Full text of H.16 Capital Market Developments : February 29, 1960
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Not for Publication DECONTROLLED AFTER SIX MONTHS H.lli ' February 29, i960. CAPITAL MARKET DEVELOPMENTS IN THE UNITED STATES AND CANADA (Including Monthly Review of Sources and Uses of Funds of Financial Intermediaries in the United States) 1 I - United States During the week ending February 26, corporations sold large issues totaling $60 million and State and local governments sold issues with aggregate proceeds of $75 million. A long-term issue for $150 million was also sold by Federal National Mortgage Association. The calendar for this week includes large corporate offerings for $35 million and State and local government issues totaling $102 million. A Canadian issue for $35 million is also scheduled for sale. Bond yields - Changes in yields on outstanding bonds were mixed last week. Yields on U. S. Government and State and local government obligations increased, while those for high-grade corporate bonds were stable, and yields on lower grade corporate bonds declined. Two new Aa-rated, first mortgage electric utility issues were offered to investors last week, one to yield 5.08 per cent and the other 5.10 per cent. These yields are about 20 basis points below that for the last conparable issue, an offering made in early December. FNMA secondary market operations - Operations in the secondary mortgage markets by the Federal National Mortgage Association in January continued to reflect pressures in mortgage markets. Offerings to, and purchases by, FNMA continued in large volume and there were no sales of mortgages by the Association. March security volume - New public security financing for both corporations and State and local governments is expected to continue moderate in March. The volume of corporate security financing is currently estimated at $700 million, one-sixth larger than the volume in February and one-tenth larger than in March last year. Large public issues are expected to total about $300 million. New financing of $700 million in March would bring the first quarter new issue total to $2.0 billion, onetenth less than the volume in the first quarter last year. State and local government security financing is expected to total $600 million in March, including a $100 million issue t?y the State of California which is expected to be sold next week. This volume would be about one-tenth larger than the February total, but one-twelfth below the volume last March. For the first quarter of this year, State and local government bond issues are estimated at $1.9 billion, one-seventh less than the volume in the first quarter of 1959. -2- Stock prices - Stock prices, as measured by Standard and Poor's index of 500 common stocks, showed little net change last week, closing at 56.16 on February 26, Trading activity declined somewhat with volume averaging 3.2 million shares a day. Institutional investors - In December, share capital at savings and loan associations increased one-tenth more than a year earlier, .while both life insurance company assets and mutual savings bank deposits increased one-fifth less. The investment pattern of these institutions showed little change in December from that of other recent months as holdings of mortgages generally continued to increase rapidly and growth in holdings of business securities was smaller than a year earlier. For the year 1959, the savings inflow to these three major types of savings institutions—life insurance companies, savings and loan associations and mutual savings banks—was 6 per cent smaller than in the previous year. The decline in the growth of deposits at mutual savings banks was particularly sharp. (Time and savings deposits at commercial banks also increased much less than in 1958.) The decline in growth of life insurance assets was small, while share capital at savings and loan associations increased somewhat more than a year earlier. The increase