Full text of H.16 Capital Market Developments : January 5, 1959

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L

! £> "8 ~

.

.

Not f o r P u b l i c a t i o n
DECONTROLLED AFTER SIX

MONTHS

H.lii

January 5, 1959
CAPITAL MARKET DEVELOPMENTS

Tae volume of new public s e c u r i t y f i n a n c i n g i s expected to
i n c r e a s e s u b s t a n t i a l l y t h i s week a f t e r being seasonally small during
t h e holiday p e r i o d . The only l a r g e corporate o f f e r i n g l a s t week was
a common stock i s s u e f o r $17 mill ion, s u b s c r i p t i o n r i g h t s f o r which
expired on December 30. No l a r g e S t a t e and l o c a l government bond
i s s u e s were sold. This week, corporations a r e expected t o s e l l l a r g e
i s s u e s t o t a l i n g §135 m i l l i o n . S t a t e and l o c a l government i s s u e s
amounting t o $218 million a r e also scheduled f o r s a l e . One of t h e
two S t a t e and l o c a l government i s s u e s expected t h i s week i s t h e $200
m i l l i o n revenue i s s u e by New York S t a t e Power A u t h o r i t y , which was
f i r s t t e n t a t i v e l y ..scheduled f o r s a l e l a s t October.
Bond y i e l d s - Changes i n y i e l d s on outstanding bonds were
mixed, but minor during the week ending January 2; Yields on corporate
bonds increased s l i g h t l y , while y i e l d s on S t a t e and l o c a l government 1
bonds remained s t a b l e . Yields on U. S. Government bonds declined
s l i g h t l y . At the end of 1958, corporate Aaa-rated bond y i e l d s were
h2 b a s i s p o i n t s higher than a y e a r e a r l i e r , while y i e l d s on t h e Baar a t e d bonds were 11 b a s i s p o i n t s lower. Yields f o r high-grade S t a t e and l o c a l government bonds were 28 b a s i s p o i n t s higher a t t h e end of
1958, while t h o s e f o r lower-grade S t a t e and l o c a l government, bonds
were 18 b a s i s points higher than a year e a r l i e r . Yields on U. S.
Government o b l i g a t i o n s were about 60 b a s i s p o i n t s h i g h e r .
January s e c u r i t y volume - The January volume of corporate
i s s u e s f o r new c a p i t a l i s expected to totjal $700 m i l l i o n , one-fourth
smaller than the estimated December volume, but only s l i g h t l y below
the volume l a s t January. Large p u b l i c l y - o f f e r e d i s s u e s a r e expected
t o t o t a l $250-$300 m i l l i o n .
- S t a t e and l o c a l government s e c u r i t y i s s u e s f o r January a r e
estimated a t $550 m i l l i o n . This volume would be more than o n e - f i f t h
l a r g e r than t h e December e s t i m a t e , but n e a r l y o n e - t h i r d smaller than
the volume i n January 1958. The number of l a r g e i s s u e s now scheduled
f o r s a l e t h i s ; month i s r e l a t i v e l y small. A f t e r the s a l e of the New
York S t a t e Power Authority i s s u e , however, more i s s u e s may be added
t o t h e calendar, which could r e s u l t i n a l a r g e r January t o t a l than
c u r r e n t l y expected.
Stock p r i c e s - Stock p r i c e s increased sharply l a s t week.
Standard and Poor's index of 500 common stocks closed a t 55. Uj on
January 2, 2 . 5 p e r cent higher than a week e a r l i e r . Closing the end
of the year a t 55.21 on Wednesday, p r i c e s were n e a r l y t w o - f i f t h s
higher than a t the end of 1957. Trading a c t i v i t y was heavy l a s t week,
but somewhat smaller than e a r l i e r i n December. The daily, average
t r a d i n g volume in 1958 was 3.0 m i l l i o n shares a day as compared with only
2.2 m i l l i o n in 1957.




H.lii

More d e t a i l e d information concerning r e c e n t c a p i t a l market
developments i s presented i n the a t t a c h e d e x h i b i t s .

