Full text of H.16 Capital Market Developments : July 26, 1956

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Not for Publication d e c o t o o l l e d ^

g n M d m s

H.lU

July 26, 1956
CAPITAL MARKET DEVELOPMENTS

Three large corporate flotations produced a total of $150
million in new capital during the week ending July 20. A like number of large new State and local offerings—the largest single offering being $16 million in general obligations issued by the State of
Michigan—totaled only $35.5 million. Public reofferings in all instances were favorably received, with the bulk of each issue out of
the dealers' hands before*the close of the week.
The schedule for the week ending July 27 includes expiration of subscription rights to $52.7 million in common stock being
issued by Sperry Rand Corporation and new corporate debt issues aggregating $66.5 million. Largest public offerings of tax-exempt bonds
scheduled for the week are $15 million in serial bonds issued by the
Maryland Roads Commission and a $lit million issue of electric revenue bonds by the city of Jacksonville, Florida.
Bond yields - Yields on all categories of bonds moved
higher during the week. Municipal yields for selected grades of
bonds increased from 1 to 3 basis points. Corporate Aaa's in Moody's
series, which have sold for the past 10 weeks at yields varying between 3.26 and 3.27 per cent, edged upward to 3.28 per cent. Meanwhile, Baa-rated corporate bonds, which have maintained a slow but
constant climb from their 1956 low of 3.58 per cent in early March,
reached 3.79 per cent. Both Aaa and Baa corporate bonds are now 21
basis points above their lows in early March. The yield increase
in the higher quality securities occurred over an 8-week period in
March and April. Thereafter, these yields stabilized at slightly
below the May it high of 3.30 per cent. Baa bonds, on the other
hand, have established a succession of new highs throughout the
entire period.
Among new offerings, the Illinois.Power Company's Aa-rated
30-year first mortgage issue of July 2k was priced to yield 3.70 per
cent, 8 basis points higher than a comparable issue the preceding
week and 18 points above the offering yield on a similar issue
floated early in June.
Stock prices - On July 20, the SEC index of 265 common
stock prices reached a new high for 1956 of 292.8, 3.6 points higher
than the preceding week. Daily indexes since that time indicate continuing moderate increases.

Business Finance and Capital Markets Section,
Division of Research and Statistics,
Board of Governors of the Federal Reserve System.




EXHIBIT A

H I G H - G R A D E BOND YIELDS

Per cent per

CORPORATE A a a
I Moody',

Z\

/
\ x / A

;

iJ. /vrw.o.o »•..»

M

J

1953

S

D

M

J

1954

S

U. S.
Date

Corporate

D

M

J

1955

S

D

M

J

1956

long-term 2/

Old series

Spread between
State and
U.S.
New series local govt. (old series) and
Aaa y
Corporate!State and
Ilocal Aaa
(Per cent)

1953 - High
1954 - High
1955 - High
Low
1956 - High
Low
June 22
June 29
July 13
July 20

3.42
2.99
3.09
2.85
3.17
2.91
3.30
3.07

(6/19)
(1/9)
(1/8)
(4/23)
(12/23)
(1/7)
(5/10
(3/2)

3.26
3.27
3.26
3.27
3.28

3.15
2.78
2.74
2.1*4
2.94
2.62
3.08
2.80
2.88
2.92
2.90
2.95
2.98

(6/6)
n.a.
2.73 (6/25)'
n.a.
(12/26)i
1.98 (1/8)
-2.21 (6/10)
(1/9)
n.a.
(8/7)
1.90 (9/2)
(8/5) 3.03 (8/5)
2.3!* (9/8)
(1/7) 2.89 (6/10) 2.05 (5/26)
(1/20) 3.13 (V20)
2.51 (5/3)
(2/17) 2.92 (2/3)
2.17 (2/23)
2.98
3.00
2.98 .
3.01
3.05

2.32
2.34
2.38
2.38
2.h0

.38
.19
• 43
.32
• 34
.13
.40
.13

.8U
• 30
.61
.29
.70
.54
.68
• 45

.38.
.35
.36
.32
.30

.56
.58
.52
.57
.58

1/ Weekly average of daily figures. Average term of bonds included is 25-26
2/ Weekly averages of daily figures. The old series includes fully taxable,
marketable 2 1/2 per cent bonds due or first callable after 12 years through
September 1955, and those due or callable in 10-12 years thereafter; the average
term to first call of the bonds included declined from lU years in early 1953 to
11 1/2 years in early 1956. The new series is comprised of the 3 per cent bond
of 1995 and the 3 1/4 per cent bond of 1978-83.
3/ Thursday figures. Only general obligation bonds are included; average
term is 20 years.
Note.—Highs and lows are for individual series and may be on different dates
for different series.