in life insurance company assets in 1959 amounted to $6.0 billion, k per cent smaller than in 1958, but larger than in most other recent years. (Part of this decline probably reflects the less rapid increase in stock prices in 1959 than in 1958.) There was net liquidation of U. S. Government securities, principally in holdings of bills and savings bonds, during 1959 in contrast with an increase in holdings in 1958. The liquidation was smaller, however, than during the years 1953 through 1957. After March, acquisitions of mortgages were larger in each month last year than in the corresponding month a year earlier with the total for the year being more than one-fifth larger. (The growth in mortgage holdings had been smaller in 1958 than in other recent years.) In contrast, these companies acquired business securities in smaller volume in the last half of 1959 than in 1958 and for the year the increase in such holdings was 5 per cent smaller than a year earlier. Net acquisitions of State and local government securities was much larger last year than a year earlier. The net increase in share capital at savings and loan associations was a record §6.6 billion last year, 8 per cent larger than in 1958. These associations also increased their indebtedness to Home Loan Banks by a record amount—$837 million and drew down their cash substantially. This increase in funds enabled these associations to increase their holdings of mortgages by $7.5 billion. This was a record increase and one-third larger than in 1958. However, net acquisition of mortgages slowed in November and December to a rate less than in the comparable months of 1958. Growth in holdings of U. S. Government securities was about the same in 1959 as it had been in 1958. H.U. .3. Sources and Uses of Funds of Major Types of Savings Institutions 1/ 1953-1959 (In millions of ddllars) Year Cash Uses of funds U. S. BusiState & Govt. Mortlocal gages govt. ities ities sec. Total Other assets S0UTC6S Sources of funds Net change in deposits Borrow- Other or.savings ing capital Life Insurance Companies 1959 1958 r/ 1957 1956 1955 1951 1953 -36 -331* 69 151* -526 Hi 18 -1,026 -1*76 55 -71*6 5 80 -1*28 2,365 2,1*79 2,1*95 1,972 2,126 2,280 2,792 2,207 1,821 2,21*1 3,569 3,1*97 2,653 2,030 1*86 3H* 121* 236 165 555 152 6,01(6 6,271 5,298 5,577 6,199 5,867 5,167 1,358 1,1*31* 950 808 832 1,120 51*1 — — — Savings and Loan Associations 1959 -396 1958 1*39 27 1957 1956 52 1955 r/ 92 1951* r/ 1*92 190 1953 652 6I46 391 1*1*0 325 93 133 -62 31 -30 -1*5 -61 1*3 65 -31*9 --266 -1*19 -1*89 • . -288 •-1*36 •-238 — — — 7,1*60 5,578 1*,278 1*,268 5,300 l*,ll*6 0*566 n.a. n.a. 617 338 571 1*08 n.a. - 320 n.a. 172 n.a. 189 8,333 7,001 5,263 5,156 6,023 1,900 U,073 o,572 o,061* <-1,761* 4,956 1*,890 i*,l*06 3,651 / 9lt0 65 32 -211 71*5 -77 83 821 872 1*67 1*11 388 571 339 Mutual Savings Banks 1959 1958 1957 1956 1955 1951* 1953 -106 61*2 808 177 -178 230 388 2,855 2,088 1,1*22 2,281* 2,1*29 2,050 1,556 23, 1*3 13 32 37 193 82 109 91* 63 78 57 68 1*1* 1,1*70 2,611 1,857 2,037 1,998 2,11)6 1,897 r j Revised. n.a.—Not available. 1/ For description of data see Exhibits J, K and L. 1,228 2,31*6 1,663 1,81*5 1,826 1,961 1,777 mmmm — 242 265 191* 192 170 185 120 H.lh -I4- Although deposits at mutual savings banks rose during most months, the rate of growth was smaller than in corresponding months of 1958. For 1959 as a whole, the net increase in deposits totaled $1.2 billion, nearly one-half less than a year earlier and the smallest increase since 1951. Met acquisition of mortgages was one-tenth smaller than in 1958. Early in the year acquisitions were larger than in comparable months of 1958 and even when the rate of growth became less than that of a year earlier, acquisitions continued to be substantial. There was a net liquidation of business securities generally throughout 1959 with the decline for the year totaling $106 million as compared with a net acquisition of $61*2 million in 1958. There was also a