. C a p i t a l Markets Section,
Division of Research and S t a t i s t i c s ,
Board of Governors of t h e Federal Reserve System.




EXHIBIT A

HIGH-GRADE B O N D YIELDS

LOWER - GRADE B O N D YIELDS




H.lk

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

Date

u. S. Govt.
long-term 2 /

S t a t e and
l o c a l govt.
V a y

Spread between
U. S/ Govt, and
Corporate State and
Aaa
l o c a l Aaa

(Per cent)
1953
1954
1957
1958

-

High
Low
High
High
Low

Dec.
Dec.
Dec.
Dec.
Jan.

5
12
19
26
2 2/

4.14 (9/27)
4.13 (10/10)
3.55 (5/2)

3.19
2.1*5
3.76
3.84
3.07

4.06
4.06
4.07
it. 09
4.10

3.73
3.77
3.83
3.81
3.83

•

(6/5)
(8/6)
(10/18)
(12/26)
(4/25)

2.73
1.90
3.1*5
3.31
2.64

(6/25)
(9/2)
(8/29)
(9/11)
(5A)

.60
.51
.22

3.H;
3.13
3.11
3.12
3.12

.33
. .29
.24
• .25
.27.

.83
.30
.17

'

,:E

'

.72
.72
.71,

Lower-grade Bond Yields
Corporate
Baa 1 /

Date

State and
l o c a l govt.

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

(Per cent)
1953
1554
1957
1958

-

High
Low .
High
High
Low

Dec.
Dec.
Dec.
Dec.
Jan.

5
12
19
26
2 2/

|

3.89
3.44
5.10
4.96
It. 51
4.85
4.81:
4.85
It. 86
It. 87

(9/18)
(12/31)
(11/29)
(1/3)
(7/11)

3.79
2.93
It.51
It.34
3;64
4.10
4.10
4.10
4.10
4.10

(6/25)
(8/5)
(8/29)
(9/11)
(5/1)

.69
.52
. 1.27.1.28'
.77
.79
.78
.78 . ,
.77
.77

1.21
.96
1.21
1.11
,93 .
: .96
.97
.99
.98
.98

2/ 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 daily f i g u r e s . The s e r i e s includes bonds due or c a l l a b l e in
10 years or more.
2 / Thursday f i g u r e s . Only general obligations bonds are included; average term
i s 20 years.
Note.—highs and lows are f o r individual s e r i e s and.may be on d i f f e r e n t dates f o r
different series.
-




J
STOCK MARKET
Millions of Dollars




1941-43 Averogo*IO

Exhibit D
Table f o r Exhibit C
Stock Market
Date

Stock price
index 1 /

Trading
Common
volume 2/
stock
yields 3 /
(millions
of shares) (per cent)

Stook market customer credit
Customers1
Bank
debit bal- loans to
ances k/ "others" 5 /

Total

(Millions of dollars)

1953 - High
Low
1951* - High
Low
1955 - High
Low
1956 - High
Low
1957 - High
Low
1958 - High
Low

26.51*
22.95
35.98
21.93
15.89
35.28
h9M

(1/2)
(9/13)
(12/31)
(1/8)
(12/9)
(1/lii)
(8/3)

1^9.08
39.1*8
51.11
1*0.37

(7/12)
(12/20)
(12/26)
(1/10)

November
December,
Dec. 19
Dec. 26
Jan. 2 jo/

52.50
53.1*9
51*. 07
51*. 11
55.U*

1*3.22 (1/20)

2.5
0.9

H

1.5

S

1*.2

1.1*
1*.9
1.7

l*.l

3.6
3.7
3.0
3.8

a

1*.32

5.82

si

i : S

780
66U
l,0l»8
7li6
1.2U-

it.ia

i s
U,030
3,537

Wk
3.91
£.72
3.30
lt.58

U.U23
3,551i

3,215
2,JU87

1,317
1,051

li,to3
n.a.
n. a.
n.a.

