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MSCOHTBOLLSD, AFThR SIX M lT S
Oi H

H.lli

February 1, i960
iV

CAPITAL M R E DEVELOPMENTS
A KT
THil UNJTED STATES AND C N D
AAA

(Including Monthly Review of Sources arid uses of Funds
jdf "Financial Intermediaries in the United States)
I — United States
The volume of new public security financing for new capital
continues to be moderate. During the week ending January 29, one large
corporate issue for $30 million and a Federal agency long-term o f f e r ing for *>100 million were offered to the public. No large State and
local government issues were sold. The calendar for t h i s week includes
only two State and l o c a l government bond issues totaling $35* million
and a Canadian issue for $15 million.
Bond yields - Yields on outstanding bonds changed l i t t l e l a s t
week. Yields on U. S. Government and lower grade corporate obligations
increased very s l i g h t l y while those on State and l o c a l government and
high-grade corporate bonds remained stable.
Bond y i e l d s also showed l i t t l e net change during Januaiy.
Corporate Aaa bond yields ranained stable and corporate Baa bond yields
gradually increased throughout the month. Yields on other types of
obligations increased somewhat in early Januaiy, then declined.
February security volume - New public security financing for
both corporations and State and l o c a l governments i s expected t o be
moderate in February. The volume of corporate security financing i s
currently estimated at $600 million, one-seventh l e s s than the volume
in Januaiy and one-fifth smaller than in February l a s t year. Large
publicly offered issues are expected to t o t a l about $200 million during
February.
State and l o c a l government bond sales are expected to total
$550 million in February, including a $103 million Public Housing Authori t i e s issue which i s expected to be sold next week. This volume would
be one-fifth smaller than the January total and more than one-third l e s s
than the heavy volume l a s t February.
F M secondary market operations - Secondary market operations
N A
of the Federal National Mortgage Association in December continued t o
r e f l e c t pressures on residential mortgage markets. Offerings to F M
N A
and F M purchases renained unusually large. F M sales again were
N A
N A
negligible.




-2-

In the fourth quarter of l a s t year, secondary market offerings
. t o I'TE-la were somewhat below the advanced third-quarter l e v e l , but FN Ha
purchases were substantially higher. F M sales were the lowest on
N k
record for any quarter.
During the year 1959, FNI'IA secondary market purchases t o t a l e d
nearly i,?735 m i l l i o n , compared with &260 m i l l i o n during 1958 when market
conditions were e a s i e r . F M s a l e s in 195 9 were l e s s than &L million
N A
compared with ^U66 m i l l i o n a year e a r l i e r .
Stock prices - Stock prices declined sharply l a s t week. Standard
and Poor's index closed at 55.61 on January 29, 3 per cent lower than a
week earlier. Prices generally declined throughout January and a t the
end of the month were 7 per cent lower than at the close of 1959.
Trading a c t i v i t y has moderated SOLE what in recent weeks (daily
volume averaging 2.8 million ^shares a day) when the decline in p rices
has been the sharpest. For the month as a whole, trading volume averaged
3.2 million shares, l i t t l e d i f f e r e n t from December.
I n s t i t u t i o n a l investors - The inflow of funds to major savings
i n s t i t u t i o n s was s l i g h t l y smaller i n November than a year e a r l i e r . The
combined growth of l i f e insurance company a s s e t s , deposits at mutual savings
banks and savings capital at savings and loan associations was £>955 m i l l i o n ,
h. per cent l e s s than i n November 1958. While the growth in a s s e t s of l i f e
insurance companies was s l i g h t l y larger than a year e a r l i e r , and t h e increase in savings and loan associations share capital about the same,
savings bank deposits declined i n contrast to a small increase in November
1958.
The increase in l i f e insurance company a s s e t s in November was
s > 9 m i l l i o n , 5 per cent larger than the increase in 1958.
* U9
There
was substantial net liquidation of U. S. Government s e c u r i t i e s in
contrast with slight net a c q u i s i t i o n a year e a r l i e r . This liquidation of
Government s e c u r i t i e s (principally i n shorter term s e c u r i t i e s ) enabled
these companies to increase their holdings of business s e c u r i t i e s and
mortgages much more than in November 1958; the former was one-half
larger and the l a t t e r two-thirds larger.
The November increase in share capital at savings and loan
associations amounted t o # 8 3 million, about the same as a
year e a r l i e r . There was some liquidation ui U. ti. Government s e c u r i t i e s
in November, while in 1958 there had been a moderate net acquisition.
Net purchases of mortgages was s l i g h t l y smaller than in November 1958.
(This i s the f i r s t month of 1959 when the increase in mortgage holdings
was smaller than in the comparable month of 1958.)




For the second consecutive month deposits at mutual savings
banks showed an absolute decline. The decline of $27 million, however,
was much smaller than in October (November data are e f f e c t e d by seasonal
Christmas club account withdrawals). As in most months of 1959» savings
banks were net s e l l e r s of business and U. S. Government s e c u r i t i e s . The
increase i n their mortgage p o r t f o l i o was nearly o n e - f i f t h l e s s than
November 1958.
More detailed information concerning recent capital market
developments i s presented in the attached e x h i b i t s .
Developments in the Canadian c a p i t a l market are presented in
Part I I at the end of t h i s report.