net liquidation of U. S. Government securities as in other recent years. More detailed information concerning recent capital market developments is presented in the attached exhibits. Developments in the Canadian capital markets are presented in fart II at the end.of this report. Capital Markets Section, Division of Research and Statistics, Board of Governors of the Federal Reserve System. HIGH-GRADE BOND YIELDS /Vf f ' U.S. GOVilNHIMT >v/ LOWER-GRADE BOND YIELDS rv^Z •r\ > A IZ V / V\ V $.0 / i V •A / J t V v v u J V.Z \ V.O V A r TT -6- Exhibit B - Tables for Exhibit A H.lii High-grade Bond Yields Date Corporate Aaa y U. S. Govt, long-term 2/ Spread between U. S. Govt, and Corporate |State and „ local Aaav State and local govt. Aaa y (Per cent) Low High Low High Low • I960 - High Low - 195U 1957 1958 1959 Jan. Feb. Feb. Feb. Feb. 29 5 12 19 26 2/ 2.16 (8/6) 2.85 k.lk 3.55 It. 61 it.09 it. 61 it.5it s? it. 61 it. 60 it. 57 it.5it it.5it 3.76 (10/18) 3.07 (li/2S) li.37 (12/31) 3.83 (1/2) fc.l* (1/8) It. 16 (2A9) it.36 it. 29 It. 20 it. 16 it. 22 1.90 (9/2) a a® .22 3.65(9/21.) 3.06 (3/26) 3.53 (1/7) 3.38 (2/18) .50 .16 .38 .19 .25 .31 .37 .38 .32 I'M 3.38 3.38 3.39 Lower-grade Bond Yields Corporate Baa y Date State and local govt. Baa y Spread between Aaa and Baa State and . Corporate local govt. Jf 5* 1; (Per cent) 195it 1957 1958 1959 Low High Low Higi Low I960 - High Low Jan. Feb. Feb. Feb. Feb. - 29 5 12 19 26 2/ ' 3.itlt (12/31) 5.10 (11/29) lt.5l (7/11) 5.32 (12/31) It.83 (It/17) 5.36 (2/12) 5.31 (2/26) 5.36 5.36 5.36 5.33 5.31 2.93 (8/5) it. 51 (8/29) 3.6U (5/1) it.it6 (7/2) 3.92 (3/26) li.it6 (1/7) it. 31 (2/18) lt,ltl it.itO it. 35 it. 31 It. 32 .52 1.27 .77 .77 .56 .79 .71 .96 1.21 .93 -98 .79 .97 ) .75 .76 .79 .78 .77 .9lt .97 .97 .93 .93 n ; : A / fiZ Preliminary. 1/ Weekly average of dally figures. Average term of bonds Included Is 25-26 years. 2/ Weekly average of divlly figures. The series Includes bonds due or callable In 10 years or more. 3/ Thursday figures. Only general obligation bonds are Included; average tern Is 20 years. Note.—Highs and lows are for Individual series and may be on different dates for different series. 3* ; STOCK MARKET FEDERAL NATIONAL SECONDARY MARKET MORTGAGE OPERATIONS ASSOCIATION Exhibit D - Tables for Exhibit C -8- Stock Market Stock price index 1/ Date Trading Common volume y yields 2/ (millions (per cent) of shares) Stock market customer credit Customers1 Bank debit bal- loans to ances V "others" 5/ (Mil]Lions of dollars) Total 1957-1959 - High Low I960 - High Low 60.51 (7/31/59) 39.78_( 12/27/57) 59.50 (1/8) 55.U6 (2/12) 3.07 I1.66 3.18 3.1*1 k.3 l.k 3.6 2.7 k,76k 3,55k n.a. n.a. 3,k01 2,182 1,373 1,060 n.a. n.a. December January Feb. 12 Feb. 19 Ffeb, 26 2/ 59.06 58.03 55.k6 56.2k 56.16 3.18 3.28 3.ta 3.37 3.37 3.3 3.2 2.7 3.5 3.2 k,k5k 4,365 3,280 3,198 n.a. n.a. n.a. 1,17k 1,167 1,151 1,11)5 n.a.—Not available. g/ Preliminary. 1/ Standard and Poor's Tmposite index of 500 oomnon stocks, weekly closing prices, 1941-43=10. Monthly data are averagea of daily figures rather than of Fridays1 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 prices 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 Exoliange. 4/ End of month figures for member firms of the New York Stock Exchange which carry margin accountsi 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, 1959, such loans are excluded only at banks in New York and Chicago. Weekly reporting banks account for about 70 par cent of loans to others. For further detail see Bulletin. Federal National Mortgage Association Secondary Market Operations 1/ Estimated Offerings to FNttA Standby Immediate Total purcliase commitment Purchases by MIMA Sales by FNMA (Millions of dollars) 1959 - Jan. Feb. Mar. Apr. May June July Aug. Sept. Oct. Nov. Dec. 1960 - Jan. ^ 5 52.k 578 80.6 8k. k 109.5 123.1 1U1.3 1/IO8.3 r/105.6 t/116.3 137.9 19.8 . 