance companies. H.lU Exhibit F Other Security Offerings 1/ (In millions of dollars) Long-•term Foreign government 2/ Federal agency 3/ 1956 1956 1958 1 1957 1 1957 1 .1956 1 January February March 196 53 April May June 139 198 120 123 Ii8 U2 9 5 17 28 7 30 July ^ August September — October November . December 8U 1*9 30 h 60 1 Year 507 37 •8 1,163 251 : — 50 523 125 60 95 — 60 — 2 39 16U ;— — 109 215 hh 5 21 100 300 572 ' — — Short-term State and local government h/ January February March 72 — Federal agency 3/ 233 . 460 273 326 U55 lit? 196 .357 21-9 371 208 1'i; 6]8 h30 505 380 220 283 April May 357 35k 261* 205 337 153 125. 252 176 209 161 329 336 469 501 323 311 260 July August September 289 L23 369 272 272 252 . 195 207 179 U37 206 330 221* 370 512 222 k25 273 2/231 303 9h 159 29h 328 118 h$k 1,236 255 116 1*07 222 128 3,271 2,706 5,51*3 3,,1,57 October November December Year • 169 , 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. S. Government. Source: long-term, Securities and Exchange Commissionj short-term, Federal Reserve. h/ Principally tax and bond anticipation notes, warrants or certificates and Public Housing Authority notes. In some instances PilA notes included may have a somewhat longer term than one year. Source: bond Buyer. Exhibit G H.lU Larpe Lunp>term Public Security Issues for New Capital (Other than U. S. Treasury) 1/ Proceeds of Large Issues Offered (Millions of dollars) Month 1957 - November December 1958 - January February March April May July August September October November Corporate State and local government L20 399 318 605 1,093 725 356 281 771 209 825 259 227 3hh I4OU . ' ItlO 553 182 300 505 195 275 109 288 r 172 259 Other 2/ 15h • 1,357 266 653 16U 86 laid 209 100 Large Individual Issues Offered December 1 through 5 • Issuer Type 3/ Amount Coupon (millions Offering Maturity net interyield of dollars) est cost Rating CORPORATE Pacific Gas & Electric Co. 1st ref.mtg.bds.' 65.0 Public Service Elec. & Gas Com. stk. 26. q Potomac Elec. Pwr. Co. 1st mtg. bds. 25.0 1990 1993 h.50 Aa 4 5/8 k.55 Aa 2.72 3. CO 1.60-2."0 1.80-3.65 Aaa Aa h 1/2 STATE"AND LOCAL GOVERNMENT State,of Ohio State of California G.O. G.C. ' 30.0 1959-73 1 0 0 . c 1959-85 OTHER Republic of Austria Union of South Africa bonds bonds . 25.0 1973 25.0 1 9 6 1 - 0 8 5 1/2 5.91 5, 5 1/2 jp.00r5.70 H.lli G-2 n.a.—Not available. 1/ Includes corporate and other security offerings of $15 million and oyer; 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.O. denotes general obligations; Rev.-Ut., revenue obligations secured only by income from public utilities; Rev.-Q. lit., revenue bonds secured only by 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. ti.u Forthcoming Large Long-term Public Security Offerings for New Capital (Other than U. 5'.. Treasury) 1/ Expected Proceeds from Forthcoming Large Issues Subsequent to date shown During month following date shown Date of computation. Corporate 1957 - Oct. 31 Nov. 29 Dec. 31 1958 - Jan. 31 Feb. 28 Mar. 31 Apr. 30 May 29 June 30 July 31 Aug. 29 Sept. 30 Oct. 31 Nov. 38 ^ 1,58 383 378 1*98 1,123 555 356 266 768 161 785 113 204 301 [<>U»r 2/ 363 345 370 134 298 193 177 225 55 2ill 295 258 229 Corporate l ^ / o v l . K •18 150 110 150 36 815 1,193 1,161 • 1,378 1,208~ 670 561 464 1,048 381 914 . 71 216 326 401 1% 564 487 341 330 493 208 235 125 435 524 675 6U3 h e r 2/ 45 63 165 110 150 36 71 Forthcoming Large Offerings, as of December 5 Type Issuer Amount Approximate date (millions of offering of dollars) CORPORATE Common stk. 2U.8 Southern Bell Telephone & Telegraph Philadelphia Electric Co. Pacific Telephone and Telegraph Co. Deb. • 1st & ref. mtg. bds. Common stk. 70.0 50.0 16.6 Arvida Corp. Consumers Power Co. Montana Power Co. Commerce Oil Refining Corp. Indiana & Michiran Electric Co. Common stk. Pfd. stk. 1st. mtg. bds. Deb., bds. 6 common 1st mtg. bds. 27.5 15.0 20.0 45.0 20.0 P. Loriliard Co. Dec. 9 (rights expired Dec. 10 Dec. 11 Dec. 30 (rights expire) Dec. Winter . Vj inter Winter Winter STATE AND LOCAL GOVERNMENT hast Baton Rouge Parish, Louisiana State of New York Chicago Board of Education, Illinois New York State Power Authority Chesapeake Bay Ferry Commission Detroit-Metro. Expressway Massachusetts Port Authority J G;O. G.O. G.O. Rev.-Ut. Rev.-Ut. Rev.-Ut. Rev.-Ut. 22.5 51.0 25.0 200.0 144.0 75.0 Dec. 10 Dec. 10 Dec. 10 Winter Winter Winter Winter ti.llt ti-2 Forthcoming Large Offerings, as of December 5 (Cont'd) Issuer type Amount Approximate date (millions of offering of dollars) OThER Municipality of Metropolitan Toronto S.F. deb. 26.6 Dec, 9 local government issues of $10 million 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. Exhibit I H.lli Yields on New and Outstanding Electric Power Bonds, Rated Aa and A 1/ Date 1952 - 1957 High Low 1958 -January February March April May 7 13 % 20 21 22 28 June 10 17 25 July 2 9 18 23 Oct. 7 15 28 29 Aa-rated offering yields A-rated offering yields Amount above Amount above Actual Actual seasoned yields seasoned yields (per cent) (per cent) (basis points) (basis points) 5.00(8/m/57) 2.93(3/31/Sh) 87 -3 *3.60 / 3-89^ 14.08 3.91 -8 22 35 18 3.90 21 3.85 3.85 16 16 3.85 3.82 3.95 17 12 2U U.OO -I4.IO LlO 14,57 14.50 li.li02/ li.l42^ 25 28 29 25 22 12 U4 5.50(11/7/57) 3.00(3/17/5U) | ' 123 -15 3.96^/ U.07 14.16 14.01 U.OO 3 9 -1 8 3 14.07 1*.35 14 32 I4.OO 3.95 -1 -6 3.982/ 1 Ji.352/ 31 . *—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.