3,215

1,178
1,203
1,193
1,203

1*.08

3.82

3.1*2
3.35
3.30
3.30
3.22

2,805
2,517
2,823
2,7UO
2,887

2,182

1,018

1,267
1,155

n.a.—Not available.
ja/ Preliminary.
™
1/ Standard and Poor's composite index of 500 common stocks, weekly closing
prices, 19l|l-U3"10. Monthly data are averages of daily figures rather than of
Fridays 1 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 i t s high or low.
It/ End of month figures for member firms of the New York Stock Exchange which
c a n y margin accounts; excludes balances secured by U. S. Government obligations.
£ / 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.

4




Exhibit E

H.14

Long-term Corporate and S t a t e and Local Government
Security Offerings and Placements
( I n millions of d o l l a r s )

1959
January
February •
March

1

e/700
_

April
May

New Capital
Corporate 1/
S t a t e and Local 2/
1958
1959
1
1957
1
1958
1
1957
723
#1
i, W /

1,060
1,065
1,320

17151
600
881

1,453

July
August
September

1,102

October
November
December
1st
2nd
3rd
4th

quarter
quarter
quarter
quarter

1 s t half
Three q u a r t e r s
Year

e/550

-

812
953
511

742
572
506

798
895
551

765
546
393

'

1,144

1,003
924
^
973

806
403
650

529
584
431

jg/815
e/600
e/95o

1,090
789
1,076

455
2/461
e/450

#8
633
698

3,13$
2,622
2,784
e/2,36^

3,4#
3,119
2,899
2,954

2,276
i'J&
e/1,366 •

1,820
1,704
1,544
2,029

5,757
8,5a
e/10,906

6,59k
9,493
12,447

4,520
6,379
e/7,745

3,524
5,069
7,099

,
-

Excluding f i n a n c e companies 4 /
1st
2nd
3rd
4th

quarter
quarter
quarter
quarter

<7>

Year

2,891
2,#3
2,753
a/2,290

3,237
2,%%
2,582
2,810

e/10,520

11,518

e/ Estimated.
2 / Preliminary.
1 / S e c u r i t i e s and Exchange Commission estimates of
proceeds.
2/ Investment Bankers Association of America estimates of p r i n c i p a l amounts.
3/ Includes $718.3 m i l l i o n AT&T convertible debenture i s s u e .
%/ Total new c a p i t a l i s s u e s excluding o f f e r i n g s ' o f s a l e s and consumer f i n a n c e
companies.




Exhibit F

H.lli

Other Security Offerings 1 /
(In millions of dollars)
Long-term
Foreign government 2/
Federal agency 3/
1956
1958
1 1957
1 1956
1
1 1957
" Januaiy
February
March
April
May
June
July
August
September
October
November
December

196
53

81*
1*9
30

37

139
198
120

123
1*8
1*2

50
. 95

9
5
17

28
7
30

2
39

161*

—

—

58

1*
60
1

1*1*
5
21

Year

1,163
251

8

—

523
—

220

April
May
June
July
August
September
October
November
December

60

60

.11

—

100
—

169

Federal agency 3/

233
1*60
273

326
1*55
11*7

196
357
21*9

371
208"
114*

638
1*30
505

357 •"
351*
- 261*

205
337
153

125
252
176

209
161
329

336
1*69
501

' 323
311*
260

195.
207
179

1*37
206
330

221*
370
512

222
1*25
273

289
1*23
369

272
272
252

,231
B/£I£

303
9k
1*59

29l*
328
11*8

3,271*

2,706.

Year

/

.

- .

109

215

572

Short-1berai
State and l o c a l government It/
January
February
March

—

—. ;

125

—

. 300

507

1956

,72

1*51*
111*

1,238

380
220 v
283

116

255

1*07
222
128

5,5143

3A57

e / Estimated.
p/ Preliminary.
1 / Data presented in t h i s exhibit d i f f e r from those in Exhibit E in that refunding issues, as well as new capital issues, are includedi. Long-term s e c u r i t i e s are defined as those maturing in more t K n one year.
2 / Includes securities off »red 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 Commission; short-term, Federal Reserve.
Ij/ 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. In some Instances PHA notes included may have a somewhat
Digitized
for
longer FRASER
term than one year. Source: Bond Buyer.