76.6 92.5 r/109.9 13U.8 r/101.8 r/100.3 r/lll.k 128.6 r/3.7 3.2 2.6 7.7 7.2 7.8 17.1 13.3 6.5 6.5 5.3 k.9 9.3 33.7 27.6 36.5 39.6 38.3 k9.lt 62.3 71.7 85. k 105.5 92.6 92.2 86.1 .3 .8 1.1 .6 .3 .3 —— * * — m s s s & s & s m s a s & t & f c u.iuolly /deliver within ono yoor. Purchtvien Include thoee under both immediate purchase and ntandby conwltmnW oontvnotfl. Data cyclvde PIMA activity under Special Asslotance and Management and Liquidating Programs. -9- Exhibit.B H.Ik Long-term Corporate and State and Local Government Security Offerings and Placements (In millions of dollars) 1960 January February March New capital Corporate 1/ State and local 2/ 1 1959 I960 1 1958 1 1959 1 1958 638 858 61*6 81*0 71*5 631 1,5532/ April May June 899 791 871* 1,11*0 597 887 931 593 1,006 July August September 531 718 .709 1,107 51*0 1,111* 12 806 1*03 651 ' 887 865 .936 862 518 920 B 1*56 1*71* 1*35 2,216 2,561* 3,139 2,623 2,760 2,300 e/700 e/600 e/700 October November December 1st 2nd 3rd Lth quarter quarter quarter quarter e/2,000 a 1st half Three quarters Year isS '9,1*27 728 @ 10,823 e/700 V550 t/600 1*68 2/W* e/1,850 2,11*2 812 In 798 895 551 !;S £/I,55O 1^365 673 6,223 EZ7,773 k,520 6,380 7,71*6 Excluding finance companies U/. 1st 2nd 3rd lith quarter quarter quarter quarter e/1,600 Year 2,011 2,1*09 1,695 e/2,538 2,899 2,586 2,731 2,213 e/8,651* 10,1*29 1/ Securities and Exchange Commission estimates of net proceeds. 2/ Investment Bankers Association of America estimates of principal amounts. 3/ Includes $718.3 million AT&T convertible debenture issue. 5/ Total new capital issues excluding offerings of sales and consumer finance companies. —10— Exidbit F H.lii & Other Security Offerings 1/ (]h millions of dollars) Long-tern Federal agency 3/ Foreign government 2/ "1950 I9S0 19^5" 1959 1959 • I 4 1956 January February March 77 59 2 196 53 April May 56 50 523 h2 139 198 120 July August September 85 1 36 9 5 17 161) October November December 33 1*2 70 58 123 7b 86 558 992 707 Year 199 175 — -i 220 2,321 ^ Federal agency 3/ 359 5oo 189 371 b 208 V mi* A 357 351 26U U86 675 289 209 161 329 289 727 365 665 1*37 t' 206 330 733 1*71 288 bSh f* llli 137 6.0U7 3,098 190 128 .295 233 U60 273 563 111 21*5 2ii6 ? 98 150 State and local government U/ h6? h23 235 313 306 231 Ml$ it,127 3,910 399 r 1,163 251 k!9 369 21x3 ^ % I " 2 / Preliminary. 1/ Drta presented In this exhibit differ from those In Exhibit E In that refunding Issues, ao 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 ty foreign governnents and their subdivisions and by r International organisations. Sourcet Securities and Exchange Commission. i 3/ Issues not guarantied by the 0. S. Government. Source« long-term, Securities and Bcohange Cocnlsslonjf. short-term, Federal Reserve. r' 4 4/ Principally tax and bond anticipation notes, warrants or certificates ar.i Public Housing Authority r.ot*s. In some instances PHA notes included may have a somewhat longer tens than one year. Source: Bond Buy Exhibit G H.lii —11— Large Long-term Public Security Issues for New Capital (Other than ti. S. Treasury) 1/ Proceeds of Large Issues Offered (Millions of dollars) Month Coxp orate 1959 - January February March April May June July August September October November December i960 - Januaiy 369 3U0 215 359 31*2 281* 110 363 199 1*00 1*21 230 279, State and local government Other 2/ 17U 35 176 20 50 60 50 98 175 20 335 551 369 563 258 635 19U 263 21k 29k 163 217 388 . 70 100 Large Individual Issues Offered February 1 through 26 Type y • CORPORATE Consolidated Nat. Gas Co. .Pacific Tel. & Tel. Co. Tenn. Gas Transm. Co. Duke Power Co. Duquesne Light Co. Brooklyn Union Gas Co. Dayton Power & Light Co. Coupon Amount (millions Maturity rate or Offering of net inter- yield dollars) est cost Deb. . Deb. Com. stk. 1st ref.mtg.bds. S.F. deb. Pfd. stk. 1st mtg. bds . 25.0 72.0 55.2 50.0 20.0 15.0 25.0 Rating 1985 1993 5 z 5 1/8 1*.95 5.05 Aaa Aaa 1990 2010 5 1/8 5 1*.95 k.97 Aaa Aa 1990 5 1/8 5.10 Aa STATE AND LOCAL GOVERNMENT Milwaukee Co., Wise. G.O. New York, New York G.O. Wash.Sub.Sanit.Dist., Md. G.O. Public Housing Authorities G.O. Dallas, Texas G.O. Dallas, Texas Rev.