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.




HIGH-GRADE

BOND

YIELDS

A/

LOWER-GRADE

BOND

YIELDS




f

M
U.S.

GOVEINMiNT

- 5 ii. ill

Exhibit B - Tables f o r Exhibit A
high-grade Bond Yields
Corporate
Aaa 1 /

U. S. Govt,
long-term 2 /

Spread between
I). S. Govt, and
State and
Corporate
Aaa
l o c a l Aaa

State and
l o c a l govt.
Aaa y

(Per cent)
195it - Low
1957 - High
1958
1959 - high
Low
I960 - High
Low

2.85
i*.ll*
3.55
i*.6l
U.09
n.a.
n.a.

Dec.
Jan.
Jan.
Jan.
Jan.

It. 61
it. 6 l
l*.6l
it. 61
it. 61

31
8
15
22
2?E/

(l*/23)
(9/27)
(5/2)
(12/31)
(1/9)

2.it5
3.76
3.07
it. 37
3.83
it.it2
it. 35

(8/6)
(10/18)
(V25)
(12/31)
(1/2)
(1/8)
(1/22)

.30
.60
.22
.50
.16
.26
.19

3.it9
3.53
3.it9
3.it7
3.1*7

it. 37
it.it2
it.37
it. 35
it. 36

1.90 ( 9 / 2 )
3.1t5 (8/29)
2.6I1 (5/1)
3.65(9/21*)
3.06(3/26)
3.53 (1/7)
3. it? (1/28)

. 2it
.19
.2it

•

.30
.1*7
.3it
•92
.53
.89
.88
.88
.89
.88

.88
.89

.26

.25

Lower-grade Bond Yields

Date

Corporate
Baa 1 /

State and
l o c a l govt.
Baa 3 /

Spread between
Aaa and Baa
State and
Corporate
l o c a l govt.

(Per cent)
1951*
1957
1958
1959

-

Low
High
Low
High
Low
i960 - High
Low

i t . 5 l (7/11)
5.32 (12/31)
it.83 (it/17)
5.36 (1/29)
5.32(1/8)

3.6it
it. it6
3.92
it.it6
it.itl

Dec.
Jan.
Jan.
Jan.
Jan.

31
8
15
22
29 2 /

5.32
5.32
5.3k
5.35
5.36

it.U3
it.it6
it. 1*3
it.1*1
it.itl

3 .'U* (12/31)

2.93 ( 8 / 5 )

5.10 (11/29)

it. 5 1 (8/29)

(5/D
(7/2)
(3/26)
(1/7)
(1/28)

.52
1.27
.77
.77
.56
.75
.71

.96
1.21
.93
.98
.79
.91*
.93

.71
.71
.73
.7it
.75

.91*
.93
.91*
.91*
.91*

g / Preliminary.
1 / Weekly average of daily f i g u r e s . Average term of bonds included i s 25-26 years.
2/ Weekly average of dully f i g u r e s . The series includes bonds due or callable i n 10 years or more.
3/ Thursday f i g u r e s . Only general obligation bonds are included: average term i s 20 years.
Note.—Highs and lows are for individual s e rie s and may be on d i f f e r e n t dates f o r d i f f e r e n t s e r i e s .







Exhibit D - Tables for Exhibit C
Stock Market
Stock price
index 1 /

Date

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

I960 - High
Low

60.51 (7/31/59)
39.78 (12/27/57)
59.50 (1/8)

3.07
1.66
3.18

55.61

3.a

November
December
Jan. 15
Jan. 22
Jan. 29 2 /

57.23
59.06
58.38
57.38
55.61

1957-1959 - High
Low

(1/29)

•

3.2k
3.18
3.2k
3.29

k,76k
3,55k
n.a.
n.a.

k.3
l.k
3.6
2.8
3.1
3.3
3.5 .
2.8
2.8

3.a

Stock market customer credit
Customers1
Batik
Total debit bal- loans to
ances k/ "others" 5 /
(Mil]Lions of dollars)
3,k01
2,182

1,373
1,060

n.a.

k,k60
3,273
r/k,k5k, r/3,280

1,187
1,17k
i/l,176
1,16k

n.a.
n.a.

