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DECONTROLLED AFTER SIX MONTHS
Not for Publication

JUN 1,3 i960
FEDERAL r ' " f I A N X

June 10, i960

H.lli

HftPTTAT. MAPKira DEVELOPMENTS
IN THE UNITED STATES AND CANADA
(Including Quarterly Review of Corporate Security
Financing in the United States and Monthly Review
of Financial Developments in the United Kingdom)
Part I - United States
The volume of large public security financing for new
capital is expected to be somewhat smaller this week for corporations
and somewhat larger for State and local governments than in other
recent weeks. Last week, ending June 10, large corporate issues with
aggregate proceeds of $130 million and State and local government bonds
totaling $58 million were sold. This week, one corporate bond.issue
for $50 million and State and local government bond issues amounting to
$126 million are expected to be sold. A Canadian provincial issue for
$30 million is also scheduled for sale.
Long-term bond yields - Yields declined last week for all
categories of outstanding bonds, except those for high-grade State and
local government bonds which remained stable. Yields for high-grade
corporate and U. 5. Government obligations are currently at their low
levels reached earlier this year3 those for State and local government
and lower grade corporate bonds are still 7-10 basis points above their
i960 lows.
Short- and intermediate-tern interest rates - Money market
rates also generally declined last week. The discount rate at the
Federal Reserve Bank of New York was lowered on Thursday to 3-1/2
per cent. Yields on Treasury bills and intermediate-term issues continued to decline substantially with those for both 3- and 6-month
bills reaching the lowest level this year. The rate for directly placed
finance company paper, 3 to 6 months, also declined further as early
last week the rate was changed from 3-3/b to 3-1/2 per cent.
Stock prices - Standard and Poor?s index of stock prices
increased substantially last week, closing at 57.97 on June 10. Prices,
at the highest levels since mid-January, are currently ii per cent below
the high reached in the first week this year and 8 per cent higher than
the low recorded in early March.
FNMA secondary market operations - Secondary operations of
fNMA in May continued to reflect some further easing in mortgage market
conditions. Offerings to and purchases by EMMA"were down again. The modest
volume of FNMA sales was uie largest in k(j montns, and at $3.6 million
exceeded the totalTfor all of last year.




Coiporate Security Offerings
in the First Quarter i960
Net proceeds for new capital - Corporate security offerings
for new capital totaled $2.2 billion in the first quarter of 19 60,
about the same as a year earlier, but one-third smaller than the very
heavy volume sold in the first quarters of 1958 or 19^7. (Securities
sold to refund outstanding issues were snail in volume—#82 million—
but somewhat larger than a year earlier.) Although the total of net
proceeds for new capital was little different from last year, offerings by manufacturing, electric, _gas and -water utilities, transportation
and commercial and other companies were in substantially smaller volume.
Issues sold by communications, financial and real estate and mining
companies were larger.
Financial and real estate companies offered securities with
proceeds of $.6 billion, nearly one-half larger than a year earlier
and the largest first quarter volume for these companies since 1956.
The increase this year reflected a much larger number of moderate-sized
($L5-$50 million) issues sold by sales and consumer finance companies.
New financing by electric, gas and water utilities, amounting to $.6 billion, was one-fourth smaller than in the first quarter
of 1959. A further increase in internal funds, principally depreciation
allowances, and substantially smaller net repayments of bank loans this
year than in the first quarter of 1959, made it possible for these
companies to finance about the same amount of plant and equipment
expenditures with a smaller volume of long-term external financing.
New issue volume by manufacturing companies was $.3 billion.
This volume was one-tenth smaller than in the first quarter last year
and the smallest volume of security sales by manufacturing companies
since the first qua rter^of 195b. The amount of securities sold was
moderate for all types of manufacturers. Industries selling a larger
dollar volume of issues this year than last included electrical
machinery, fabricated metal products and textiles and apparel; chemical
and food manufacturers sold less than last year.
Total gross proceeds - Gross proceeds from corporate offerings, which include refunding issues and costs of flotation were #2.3
billion in the first three months of i960, about the same as a year
earlier.
Publicly-offered issues totaled §1.1* billion, slightly
less than in 1959, while private placements amdunted to nearly $.9
billion, slightly more.
The volume of bond financing was nearly one-tenth larger
this year than last. Stock financing was smaller with that for common
stock issues being almost one-third smaller and preferred stock one-sixth
smaller than a year earlier. Financing through convertible bonds