-Ut. Rev.-Ut. Port of New York Authority 12.5^ 1961-80 3.19 22.0 1961-65 3.35 10.0 1961-90/75 3.77 102.8 1961-2000/76 3.82 10.0 1961-80 3.1*1* 8.0 1961-80 3.1*3 30.0 1961-80/69 3.66 2.65-3.25 Aaa 2.85-3.35 A Baa -3.0O-L50 2.60-3.90 Aaa 2.70-3.50 A 2.70-3.50,, Aa 2.80-3.702/ A H.lli G-2 -12- Large Individual Issues Offered February 1 through 26 (Cont'd) Type 3/ Coupon 1 Amount rate or Offering (millions Maturity net inter- yield of est cost ( dollars) Rating STATE AND LOCAL GOVERNMENT (Cont'd) St. Louis, Missouri Los Angeles Co., Calif. Cuyahoga Co., Ohio Alabama Bd. of Educ. Elizabeth River Tunnel Comm., Va. 1962-80 1962-79 1961-80 1961-80/65 2.75-3.35 Aa 2.90-3.85 - Aa 2.65-3.50 Aa 2.80-3.80 Aa G.O. G.O. G.O. Rev.-S.T. i2.a 18.3 10.5 20.0 Rev.-Ut. 26.0 2000 1.62 1.50 S.F. deb. S.F. deb. 15.0 30.0 1985 1985 5 3/8 5 5/8 5.to 5.70 A A 125.0 150.0 1985 1962 5 z h 7/8 5.00 1.98 Aaa 3.29 3.81 3.Ill 3.75 • — OTHER Prov. of New Brunswick, Canada Montreal Metro.Corp.,Can. International Bank for Reconstruction and Development Fed. Natl; Mtge. Assn. Bds. Deb. 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.Ut., 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. V $1.3 million of bonds of 1961 to 1970 not reoffered. 5/ 1 per cent of 1980 not reoffered. i — i -13- Exhibit H H.Ik Foi*thcoming Large Long-term Public Security Offerings for New Capital (Other than U. S. Treasury) 1/ Expected Proceeds from Forthcoming Large Issues Date of computation During month following date shown State and Corporate Other 2/ local govt. 1959 - Feb, 27 Mar. 31 Apr. 30 May 29 June 30 July 31 Aug. 31 Sept. 30 Oct. 30 Nov. 30 Dec. 31 I960 - Jan. 29 Feb. 29 198 396 2l*6 287 165 238 198 371* 385 226 210 207 301 292 550 251* 2kl 11*6 356 385 270 115 295 W5 210 255 Subsequent to date shown State and ' Corporate Other 2/ local govt. 279 1*76 31*6 332 272 305 517 691* 509 271 280 252 372 20 50 50 25 70 30 bS 35 1*81 761 517 761 500 1*06 1*02 1*70 336 1*85 51*5 310 385 20 50 50 25 * 70 30 1*5 35 Forthcoming Large Offerings, as of February 26 Issuer Type Amount Approximate date (millions of offering ,of dollars) CORPORATE *States Steamship Co. Imperial Investment Co., Ltd. General Motors Acceptance Corp. ^General Telephone Co. of Fla; MidmAmerican Pipeline Co. Chesapeake & Potomac Telephone Co. Northern Indiana Public Service Co. Louisiana Power & Light Co. *Coastal States Gas Producing Co. •KGeneral Telephone & Electronics Corp Commerce Oil Refining Corp. Kratter Corp. Ins.'bds. Coll. tr. bds. Deb. 1strafcg.bds. Sub. deb. & stk. Deb. 1stratg.bds. 1st mtg. bds. S.F. deb. Com. stk. Debl, bds. & com. Pfd. stk. 20.2 15.0 100.0 15.0 20.5 25.0 15.0 20.0 20.0 50.0 Ii5,0 26.0 Mar. 2 Mar. 3 Mar. 10 Mar. 11 Mar. 16 Mar. 16 Mar. 16 Mar. 30 Mar. Mar. Indefinite Indefinite STATE AND LOCAL GOVERNMENT Grand Rapids Expressway, Mich. Newark, New Jersey New York State Thruway Auth. Dade Co. Port Authority *State of Louisiana Rev.-S.T. G.O. G.O. Rev.-Ut. G.O. 18.0 15.0 50.0 19.2 15.0 Mar. Mar. Mar. Mar. Mar. 1 1 3 3 7 H-2 H.lii -ll*- Forthcoming Large Offerings, as of February 26 (Cont 'd) Issuer Type Amount Approximate date (millions of offering of dollars) STATE AND LOCAL GOVERNMENT (Cont'd) Cook Co., Illinois *State of Delaware State of California Ventura Port Dist., Calif. •sTriborough Bridge & Tunnel Auth. •^Jacksonville, Fla. Rev.-S.T. G.O. G.O. Rev.-Ut. Rev.-Ut. Rev.-Ut. 100.0 10.0 100.0 30.0 Mar. 8 Mar. 8 Mar. 9 Mar. April May 10 Deb. 3L5 Mar. 3 25.0 12.k OTHER Metropolitan Toronto, Canada 1/ Includes corporate and other issues of $15 million and over; State and local government issues of $10 million and over. 2/ Includes foreign government and International Bank ior Reconstruction and Development issues and non-guaranteed issues by Federal agencies. Note.