n.a.—Not a v a i l a b l e .
g/ Preliminary.
1 / Standard and P o o r ' s T m p o s i t e index of 500 common s t o c k s , weekly c l o s i n g p r i c e s , 1941-43=10. Monthly data
a r e averages of d a i l y f i g u r e s r a t h e r than of F r i d a y s ' o n l y . Highs and lows a r e f o r F r i d a y s ' d a t a only.
2 / Standard and P o o r ' s composite stock y i e l d based on Wednesday d a t a converted t o weekly c l o s i n g p r i c e s by
Federal Reserve. Y i e l d s shown a r e f o r d a l e s on which p r i c e Index reached i t s high or low.
3 / Averages of d a l l y t r a d i n g volume on the New York Stock Exoliange.
4 / End of month f i g u r e s f o r member f i r m s of the New York Stock Exchange which carry margin accounts; excludes
balances secured by U. S . Government o b l i g a t i o n s .
5 / Wednesday f i g u r e s f o r weekly r e p o r t i n g member banks. Excludes loans for purchasing or c a r r y i n g U, S.
Government s e c u r i t i e s • P r i o r t o J u l y 1, 1959, such loans a r e excluded only a t banks i n New York and Chicago.
Weekly r e p o r t i n g banks account f o r about 70 per cent of loans t o o t h e r s . For f u r t h e r d e t a i l see B u l l e t i n .

Federal National Mortgage Association Secondary Market Operations 1 /
Date

,

Purchases
by
MM .
I A

Estimated Offerings to F M
NA
Standby
immediate
Total
purchase commitment

Sales
by
FM
N A

(Millions of dollars)
1958 - Dec.
1959 - Jan.
Feb.
Mar.
Apr.
May
June
July
Aug.
Sept.
Oct.
Nov.
Dec.

39.7
37.7
kk.k
52.k
57.8
80.6
8k. k
109.5
123.1
lkl.3
107. k
10k.2
Ilk. 5

35.3
33.9
ill. 2
k9.8
50.1
73.k
76.6
92.5
109.8
13k.8
100.9
r/98.9
109.7

k.k
3.8
3.2
2.6
7.7
7.2
7.8
17.1
13.3
6.5
6.5
l/S.3
k.9

•

33.2
33.7
27.6
36.5
39-6
-38.3
k9.k
62.3
71.7
85.k
105.5
92.6
92.2

.-9
.3
.8
1.1
.6
.3
.3
,

1
»—Leio than $50,000.
1 / Dx-ta represent, unpiild p r i n c i p a l balances of the mortRitnes involved, exclusive of premiums,
d i s c o u n t s , or other chfir^eo. O f f e r i n g s a r e n mount a of a p p l l e n t l o n e recelvod during the period from
n e l l e r o proponliyr t h n t FH11A execute nurehnnln/. c o n t r a c t n . An Immediate purohane c o n t r a c t cove re
exlntlnf, mortpn,.,e.o which the nolior rnurt d e l i v e r t o P M within 45 drxyit. A otandby ccmrnltnent conUA
t r a c t r c l n t o s t o proponed mortr. n p.en, on housing not y e t under e o n n t r u c t l c n , which the s e l l e r mint
unrolly d e l i v e r within one ynnr. Purr.lmnon Include thooe under both Immediate purchase and standby
cowltBifiirt c o n t r a c t s . Data o-clvde FH11A a c t i v i t y under Special Aseiotance and Management and
L i q u i d a t i n g Programs.




Exhibit ti
Long-turm Corporate and State and Local Government
Security Offerings and Placements
(In millions of dollars)

I960
January"
February
March

New capital
Corporate 1/
State and local 2/
I960
1 1956
1 1959
1 1958
1 1959
alio
7h5
631

1,5535/

April
May
June

899
791
87k

l,li|0
597
887

JulyAugust
September

531
718
709

1,107
5Lo
1,11U

/

e/700
e/600

October
November
December
1st
2nd
3rd
iith

g/826
2/778,
e/850

quarter
quarter
quarter
quarter

728

862
518
920

e/700
e/550

637
857
6ii5

953
511

931
592

798
g

982

56?'
51 b
I168

2/590
f ®

812

806

1*03
651
h$6
hlh
U35

2,216
2,56L
1,958
e/2fbSk

m
e/l,5:37

1,860

U,780
6,738
s/9,192

1st half
Three quarters
Year

3,139
2,623
2,760
2,300
5,762
8,522
10,823

6,193
e/7,730

б,380
7,716

2,276
2,2 Uk

1,365
а,520

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

quarter
quarter
quarter
quarter

Year

2,011
2,U09
1,695
e/2,30U

2,899
2,586
2,731
2,213

e/8,K9

10,^29

1 / Securities and Exchange Commission estimates of net proceeds.
2/ investment Bankers Association of America estimates of principal amounts.
3 / Includes $718.3 million A & convertible debenture issue.
T T
hj Total nev capital issues excluding offerings of sales and consumer finance
companies.




n. lh
Other Security Offerings 1 /
(In millions of dollars)
Long-term
Foreign government 2 /
Federal agency 3/
1959
I
1950
I 1957"
1959
I 1958
January
February
March

77
59
2

196
53

April
May
June

56
50
1*2

139
198
120

July
August
September

#

1A63
251

72

123
1*8
1*2

523

125

9
5
17

28
7
30

161*

58
123
71*

1
*
60
'1

—

1
36
29
38

October
November
December
Year

81*
1*9
. 30

992

199
175

&.