LOWER - GRADE BOND YIELDS

CORPORATE Baa

/ *\
\

i

STATE AND LOCAL GOVT. Baa
/\
1 Moody ,
|

STATE AND LOCAL GOVT. REVENUE

Corporate
Baa 1/

Date

State and
local govt.
Baa 2/

State and
local govt,
rev. ]/

(Per cent)
1953 - High
Low
195U - High
Low
1955 - High
Low
1956 - High
Low

3.89 (9/18)
3.50 (1/2)
3.7k (1/8)
3.Wi (12/31)
3.63 (12/30)
3.L5 (I/Hi)
3.79 (7/20)
3.58 (3/9)

3.79 (6/25)
2.96 (1/8)
3.32 (1/7)
2.93 (8/5)
3.26 (12/29)
3.02 (1/6)
3.Uli (5/3)
3.20 (3/8)

3.27
2.71
3.00
2.72
2.99
2.76
3.12
2.89

June 22
June 29
July 6
July 13
July 20

3.75
3.77
3.78
3.78
3.79

3.26
3.26
3.31
3.3U
3.35

3.01
3.03
3.0U
3.05
3.08

(6/26)"
(1/2)
(1/1)
(8/13)
(12/30)
(1/7)
(U/27)
(2/2U)

included is 25-26 years.
2/ Thursday figures. Only general obligation bonds are
included; average term is 20 years.
3/ Friday figures. Average rating of bonds included is
between Baa and Aj average term is 20 years.
Note.—Highs and lows are for individual series and may
be on different dates for different series.




STOCK MARKET

Trading
Common
Stock market customer credit
stock
Stock price_ volume 2/
Customers1
index 1/
(millions yields y
debit bal- loans to
of shares) (per cent)
ances k/ "others" 5/
(Millions of dollars)
1953 - High
Low
195L - High
Low
1955 - High
Low
1956 - High
Low

167.1 (1/2)
HtU.O (9/18)
221. U (12/31)
156.5 (1/6)
270.7
217.1
292.8 (7/20
257. U (1/20)

IS® }

280.1
275.5
280.1
286.1
289.2
292.8

2.5 .
0.9
3.7
l.li
U.6
1.5
3.1
1.6 "

2.1;

1.8
1.8
2.0
2.3
2.3

2M5

1,665

5.75
5.15
5.33
U.20
ii.22
3.78
U.08
3.68

2,1*05
U,030
3,537
U,0li7
3,991

1,653
2,805
2,517
2,810
2,7UO

IS

U,0U7
It,009

2,810
2,786

SSI

feSS

780

66U

1,0U8
716
1,21*1
1,018

1,267
1,217
1,237
1,223
1,223
1,231
1,225

available.
1/ SEC index of 265 common stocks, weekly closing prices, 1939*100; converted
to 19u7-U9"100 by Federal Reserve. The conversion factor is 123.91.
2/ Averages of daily trading volume on the New York Stock Exchange.
3/ Moody's 200 common stocks; end of month figures.
£/ 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.
Wednesday figures for weekly reporting member banks. Excludes loans for
purchasing or carrying 0. S. Government securities at banks in New York and Chicago.
Weekly reporting banks account for about 72 per cent of loans to others.
Note.—Highs and lows are for individual serias and may be on different dates
for different series.




H.lii

Exhibit D
Corporate and State and Local Government
Security Offerings and Placements
(In millions of dollars)

1956
January
February
March

579
70U
790 .