—Deletions for reasons other than sale of issue: None. H.U* Exhibit I _%$_ Yields on New and Outstanding Electric Power Bonds, Rated Aa and A 1/ Date 1952 - 1958 High Low 1959 - January Februaxy 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 Feb. 25 26 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) I S M 3 5.50 (u/7/57) 3.00 (3/17/54) •» ; 11.97 *4.95 37 29 4.93 31 1:8 t 5.15 ¥> 5.15 42 li2 5.08 5.30 5.08 5.10 123 -15 23 A . 67 18 !:Sy 5 5*io 5.oo 13 5.65 60 5.25 5.1*0 35 5o 5.1*5 5.1*1* 5.30E/ 51 50 28 5.10 19 19 63 w» 116 *—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. 2/ 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. H.lii Exhibit J _i63 | Sources and Uses of Funds by Life Insurance Companies (in millions of dollars) Ca h U. S. Govt. ities Value of assets at end of period: 19$6 -Dec. • 1957 - Dec. 1958 - Dec. 1959 - Dec. Changes: 1957 - Oct. Nov. Dec. 1958 - Jan. Feb. Mar. Apr. May June July Aug. Sept. Oct. Nov. Dec. 1959 - Jan. Feb. Mar. Apr. May June July Aug. Sept. Oct. Nov. Dec. 1,273 1,29k 1,363 1,327 7,519 7,028 7,182 6,818 -17 22 138 -102 -4l 20 -18 81 -24 22 -18 1 -17 55 110 -81 -57 -14 -2k 10 3 -15 19 -31 22 33 99 13 -92 -181 166 . 16 -124 Ik -71 45 172 k4 k 11 19 -142 303 -71 -185 22 -16 11 13 95 -185 -22 -131 -168 Uses of Funds 1/ BusiState and ; ness local govt* Mortsecurgages ities 2/ ities 39,552 42,133 44,612 46,977 244 212 258. . 229 158 244 216 143 201 • 191 129 214 309 137 308 188 223 251 242 193 242 214 75 95 208 207 227 2,234 2,377 2,691 3)177 13 10 10 50" 12 24 14 29 34 24 37 20 26 32 12 53 30 66 49 79 23 94 30 .15 8 16 23 Total sources or uses 32,994 35,271 37,092 39,299 12,272 13,206 14,640 15,996 170 132 237 17% 137 142 115 118 102 128 139 142 186 145 291 119 139 136 116 135 157 214 174 211 251 240 315 6 110 7 139 76 103 39 164 148 45 154 72 72 88 334 -17 174 108 80 97 60 208 101 95 92 134 226 95,844 . 101,309 107,580 113,626 O 1/ Uses of funds represent net_changes in assets and therefore reflect net, rather than gross, uses. 2/ Includes securities of domestic corporations only. Source: Institute of Life Insurance. .. 429 394 \ 469 « 6581: 358 v 409 % 380 , 464 506 582 485 "• 453 587 • 1 476 913 565 r> 438 ? 362 : 485 498 ; # 6 : 728 ? 494 200 # 9 ' 499 j 722 ' :« H.l4 Exhibit K »17- Sources and Uses of Funds by Savings and Loan Associations (In mil]ions of dollars) Cash Value of Assets at End of Period 1956 - Dec. 1957 - Dec. 1958 - Dec. 1959 - Dec. 2,119 2,146 2,585 2,189 Uses of Funds 1/ U. S. Govt. Other Mortgages assets ities 2,782 3,173 3,819 4,471 Changes: 1957 - Oct. Nov. Dec. 1958 - Jan. Feb. Mar. Apr. May 35,775 40,049 45,627 53,087 Total sources or uses 2,199 42,875 2,770 48,138 3,108 55,139 3,725 63,472 Sources of Funds Net change BorrowOther savings ing 3/ capital 37,148 41,912 47,976 54,548 . 1,347 1,379 1,444 2,384 *,380 4,847 5,719 6,540 -18 4l6 16 480 361 103 87 -5 60 86 10 278 23 378 447 59 -65 614 431 253 125 923 -5 -434 -118 10 56 197 453 45 - 134 -375 -128 240 -19 13 173 407 376 159 212 488 338 -89 4 554 ' 155 102 661 112 119 362 187 403 37 1*2 12 681 528 511 -29 199 99 81 178 165 789 -311 -43 573 935 July 216 180 -290 42 -90 554 73 -37 Aug. 110 616 12 -70 360 205 564 51 Sept. 146 692 161 578 84 -77 45 447 Oct. 104 605 -107 58 137 507 174 739 Nov. 102 42 51 665 480 470 41 144 Dec. 212 528 1,072 847 335 37 -53 -437 1959 - Jan. 402 -181 -298 297 346 434 -55 93 Feb. -26 80 226 408 -56 427 578 97 Mar. -2 76 241 98 765 593 529 -5 Apr. -182 262 105 420. 151 705 779 97 May 26 604 23 178 981 63 754 314 10 840 245 1,091 1,090 -312 -4 313 July -108 126 104 -432 190 783 31 347 Aug. 22 118 211 17 -43". 727 723 394 Sept. 670 65 675 148 -53 83 -7 444 Oct. -68 621 88 648 136 113 7 399 Nov. 65 630 90 -34 459 . 140 483 57 Dec. 372 -29 479 770 1.177 219 -626 -52 ! 2/ Preliminary. " ' 1/ Uses of funds represent net changes in assets and therefore reflect net, rather than gross, uses. Savings and loan associations do not hold business securities and data on holdings of State and local government bonds, presumed to be small, are not available. 2/ Prior to 1957, data adjusted to include mortgage pledged shares as currently reoorted. 