220

1*28

295

April
May

233
1*60
273

326
155
1U7

s

190

October
November
December
Year

572

Federal agency 37~
359
. 500
1*89

371
208

638

1*30

11*1*

565

675
289

209
161
329

1*69

I
July
August
September

100

2,321

507

Short-1
State and l o c a l government V
January
February
March

215

150

261*

205
337
153

21*6

1*67
399

28 9
123
369

272
272
252

727
365
665

1*37
206
330

306

231
U5
213

303
9U
1*59

733
1*71
#8

1*51*
111*
137

it,127

3,910

3,27k

1*86

6,01*7

3,0

501

221*

370
512

1,238

255
116

5,51*3

2 / Preliminary.
1 / Data presented in t h i s exhibit d i f f e r from those in Exhibit E in that refunding i s s u e s , as well as new capital i s s u e s , are included. Long-term s e c u r i t i e s are defined as those maturing i n more than one year.
2 / Includes s e c u r i t i e s 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 Commissionj short-term, Federal Reserve.
h/ Principally tax and bond anticipation notes, warrants or c e r t i f i c a t e s and Public
Housing Authority notes.
some instances EtaA
 one year. In Source: Bond Buyer. notes included may have a somewhat
longer term than



— 10

H.lk

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

Corporate

Month

1958 - December
1959 - January
February
March
April
May
. June
July
August
September
October
November
December

State and
l o c a l government

229
335
551
369
. 563
258
635
19k
263
2lU
29k
163
217

305
369
3h0
215
359
3U2
28U
110
363
199
1*00
i*21
230

Other 2 /

79
17U
35
176
20
50
60
50
98
175
20
.

70

Large Individual Issues Offered during Januaxy
Issuer

Type y

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

. C RO AE
OPRT
Deb.
C.I.T. Financial Corp.
J
1980
75.0
Notes
Commercial Credit Co.
50.0
1980
Kansas City Pwr. & Lt. Co. 1st mtg. bds. 20.0
1990
Northern I l l i n o i s Gas Co.
Pfd. stk.
15.0
Chesapeake & Potomac Tel.
Co. of Maryland
Deb.
25.0
1996
Gen. Public U t i l i t i e s Corp Com. stk.
2 h.B
Gen. Acceptance Corp.
Deb.
15.0
1980
Conn. Light & Power Co.
1st ref.mtg.bds25.0 . 1990
Southern Calif. Edison
1st ref.ntg.bds30.0
1985

5 V8
5 lA
5

5.25
5^25
it.95

5 i/k

5.19

Aaa

6
h 7/8
5

6.00
h,9h
h.92

Aaa
Aa

• —

Aaa

STATE AND L C L G V R M N
O A OEN ET
Toledo Sch. D i s t . , Ohio
Seattle, Washington
City & Co. of San Francisco
California
j




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

10.0
1961-83
11.8 1969-85/70

3.65
3.72

2.90-3.70
3.50-li.iiO

Aa
Aa

13.6

3.Wi

2.85-3.608/

Aa

1961-80

—

H.l4

- 11

Large Individual Issues Offered during January (Cont'd)
Issuer

Type 3 /

Amount
• Coupon
(millions Maturity
rate or Offering Rating
of
net i n t e r - y i e l d
dollars)
est cost

STATE AND LOCAL G V R M N
OEN ET
(Cont'd)
New York State Pwr. Auth.
Term
Serial
State of Maryland
Tacoma, Washington
State of California
Detroit, Michigan
Sacramento Unif.S.D., Gal.
State of Washington
State of Washington
State of Louisiana
State of North Carolina

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

2006
1965-79
1963-75
1961-2010/70
1961-85
13.2
1961-85
10.0
1962-85
18.0
1967-77/72
10.1
1961-79/70
15.0 1961-84/69
11.1
1961-79

96.0
24.0
23.1
32.0
100.0

4.39
3.30
4.5!
4.02
4.10

3.57
3.94

3.65
3.84
3.29

4.38
3.50-4.00
2.95-3.30
3.50-4.75
3.00-4.00
3.l0-4.50</
2.95-3.65^
3.60-3.90
3.00-3.70
2.90-3.85
2.75-3.35

Aaa
Baa
Aa
A
Aa
A
Aa
A
Aaa

OHR
TE
Fed. Natl...Mtg. .Assoc.

100.0

1972

5 1/8

5.17

1/ Includes corporate and other security offerings of $15 million and over;
State and l o c a l government security offerings of &10 million and over.
2/ Includes foreign government and International Bank f o r Reconstruction and
Development issues and non-guaranteed issues by Federal, agencies.
3 / In the case of State and l o c a l government s e c u r i t i e s , G.O. denotes general
obligations; Rev.-Ut., revenue obligations secured only by income from public
u t i l i t i e s ; Rev.-Q.Ut., revenue bonds secured only by revenue from q u a s i - u t i l i t i e s ;
Rev.-S.T., revenue bonds secured by revenue from s p e c i f i c taxes only; Rev.-Rent.,
revenue bonds secured solely by lease payments.
4 / 1 per cent of 1980 maturity not reoffered.
' '
S j 1/4 per cent of 1985 maturity not reoffered.