1

Corporate 1955
1
5#
407
1,223

April
May
June

e/890
e/1,100
e/?60

478
886
687

July
August
September

e/1,150

, 597
6a
670

October
November'
December
1st quarter
2nd quarter
' * 3rd quarter
- 4th quarter
Year

1,162 ^
6#
900
2,073
e/2,750

2,165
2,052
1,911
2,695
• 8,821

New capital

State and local
1 1955 1 1954

1954

1956

547
426
635

hOh
. 696
390

535
312
538

396
411
565

497 '
656
842

377
e/500
e/730

1*27
350
6ia

734
748
853

909
335
747

e/350

470
249
406

279
261
649

919
658
408

594
423
877

1,385
1,148
1,121
1,981
5,911

1,372
2,334
1,188
.2,894
'6,789

1,003
290
60k
1,608
1,995
1,991
1,896
• 7,190

1,490
e/1,607

Excluding finance companies 2/
1st quarter
- 2nd quarter
3rd quarter
4th quarter
Year

1,617
e/2,550

1,727
1,870
1,434
2,554
7,569

1,527
1,927
1,911
1,792
7,158

r
e/ Estimated.
'
'
1/ Includes $637.2 million AT&T convertible debenture issue.
2/ Total new capital issues excluding offerings of sales and personal finance
companies,

Note.—Details may not add to totals due to rounding.




H.lU

Exhibit E
Large Public Security Issues for New Capital
(Other than U. S. Treasury).!/
Proceeds of Large Issues Offered
(Millions of dollars)
Month

Corporate

195# - June
July
August
September
October
November
December
195*6 - January
February
March
April
May
June

State and
local government

Other 2/

to

175
101
Lo5
328
805
221
#3
95
212
278
395
623
185

278
65

23k

716
itOl
227
192
Wi
163
157
233
463

25
50

50
20

Large Individual Issues Offered July 1 through 20
Issuer

Type 3/

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

CORPORATE
Florida Power Corp.
Pacific Gas & Electric
Tennessee Gas Trans.
American Tel. & Tel. Co.
Union Electric Co.
Superior Oil Co.
Inland Steel Co*

1st mtg.bds. 20.0 .
Common stk. 36.6
Deb.
30.0
Deb.
250.0
1st mtg.bds. ko.o
Deb.
60.0
1st mtg.bds. 5 0 . 0

1986

3 7/8

3.82

A

1977
1990
1986
1981
1981

h 1/2

U.50
3.73
3.62
3.75
3.U7

Baa
Aa
Aa
A
Aa

3 7/8
. 3 3/k
3 3A
3 1/2

STATE & LOCAL GOVERNMENT
Commonwealth of Mass.
Puerto Rico Water Res.
Auth.
State of Michigan

G.O.

38.5

Elec.rev.bds. 22.0
G.O.
16.0




1957-2005

2.63

1.90-2.80

Aa

1958-93
1959-79

n.a.
2.81

2.60-3.75
2.00-2.75

Baa
Aa

H.lU

E-2 '
Large,Individual Issues Offered July 1 through 20 (Cont'd)

Issuer

Type 3/

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

STATE & LOCAL GOVERNMENT
(Cont'd)
Tulsa, Oklahoma, Ind.
School District
Dearborn, Michigan,
School District

G.O.

5.5

1958-71

2.62

2.10-2.60

A

G.O.

14.0

1956-73

2.93

2.00-3.00

A

OTHER
None
n.a.—Not available.
1/ Includes corporate and other security offerings of $15 million and over;
State and local government security offerings of $5 million and over.
2j Includes foreign government and International Bank for Reconstruction and
Development issues.
3/ In the case of State and local government securities, G.O. denotes general
obligation; Rev., revenue bonds; G.R., general obligations additionally secured
by facilities revenues; L.L., limited liability obligations secured by pledge of
designated revenues.