3/ Advances from Home Loan Banks and other borrowing. Digitized for Source: FRASER Federal Savings and Loan Insurance Corporation. - J Kxidbit L it. lit ~18~ Sources and Uses of Funds by Mutual Savings Banks (In millions of dollars) Cash Uses of Funds 1/ U. S. Busi- State & local MortGovt, govt. gages securr securities ities 2j ities Sources of Funds Other Total sources or uses Net change in deposits Other 30,032 31,695 3U,oia .34,977 3,279 3,it73 3,738, 3,952 Value of assets at end of 1956 - Dec. 920 7,971 1957 - Dec. 890 7,552 1958 - Dec. 921 7,266 Dec. 837 6,855 1959 Changes: -2lt 1957 - Oct. Nov. 6 rDec. 125 -6a 1958 - Jan. Feb. 63 Mar. 36 Apr. -47 MayJune -66 July Aug. -5 Sept, 18 Oct, -8 Nov. -38 Dec. 101 1959 - Jan.3/ •96 Feb. 18 ' Mar. li5 Apr. -lilt May 8 June h3 . July -79 Aug. 3 Sept. -2 Oct. -27 Nov. 20 Dec. 119 i -136 -136 -26 -21 >1 -85 -62 -36 11 19 -27 -92 -32 -2 119 S -itlt 13 -85 -13 -12 -32 -281 -85 - 21 3,523 it,331 it,973 it,82k 60 93 75 160 86 86 97 120 It 8 2! kl -16 6 -31 58 -20 -kl 13 -2 -55 -28 -2 669 682 725 7it6 -3 7 -7 It 6 it -19 2it 8 2 2 -3 -1 -rr -it a -33 10 19 It -1 19,529 20,951 23,039 2it,755 698 761 855 912 33,311 35,168 37,779 38,929 12it 100 litl 130 -itl 38 -9 25 20 9 -29 ItO 5 -28 29 29 -46 it3 -20 108 299 27o 251 iSk 195 253 193 198 181 195 ; i ?08 125 175 155 161 llt5 179 156 160 12! 119 32 38 -32 it5 39 -12 33 31 'kl -10 '!5 269 26U 152 251 237 . ItO 123 309 -rnr 216 330 -10 217 161 32 192 163 -283 65 205 3k 36 it05 1U9 336 93 181 300 88 llt3 267 g itl8 ~T2T~ -5k 72 -106 102 . 7 1 <-• 88 > —36 .-*f 108 -30 '$ ill 113 313 103 17 * -16 T 120 202 -5it 80 197 -187 -27 -2; 6 33k 86 i 112 I -3it| -96 f -92%, -129: 1/ Uses of funds represent net changes in assets and therefore reflect, net rather than gross, uses. 2/ Includes Canadian government and political subdivisions, International Bank for Reconstruction and Development, nonguaranteed Federal agency and other bonds as v;ell "as corporate bonds and stocks. 3/ Adjusted to eliminate the effect of a consolidation of a large savings bank a commercial bank. Digitizedwith for FRASER Source: National Association of Mutual Savings Banks and Federal Deposit Insurhttp://fraser.stlouisfed.org/ ance Corporation. Federal Reserve Bank of St. Louis February 29, I960 Part II - Canada. Treasury bill yields eased slightly in Canada last week but bond yields had a general upward tendency. Demand pressures from current and prospective offerings of bonds in the local government and corporate sectors produced a decline of about one point in bond prices• The declines in stock prices were resumed on the Toronto and Montreal exchanges. Money market conditions. Treasury bill yields declined only fractionally last week. The yield on the 3-month bill eased from U.62 per cent to U.61 per cent and the rate on the 6-month bill fell from U.92 per cent to U.86 per cent (see Table). The chartered banks were substantial net buyers during the week but holdings of the public declined. The rate on day-to-day loans averaged U.25 per cent for the week ending February 2k or about 0.15 per cent below the previous week's average. The spread in favor of the Canadian 3-month bill compared with the United States bill was reduced to O.Wi per cent; this spread was virtually offset by the 0.36 percent discount on the 3-month Canadian dollar (see Table). Bond market developments. Bond yields moved up during the week in the government and private sectors of the bond market under pressures of local government and corporate demands. On Thursday, spreads between comparable Canadian and United States securities were (figures in parenthesis refer to the preceding week): * O.Wi 0.51 0.77 1.05 1.27 per per per per per cent cent cent cent cent on on on on on a 91-day bill (0.