Exhibit H

H.lU

Forthcoming Large Long-tern Public Security Offerings for New Capital
(Other than U. S. Treasury) 1 /
Expected Proceeds from Forthcoming Large Issues
Subsequent to
date shown

During month following
date shown

Date of
computation

Corporate

1959 - Jan. 30
Feb. 27
Mar. 31
Apr. 30
May 29
June 30
July 31
Aug. 31
Sept. 30
Oct. 30
Nov. 30
Dec. 31
1960 - Jan. 29

270
198
396

246
287
165
238

%

385
226
210
207

J
551
292
550
254
247
146
356
385

Other 2 /

45
20

50
50
25

270

115
295

70

210

45

.445

Corporate

Joth» ^

45

856
1*81
761
517
761
500

50

1*02

365
279
476
346
332
272
305
517
69k
509
271
280
252

25

20
50

4o6

470
336
1*85

70
30

545

45

310

Forthcoming Large Offerings, as of January 29
,?

Issuer

Type

Amount
Approximate date
(millions
of offering
of dollars)

CORPORATE
/

Consolidated Natural Gas Co.
^Pacific Telephone & Telegraph Co.
Duke Power Co.
Duquesne Light Co.
^Brooklyn Union Gas Co.
*Dayton Power & Light Co.
Commerce Oil Refining Corp.
STATE AND LOCAL G V R M N
OEN ET
Milwaukee Co., Wise.
New York, New York
Washington Sub. Sanit. D i s t . , Md.
Public Housing Authorities
Dallas, Texas
St. Louis, Missouri
Ventura Port D i s t . , Calif.
^Elizabeth River Tunnel Comm., Va.
•«-State of California
OHR
TE
Province of New Brunswick, Canada
Montreal Metropolitan Corp., Canada




Deb.
Deb.
1st & r e f . mtg. bds.
S.F. deb.
Pfd. stk.
1st mtg. bds.
Deb., bds. & com.

25.0
72.0
50.0
20.0
15.0
25.0
45.0

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

12.5
22.0
10.0
102.8
18.0
12.4
10.0
22.0
100.0

S.F. deb.
S.F. deb.

15.0
30.0

Feb. 9
Feb. 16
Feb. 17
Feb. 25
Feb. 25
Feb. 26
Indefinite
Feb.
Feb.
Feb.
Feb.
Feb.
Feb.
Feb.
Feb.
Mar.

.2
4
9
9
15
17
9

Feb. 3
Feb. 9

H.ll*

H-2

-13-

Footnotes
*—Included in table for f i r s t time.
1 / Includes corporate and other issues of $15 million and over; State
and l o c a l government issues of $10 million and over.
2/ Includes foreign government and International Bank f o r Reconstruction
and Development i s s u e s and non-guaranteed i s s u e s by Federal agencies.
Note.—Deletions f o r reasons other than sale of i s s u e : None.




-Ik

Exhibit I

H.lV

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

1952 - 1958
High
Low
1959 - January
February
March
April
May
June
July 9
10
15
30
Aug. 5
20
Sept. 18
Oct. 22
23
28
29
30
Nov. 25
Dec. 8
9
10
1960 - Jan. 7

A-rated offering yields
Aa-rated offering y i e l d s
Amount above
Amount above
Actual
Actual
seasoned yields (per cent) seasoned yields
(per cent)
(basis points)
(basis points)

5 . 0 0 (9/1U/57)

2.93 (3/31/5W

II

87
-3

*L95

3
l
10
17
37
29

It. 93

31

L97

L85

It. 80

2k
22

&

k6
16
ko

5.15
5.15

5.08
5.30

5.50 (11/7/57)
3.00 (3/17/5W

123
-15

*lu75^

23

*1.67

18
25
15
19

5.io
5.io

5.oo

19
13

5.65

60

'5.25
5.1:0

35
50

5.15

51
50
28

k2
k2

63

5:3^2/

*—Single observation, not an average.
1 / Covers only 30-year f i r s t 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 f o r the seasoned issues
varies from 26 to 28 years.
2 / Provides f o r 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.
3 / Includes one issue which provides for a 7-year period during which the
issue may not be called for refunding at a lower coupon rate.




Exhibit J

H.Ik

-15-

Sources and Uses of Funds T?y
Life Insurance Companies
(In millions of dollars)

Ca h
Value of
end of
1956
1957
1958
1959

assets at
period:
- Dec.
- Dec.
- Dec.
- Nov.

Changes:
1957 - Oct.
Nov.
, Dec.
1958 - Jan.
Feb.
Mar.
Apr.
MayJuly
Aug.
Sept.
Oct.
Nov.
Dec.
1959 - Jan.
Feb.
Mar.
Apr.
May
June
July
Aug.
Sept.
Oct.
Nov.
Dec.