Exhibit F

li.lk

Forthcoming Large Public Security Offerings for New Capital
(Other than U. S. Treasury) 3/
Expected Proceeds from Forthcoming Large Issues
Subsequent to
date shown
date shown
State and
Corporate State and Other 2/ Corporate local govt. Other 2/
local govt.
1955 - June 30
July 29
Aug. 31
Sept. 30
Oct. 31
Nov. 30
Dec. 30
1956 - Jan. 31
Feb. 29
Mar. 30
Apr. 30
May 31
June 30

67
1*07
222
805
202
215
70
176
123
380
568
198
137

3kh

100
18U
m

330
205
121
327
220
132
173
332 '
81

50

830
1,135
920
909 '
la 2
230
85
376
233
1,013
- 818
m

.

—

567

1,81*5
2,018
1,971
2,205
1,650
756
618
917
785
811
832
9kl
690

50

Forthcoming Large Offerings, as of July 20
Issuer

Type

Amount
Approximate date
(millions
of offering
of dollars)

CORPORATE
Illinois Power Co.
- Sperry Rand Corp.

1st mtg. bds.
Common stk.

20.0
52.7

Food Machinery and Chemical Corp.
Champion Paper & Fibre Co.
Michigan Wisconsin Pipe Line Co.
^Consumers Power Co.
Consolidated Natural Gas Co.
•^American Tel. & Tel. Co. 3/

Deb.
Deb.
1st mtg. bds.
1st mtg. bds.
Deb.
Common stk.

30.0
16.5
25.0
UO.O
30.0
575.0

J. P. Stevens & Co.
CIT Financial Corp.
Pacific Finance Corp.

S. F. deb.
Deb.
Deb.

28.7
75.0
25.0

G.O.
Elec. rev. bds.
G.O.

lU.o

July 2U
July 25
(rights expire)
July 26
July 26
August 1
August
Summer
.November
(rights expire)
1956
1956
1956

STATE AND LOCAL GOVERNMENT
Maryland State Roads Commission
Jacksonville, Florida
Oklahoma City, Oklahoma




15.0

July 2k
July 2k
July 25

H.lU

F-2
Forthcoming Large Offerings, as of July 20 (Cont'd)
Issuer

Type

Amount
Approximate date
(millions
of dollars) of offering

STfTE AND LOCAL GOVERNMENT (Cont'd)
-x-Salt Lake City, Utah, School Dist.
Milwaukee Co., Wisconsin
New Jersey Highway Authority
New York State Thruway Authority
Jacksonville Expressway Authority
Florida State Turnpike Authority
Oklahoma Turnpike Authority
Pennsylvania Turnpike Commission
Washington State Toll Bridge Auth.
Inter-American Center Auth., Fla.

G.O.
G.O.
Rev.
G.O.
Rev.
Rev.
Rev.
Rev.
Rev.
Rev.

7.5
8.8
25.0
50,0
1*2.0

185.0
65.0
62.0
227.0
70.0

July 25
July 30
Summer
Summer
September
Fall
1956
1956
1956
1956

OTHER
None
Included in table for first ,ime.
1/ Includes corporate and other issues of $15 million and over3 State and
local government issues of
million and over.
2/ Includes foreign government and International Bank for Reconstruction
and Development issues.
3/ Subject to stockholders' approval on September 5, 1956.




H.lU

Exhibit G
Yields on /few and Outstanding
Electric Power. Bonds, Rated Aa and A 1/

Date
19$2 average.
1953 average
19Sh average
1955 average
1956 - January
February
March 8
16
23
30
April U

Aa-rated offering yields A-rated offering yields
Amount above
Actual
Actual I Amount above.
(per cent) seasoned- yields (per cent)Jseasoned yields
f(basis points)
(basis points)
3.16
3.16 ,
3.03
3.23
None
*3-15
3.19

13
16
3
. 9

3.35
3.78
3.12
3-33

12
26
-3
12

—*

None
3.23

-5

3
5

3.37

18

3.77

hO

3.53
3.52

19

h
11

25
May 9
16
.

2k

June 8
20

July 3
18

3.62

3-35

7

3.55
3.57
3.60
3.67

25
23
26
29

3.80
3.73

32

3.75
3.82

28

2k

18

•

-26

27

—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. The number of new issues included in the
monthly averages varies from 2 to U except for October 19 5U when 6 A-rated
issues were included. Average maturity for the seasoned issues varies from 26
to 28 years.