£8) a 182-day bill (0.6l) an 8-year bond (0.77) a 20-year bond (1.05) a 35-year bond (1.35) In the government sector, bond yields moved up mostly about 5 basis points last week. The chartered banks continued to add to their bond holdings but the public reduced its holdings by an equivalent amount. There was no change in the Bank of Canada's net holding of bonds. The local government and corporate sectors reported continuing new-issue activity. A $6 million Newfoundland 6-l/U per cent debenture offering will have a 10-year maturity priced to yield 6.U9 per cent and a 20-year maturity priced to yield 6.52 per cent. A 6.0lt per cent yield is reported on a $7.5 million Saskatchewan bond. The one-to-five year maturities of a $5 million 6-l/U per cent serial issue of Hamilton, Ontario have been placed privately; the remaining $U«3 million of six-totwenty yqar maturities are being offered at a 6.31 per cent yield. A small . public utility bond is offered to yield 7 per cent and a 20-year secured note of a smaller instalment finance firm was privately placed at a 7-1A per cent yield. -20- The biggest offering of the current week is a $30 million 6-1/2 per cent debenture of the General Motors Acceptance Corp. of Canada. The 1975 maturity of this offering is priced to yield 6.60 per cent and a 1980 maturity priced to yield 6.63 per cent. Both tranches are noncallable for 10 years. On March U, the United States parent company is offering a $100 million debenture issue in New York with a 21-year maturity and press reports estimate a yield of 5 to $-1/8 per cent. In addition, the company has announced a $75 million private placement in the United States market. During 1959> cash raised through new security issues in Canada totalled $2,302 million compared to $3,050 million in 1958 (see Table). Government of Canada borrowings declined by $500 million and corporate bond borrowings by $U00 million during the year. There was an increase of $135 million in finance company paper compared to a reduction of $111 million in 1958. New"corporate stocks totalled $U07 million compared with $300 million in the preceding year. Stock markets. Stock prices resumed their declines last week. At the low point op Thursday, the Toronto industrial index was at lt91.72 compared to 1*98.35 a week ago and to 512.72 a month ago. The Montreal industrial index was at 289.8 compared to 292.9 a week ago and to 308.2 a month earlier. British Commonwealth Section Division of International Finance Board of Governors of the Federal Reserve System -21Selected Government of Canada Security Yields Discount on 3-fflo. Canadian dollar^ Spread between Canadian & U.S. rates Date 3-month Treasury blllsj/ Intermediate Govt, bonder' Longterm Govt,> bond2/ 1957 - High 1958 - High Low 1959 - High Low • li.08 3.65 0.87 6.16 3.25 U.81 U.52 3.31 5.30 U.U5 U.35 1U2 3.78 5.30 U.U1 1.19 0.U7 2.96 0.30 Feb. k 11 18 25 U.76 U.75 U.62' U.61 5.36 5.U0 5.36 5.U7 5.38 5.35 5.2U 5.31 1.06 1.12 1.05 1.05 0.81 0.90 0.58 0.UU L o ^ billaf/ 0.5U 0.U2 o.la 0.36 y Average yield at weekly tender on Biursday. . y Government of Canada 2-3A par cent of June 15, 1967-68. 3/ Government of Canada 3 - l A per cent of 1979. §/ U.S. Government 3 - l A per cent of 1978-83. Government of Canada 3 - l A per cent of 1979. . 5/ Spread between Canadian auction rate and composite market yield for the U.S. bill on the close of business on Thursday. 6/ Spread between 3-eonths forward and spot price of the Canadian dollar, expressed as per cent per annum, on Thursday. Canada: New Money Raised Through New Security Issues, Calendar Year, 1955 to 1959 (in millions of Canadian dollarsj" 1955 1956 1957 1958 1959 3U0 195 535 - 616 - 150 - 766 - 120 _ s - 70 1,382 ^130 1,252 H*3 582 725 211 225 320 26 782 5U0 227 801 _ 5 1,573 5U9 26U 976 3 1,783 8U0 1,667 1,832 6lli 3U0 651 3 1,609 - 131 1,U98 560 305 159 11 1,035 135 1,170 95 367 162 176 51U 689 90 U27 517 29 271 300 65 3U2 1,837 1,591 2,279 3,050 Government of Canada.: Bonds Bills and notes Total Non-Government: Provincial bonds Municipal bonds Corporate bonds Other bonds Total bonds Finance company paper Total Corporate stocks: Preferred Common Total Total financing 9k hB , w 2,302