Uses of Funds 1 /
U. S.
BusiState and
Govt.
ness
l o c a l govt* Mortsecur-.
gages
ities
i t i e s 2/
ities

1,273
1,29b
1,363
1,228

7,519
7,028
7,182
7,016

-17
22
138
-102
-ki

13
-92
-181
166
' 16
-12k
lk
-71
k5
172
kk
k
11
19
-lk2
303
-71
-185
22
-16
11
13
95
-185
-22
-131

20

-i8
81
-2k
22
. -18
1
-17
55
110

-81
-57
-Ik
-2li
10
3
-15
19
-31
22
33

39,552
12,133
kk,6l2
46,750
2kk
212
258
229
158
2kU
216
11*3
201
191 .
129
21k
309
137
308
188
223
251
2h2
193
2k2
2lU
75
95
208
207

2,23k
2,377
2,691
3,15k
13
10
10
50 ,
12
2k
lk
29
3k
2k
37
20
26
32
12
53
30 ;
66
k9
79
23
9k
30
15
8
16

32,99k
35,271
37,092
38,98k
170
132
237
176 •
137
lk2
115
118
102
128
139
lk2
186
lk5
291
119
139
136
116
135
157
21k
17k
211
251
2k0

Oth

12,272
13,206
lk,6k0
15,772

Total
sources
or uses

95,8kk
101,309
107,580
112,90k

6

110
7
139
76
103
39
16k
lk8
k5
15k
72
72.
88
33k
-17
17k
108
80
97
60
208
101
95
92
13k

1/ Uses of funds represent net changes i n a s s e t s and therefore r e f l e c t n e t ,
rather than gross, uses.
2/ Includes s e c u r i t i e s of domestic corporations only.
Source: I n s t i t u t e of Life Insurance.




k29
39 k
k 69
658 ~
358
k09
380
k6k
506
582
k85
k53
587
k76
913
565
k38
362
k85
k98
k96
728
k9k
200
559
k99
i

-16-

Exhibit K

H.lii

Sources and Uses of Funds bySavings and Loan Associations
(In millions of dollars)
Uses of Funds 1/
U. S.
Govt,
MortCash
ga^es
securities
Value of Assets
at End of Period
2,119
1956 - Dec.
2,146
1957 - Dec.
2,585
1958 - Dec.
1,817
1959 - Nov.
Changes
1957 - Oct.
Nov.
Dec.
1958
Feb.
Mar.
Apr.
May
June
July
Aug.
Sept.
Oct.
Nov.
y Dec.
1959&- Jan.
Feb.
Mar.
Apr.
May

-18
86
431
-118
173
212
119
42
178
-290
-70
-77
-107
42
335
-298
-26
-2
-182
26
2 45
-432
-43
-53
-68
65

2,782
3,173
3,819
4,500

35,775
40,049
45,627
52,608

-5
23
-65
- 45
-19

4l6

37
12
81
42
110
146
104
51
37
297
97
76
. 105
23

-4
104
17
-7
7
-34

278

253
197
240
338
, 403
528
573
554
564
578
605
470
528
402
427
593
705
754
840
783
727

Total
Other sources
or uses

Sources of Funds
Net
Borrow- Other
change
ing 3 /
savings
capital

2,199 42,875
2,770 48,138
3,108 55,139
3,777 62,702

37,148
41,912
47,976
53,371

480
447
6i4
134
. 407
554

361
378
923
453
376
488
362
511
935
73
360
447
507
480
1,072
434
408
529
420
604

87
60
-5
10
13

4

102

99
-43 ^
-90
12
45
137

102

-53
-55
80
98
151
178
10
-108
22
65
88
140

661

681
789
216
616
692

739
665
847
346
578
7 65
779
981
1,091
347
723
675
648
630

1,090

1,347
1,379
1,444
2,165
16

10
125
-375
-128
-89
112
-29
165
-37
51
84
58
41
212

-181
-56
-5
97
63
313
31
118
148
136
57

4,380
4,847
5,719
7,166
103
59
-434
56
159
155
187
199
-311
180
205
161
174
144
-437
93
226
241
262

314
-312
126
211
83
113
90

July
190
Aug.
394
Sept.
670
444
Oct.
621
399
Nov.
483
459
Dec.
g / Preliminary.
r / Revised.
1 / Uses of funds represent net changes in assets and therefore r e f l e c t net,
rather than gross, uses. Savings and loan associations do not hold business securi t i e s and data on holdings of State and l o c a l government bonds, presumed to be small,
are not available.
2 / Prior to 1957, data adjusted to include mortgage pledged shares as currently
reported.
3/ Advances from Home Loan Banks and other borrowing.
Source: Federal Savings and Loan Insurance Corporation.




H.li;

Exhibit L

-17-

Sources and Uses of Funds by
Mutual Savings Banks
(In millions of dollars)

Cash

U. S.
Govt.
ities

Value of a s s e t s
at end of
period:
1 9 # - Dec.
1957 - Dec.
1958 - Dec.
1959 - Nov.
Changes:
1957 - Oct.
Nov.
Dec.
1958 - Jan.
Feb.
Mar.
Apr.
May
June
July
Aug.
Sept.
Oct.
Nov.
Dec..,
1959 - Jan.2/
Feb.
• Mar.
Apr.
May
June
July
Aug.
Sept.
Oct.
Nov.
Dec.