li. Hi
Large Lun/'.-t.iM'iii I'iiM i r .\ . i:wri.l;,'
f o r llvu Capital
(Ul.li.-v l.ti.ui II.
Tix-atjury) \J
Proceed:: of Largo- J.y:;uu:J Offered
( M i l l i o n s of d o l l a r s )

Corporate

Month

S t a t e and
l o c a l government

it 20
399
316
60S
1,093
725
356
261
771
#9
825

1957 - November
December
1958 - January
Kebruaiy
March
April
May
July
August
September
October
November

.151

3Wi
Wi
1,10
553
182
300
#5
195
275
109
280
172
259

227

Other 2 /

1,357
266
653
I6h
86

hi

.10 •
209
100

Large I n d i v i d u a l Issues Offered during December

Issuer

Type]/

Amount
Coupon
Offering
(millions
Maturity
yield
net .interof
dollars)
e s t cost

P a c i f i c Gas & E l e c t r i c Co. 1 s t r e f . m t g . b d s . 65.0
Com. s t k .
26.i,
Public Service E l e c . & Gas
1 s t mtg. bds.
Potomac E l e c . Pwr. Co.
25.0
P. L o r i H a r d Co.
Com. s t k .
2L.8
Southern B e l l Tel. & T e l .
Deb.
70.0
P h i l a d e l p h i a Elecw Co.
1 s t r e f . mtg t bds .50.0
Arvida Corp.
Com. s t k .
27.5
P a c i f i c T e l . a. T e l . Co.
Com. .stk.
16.o
STATE AND LOCAL GOVERNMENT
S t a t e of Ohio
S t a t e of C a l i f o r n i a
East Baton Rouge P a r . , La.
S t a t e of Dew York
Chicago 13d. of Educ., I l l - f




0 . .0.
G..0.
• G..0.
(1,.0.
0..0,

30.0

100.0
?2.5
5i.o
25.0

1990

Kating

Aa

1/2

i,.50

1993

5/o

i..55

Aa

1993
1986

15/0
I 3/8

1.55
W8

Aaa
Aaa

1959-73
1959-85
1 9 f0 - 7 9
1960-79

17-1-78

i,

2,.72

3 . ,60
3 . ,60

1.60-2.80
1.80-3.65
2.00-3.60

1.70-3.00
2.5^-3.50

Aaa
Aa
A
A.'? a
A

H.lU

,

0-2

Large Individual Issues Offered during December (Cont'd)

Issuer

OTHER
Republic of Austria
Union of South Africa
Metro. Toronto, Canada

Type 3/

Amount
Coupon
'millions
rate or Offering
Maturity net i n t e r - y i e l d
Rating
of
dollars)
est cost

7

Bonds
Bonds
S.F. deb.

25.0
25.0
28.6

1973
1961-68
1959-88

5 1/2
5, 5 1/2
h lA

5.91
5.00-5.70
3.50-L.80

A
.A

n.a.—Not available.
1 / Includes corporate and other security offerings o f \ # l 5 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 nori-guaranteed issues by federal agencies.
2 / 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 s o l e l y by lease payments.




H.1U
Forthcoming l a r g e Long-term P u b l i c S e c u r i t y O f f e r i n g s f o r New C a p i t a l
(Other t h a n U. S. Treasury) 1 /
Expected Proceeds from Forthcoming Large I s s u e s
Date of
computation

Nov. 29
Dec. 31
J a n . 31
Feb. 28
Mar. 31
Apr. 30
May 29
June 30
J u l y 31
Aug. 29
S e p t . 30
Oct. 31
Nov. 28
Dec. 31

During month f o l l o w i n g
d a t e shownCorporate
S t a t e and other 2 /
l o c a l govt.
+
383
378
k98
1,123
555
356
266
768
l6l
785.
113
20k
301
210

363
3 kS
370
131
298
193
177 ,
225
55 •
2kl
295
258
229
261

18
150
110
150
36

71
75

Subsequent t o
d a t e shown
S t a t e and o t h e r 2 /
Corporate
l o c a l govt.
558
56h
1*87
3W.
330
k93
208
235
125
135
52k
675
683
515

1,193
i , m
1}M
1,208
670
?61
k6k
1,01*8
381
91k
216
326
•
ijOl
370

63
165
110
150
36

71
75

Forthcoming Large O f f e r i n g s , a s of January 2
Issuer

Type

Amount
Approximate d a t e
(millions
of o f f e r i n g
of d o l l a r s )

CORPORATE
Washington Water Power Co.
•^Household Finance Corp.
San Diego Gas and E l e c t r i c Co.
C. I . T. F i n a n c i a l Corp.
Commonwealth Edison Co.
Southern N a t u r a l Gas Co.
Champion Paper and F i b e r Co.
^Consolidated Edison Co.
Consumers Power Co.
Montana Power Co.
Commerce Oil R e f i n i n g Corp.
I n d i a n a and Michigan E l e c t r i c Co.




1 s t mtg. b d s .
S.F. deb.
S . F . deb.
Deb.
Deb.
1 s t mtg. p . 1 . b d s .
Conv. deb.
Conv. deb.
Pfd. s t k .
1 s t mtg. b d s .
Deb., bds. and common
1 s t mtg. b d s .

15.0
30.0

15.0
75-0
20.0
35.0
20.0

59.8
15.0
20.0
kS.O
20.0

Jan. 8
Jan. 8
Jan.- 9
Jan. 9
Jan. Ik
Jan. 21
Jan. 29
( r i g h t s expire)
Feb. 13
( r i g h t s expire)
Winter
Winter
Winter
Winter

'h.li;

-

h-2

Forthcoming Large Offerings, as of January 2 (Cont'd)
Issuer

Type

Amount
Approximate date
(millions 1 of o f f e r i n g
of dollars)

STATE AND LOCAL GOVERNMENT
New York State Power Authority
Los Angeles Dept. of Wtr. and Pwr.,
California
Sacremento Mun. Ut. D i s t . , C a l i f .
*Dallas, Texas
Chesapeake Bay Ferry Commission
Detroit-Metro. Expres sway
Massachusetts Port Authority

Rev,,-Ut.

200.0

Jan. 6

Rev. -Ut.
Rev. -Ut.
Rev, -Ut.
Rev. -Ut.
Rev. -Ut.
Rev. -Ut.

18.0
25.0
17.6
lhk.0
35.0
75.0

Jan. 7
Jan. 15
Jan. 19
Winter
Winter
Winter

Deb.

75.0

Jan. lii

OTHER
(-Province of Ontario

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




"

H.lli

Exhibit I
Yields on New and Outstanding
E l e c t r i c Power Bonds, Rated Aa and A 1 /
Date

1952 - 1957
High
Low
1958 - January
February
March
April
May 7
13
15
16
20
21
22
28
June 10
17
25
July 2
9
18
23
Oct. 7
15
28
' 29
Dec. 17

Aa-rated offering y i e l d s
A-rated offering y i e l d s
Amount above
Amount above
Actual
Actual
(per cent) seasoned y i e l d s (per cent) seasoned y i e l d s
(basis points)
(basis points)
5.00(8/14/57)
2.93(3/31/54)

87
-3

5.50(11/7/57)
3.00(3/17/54)

*3.60..
3.892/
4.08
3.91

-8
22
35
18

3.962/
U.07
4.16
4.01
4.00

3.90

21

3.85
3.85

16
16

3.85
3.82
3.95

17
12
24

4.00
4.10
4.10
4.57
4.50
4.4o?/
4.42^
4.44

25
28
29
25
22
12
14
23

'

123
-15
3
9
-1
8
• 3

4.07
4.35

4
32

4.00
3.95

-1
-6

3.982/

1

W5%/

31

•—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 y i e l d figure and the amount above
seasoned y i e l d s are averages of offerings during the indicated period and of the
differences between these new o f f e r i n g y i e l d s and y i e l d s on seasoned i s s u e s of
similar q u a l i t y f o r 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 f o r
refunding a t a lower coupon rate. Monthly averages so marked include one or more
i s s u e s with such a provision. Other issues have no such provision.