920
890
921
718
-2k
6
125
-6o
63
36
-47
-5
42
-66
-5
18
-8
-38
101
-96

18
45

-111*

8
43
-79
3
-2
-27
20

7,971
7,552
7,266
6,876
-136

-136
-26
-21
4i
-85
-62
-36
11
19
-27
-92
-32
-2
119
39
62

-a

13

-85
-13
-12
-32
-281
-85

Uses of Funds 1 /
Busi- State &
local
Mortgovt.
gages
i t i e s 2j
ities

3,523
4,331
4,973
4,826

.

669

682
725
746

60
93

75
160
86
86
97
120
-24
3k
8
3k
-6
47
-lb
6
-31
58
-20
-k7
13
-2
-55
-28

•

-3
7
-7
23
k
6
k
-19
2k
8
2
2
-3
-1
-7
17
-k
kl
-33
10
19
1
*
-1
8
-20
-8

19,529
20,951
23,039
24,636
124
100
141
130

99

165
154
195
253
193
198
181
195
151
174
26S
125
175
155
161
145
179
156
160

137
12k

Other

698

761
855

922

-41
38
-9
25
20
9
-29
40
5
-28
29
29
-46
43
-3
-58
32
38
.-32
45
39
-12
33
31
-37
42

Total
sources
or uses

33,311
35,168

37,779
38,724
-20
108
299
278
251
343
94
269

26k
152
251
237
. 4o
123

309

175
216
330
-10
217
161
32
192

163

-283
65

Sources of Funds
Net
change
Other
in
deposits

30,032

31,695

34,041
34,61*3
34
36
405
23U
149
336
93
181
300
88
143
267
95
42
418
122

113
313
6
120
202
. -54
80
197
-187
-27

3,279
3,473
3,738
4,081
-54
72
-106

#
102
7
1

|

64
108
-30
-55
81
-109
53
103
17
-16
97
-41
86
112
-34
-96
92

1 / Uses of funds represent net changes in a s s e t s and therefore r e f l e c t , net
rather than gross, uses.
2/ Includes Canadian government and p o l i t i c a l subdivisions, International Bank
for Reconstruction and Development, nonguaranteed Federal agency and other bonds as
well as corporate bonds and stocks.
3 / Adjusted to eliminate the e f f e c t of a consolidation of a large savings bank
with a commercial bank.
Source: National Association of Mutual Savings Banks and Federal Deposit InsurDigitized for Corporation.
ance FRASER



February 1, I960
Part I I - Canada

-18-

The decline i n Canadian short money rates l a s t week was
appreciably l e s s than i n the two preceding -weeks. Because of the further
sharp f a l l i n U.S. b i l l y i e l d s , the d i f f e r e n t i a l i n favor of Canadian
b i l l s -widened by 29 b a s i s points on the short b i l l and by 12 b a s i s points
on the 6-month b i l l . In the bond market, the y i e l d s on long-term government s e c u r i t i e s were unchanged but short bonds declined moderately i n
y i e l d . Three major bond issues were offered during the week i n the
provincial and corporate sectors of the market#
Money market conditions.
The y i e l d on the short Treasury
b i l l declined 6 b a s i s points a t l a s t week's auction from U,66 per cent
to U,6o per cent and the 6-month b i l l y i e l d dropped by 10 b a s i s p o i n t s ,
(See Table.) There was a marked pick-up i n the b i l l holdings of the
public but the Bank of Canada substantially reduced i t s holdings during
the week. Day-to-day money closed a t 3,25 per cent, the lowest point
reached since early i n 1959.
The i n t e r e s t incentive i n favor of the short Canadian b i l l
compared to the United States b i l l widened s l i g h t l y during the week
. from 0.15 per cent to 0.26 per cent per annum. The y i e l d d i f f e r e n t i a l
i n favor of the^Canadian b i l l widened from 0.39 per cent to 0.68 per
cent, but part of t h i s advantage was o f f s e t by a widening of the discount
on the 3-month Canadian d o l l a r . (See Table.)
Bond market developments. The y i e l d s on one to f i v e year bonds
declined about k to 10 b a s i s points l a s t week but longer bond y i e l d s
were unchanged or d r i f t e d upward by 1 or 2 b a s i s p o i n t s . At midweek,
spreads between comparable Canadian and United States Treasury s e c u r i t i e s
were ( f i g u r e s in parenthesis r e f e r to the previous week):
0.68
0.51
0.68
0.99
1.13

per
per
per
per
per

cent
cent
cent
cent
cent

on
on
on
on
on

a 91-day b i l l (0.39)
a 182-day b i l l (0.39)
an 8-year bond (0.60)
a 20-year bond (0.97)
a 35-year bond (1.11)

On February 1, the Minister of Finance announced a combined
cash and conversion o f f e r i n g . For cash subscription only, a $100
m i l l i o n 5 - 1 / 2 per cent bond due October 1, 1962 i s offered at an issue
price of 99-1/2 per cent showing a y i e l d to maturity of 5.70 per c e n t .
These bonds can be exchanged at the holder's option into 5 - l / 2 per cent
bonds due October 1, 1975 y i e l d i n g about 5.55 per cent to maturity.
In addition. $200 mil l i o n are o f f e r e d i n conversion for an April 1, i960
maturity: holders are offered a 5 - 1 / 2 per cent bond due April 1, 1963
y i e l d i n g 5.76 per cent to maturity and exchangeable into an April 1, 1976
issue yielding about 5,57 per cent.




-19Three major bond i s s u e s were o f f e r e d t o Canadian investors
l a s t week. A $£>0 m i l l i o n Ontario Hydro with a 6 per cent coupon was
o f f e r e d i n a 10- and 20-year maturity* the shorter i s s u e was priced
to y i e l d 6.07 per cent and the longer to y i e l d 6.20 per c e n t . Last
July, the same agency borrowed f o r the same maturities on a 5*75 per cent
y i e l d b a s i s . This large o f f e r i n g was meeting "a s a t i s f a c t o r y reception,"
according to press reports. Tiro smaller o f f e r i n g s were quickly oversubscribed. A $10 m i l l i o n , 15-year o i l bond with a 6 per cent coupon
was issued a t par. Ajsmaller 25-year corporate o f f e r i n g showed a 6.81;
per cent m a t o r r ^ ^ e l d : t h i s company had borrowed on a 5.75 per cent
y i e l d b a s i s in the spring of 19!#.
Press reports indicate that the (U.S.) $30 m i l l i o n Montreal
Metropolitan Corp. issue i n the New York market may be offered i n the
second week in February.
Life insurance companies. Figures f o r the 11 months, January
to November, show that mortgages accounted f o r about two-thirds of
net investments of Canadian l i f e companies i n 1959. (See Table.)
During the year, their purchases of provincial and municipal s e c u r i t i e s
were sharply up but t h e i r acquisition of corporate bonds substantially
lower.
Stock marketso Prices i n the Canadian stock markets continued
to decline during the week. The Toronto i n d u s t r i a l index on Friday
stood a t 510.35 compared to 519.19 a week e a r l i e r and to 530.15 a month
ago. The Montreal industrial index stood at 306.3 at Friday's closing
compared with 310.6 a week e a r l i e r and 317*8 a month previous.

British Commonwealth Section
Division of International Finance
Board of Governors of the Federal Reserve System




—20—

Selected Government of Canada Security Yields
Intermediate

Long-

Spread between
Canadian & U.S. rates
long-term
3-mo.,
bond¥
bills£Z

Date

3-month
Treasury
bills!/

bonS;

1957 - High
1958 - High
Low
1959 - High
Low

U.08
3.65
0.87
6.16
3.25

U.81
U.52
3.31
5.30
U.U5

U.35
U.U2
3.78
5.30 '
U.Ul

1.19.
0.1+7

2.96
0.30

Jan. 6
13
20
27

5.1k
U.82
U.66
In 6o

5.U6
5.55
5.U3
5.U5

5.37
5.U2
5.U1
5.U1

0.88
1.02
0.97
0.99

Discount
on 3-mo.
Canadian
dollarS/

0.51
0.31
0.39
0.68

Govt. .
bondU

0.72
0.36
0.2k
0.1*2

1/ Average y i e l d at weekly tender on Thursday,
2/ Government of Canada 2-3/U per cent of June 15, 1967-68.
3/ Government of Canada 3 - l A P e r cent of 1979.
U/ U.S. Government 3 - l A per cent of 1978-83• Government of Canada 3-l/h per
cent of 1979 o
5 / Spread between Canadian auction rate and composite market y i e l d for the
U.S. b i l l on the close of business on Thursday.
6 / Spread between 3-months forward and spot price of the Canadian dollar,
expressed as per cent per annum, on Thursday.
Investment Transactions of Canadian Life Insurance Companies-!/
( i n millions of Canadian dollars)
Total, January to November
1935"
1957
193B
W9
Net investment ins
Govt, of Canada bonds
Other bonds
Preferred and common stocks ^
Mortgages (gross)
Other assets
Total

-137
158
1
1;38
J£
U96

- 35
80
2
361
Jk
U59

37
83
51
331
30
531

Ul
93
U3
UoU
J5
605

Net source of fundsg
Mortgage repayments (gross)
Funds transferred from abroad
Balancing item^/

172
7lt
250

17U
18
267

203
30
298

2lU
26
365

1/ Covers 12 companies whose net premium income in Canada in 1958 was
77.0 per cent of t o t a l for a l l registered companies. For more detailed
breakdown see the Bank of Canada, S t a t i s t i c a l Summary.
2 / Mainly Canadian dollars from insurance operations plus changes i n
Canadian dollar balances.





Federal Reserve Bank of St. Louis, One Federal Reserve Bank Plaza, St. Louis, MO 63102