R.lU

Table 1
'Corporate Security Offerings for New Capital
by Type of Business of Issuer
First Quarter 1956-60
(Net proceeds in millions of dollars)

Total corporate offerings
Refunding
New capital

I960

1959^

1958

1957

1956

2,233

2,232

3,273

3,1*93

2,209

82
2,151

28
2,201

13k
3,139

3,W

Vl3

Manufacturing
Electrical machinery
Fabricated metal products
Chemicals
Textiles and apparel
Nonelectrical machinery
Stone, clay and glass products
Foods
Rubber products
Other transportation equipment
Motor vehicle and equipment
Other 2/

318
92
25
22
21
18
13
12
. 11
11
10
80

Electric, gas and water utilities

598

813

1,091

Communication

186

105

867

31

52

Railroad

17
33
6
19
y
3h
h
7
1/
213

, J?

lB
. 23

51j£

1^297

h
67
6
58
Ik
3
1
k
15
299

51
21*
91
57
17
6
36
51*
920

106
2,102
606
13
2

18

68
53

,2
lli
1*0

57
21*9

981

1*51

95

' 112

85

428 ll*l

Other transportation

118

239

90

90

1*9

Commercial and other

172

197

1*6

67

85

Mining

115

26

53

Financial and real estate
Sales and consumer finance
Other

H29

"

185 20?
6lk

jjU
209

382
2H0
lk2

83
387
m
179

r/ Revised.
'
1/ Less than #500,000.
2/ Includes small volume of issues of foreign manufacturers not further
classified.
Note.—Details may not add to totals due to rounding.
Source.—Securities and Exchange Commission and Federal Reserve.




1*6

638
183

totaled $.1 billion, the smallest volume in recent first quarters, and
accounted for 6 per cent of all bond issues.
Table 2
Total Corporate Security Offerings by Type of Issue
1st Quarter 1956-60
(Gross proceeds in millions of dollars)
Type of issue

I960

1959^'

1958

1957

1956

Total corporate offerings

2,283

2,282

3,318

3,558

2,250

Type of offering
Public
Private

1,1*01
881

1,1*29
855

2,521
797

2,626
932

1,201.
I,0li8

Type of security
Bonds and notes
Public
Private

1,753
937
816

1,622

2,81*6
2,067
779

2,706
1,798
908

1,706
683
1,02k

(Memo:

Convertible)

787
835

(106)

(135)

(805)

Preferred stock

100

11*2

182

98

191

Common stock

i|29

518

289

753

352

(U69)

r/ Revised
Note.—Details may not add to totals due to rounding.
Source.—Securities and Exchange Commission.

More detailed information concerning recent capital market
developments is presented in the attached exhibits.
Developments in the Canadian capital markets are presented
inJPart II at the end of this report.

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




(122)

HIGH-GRADE

LONG-TERM

4.5

^v/

LOWER-GRADE

X
v

y

/

A

"r"'

\j~

/

j

V

V

7 /

v y

y

j

v _ 'A
V

V

\

/•

.J:.
1957




1958

R M

I960.

ii. la

-7-

Exhibit B - Tables for Exhibit A
Long-term Bond Yields ...
High-grade

Date

Corpora te
Aaa 1/

U. S. Govt,
long-term 2/

Spread between
U. S. Govt, and
Corporate IState and
local Aaa

State and
local govt*
Aas •Q

(Per cent)
195U
1957
1958
1959

-

Low
High
Low
High
Low
I960 - High
Low

2.85
it.Ht
3.55
£.61
L.09

3.76 (10/18)
3.07 V25)
4.37 (12/31)
3.83 (1/2)

h.hh

it.00 (6/10)

May 13
May 20
May 27
June 3
June 10 2/

h.h$
k.k&
h.hl
L W

l».13

l|.U2 (1/8)
1

It. 18

lf.16

It. 07
It. 00

.30

13.061 (3/26)
;

1:8

.30
.60
.22
.50
16
.1*6
.19

.3li
.92
.53
.92
.62

3,32
3.37
3.38
3.38
3.38

.32'
.28
.31
.a
.a

.81
.81
.78
.69
.62

2.16 (8/6)

.17

Lower-grade
Date

Corporate
Baa 1/

State and
local govt.
Baa y

Spread between
Aaa and Baa
State and
Corporate
local govt.

(Per cent)
1951
1957
1958
1959
,
1960

-

Low
High
Low
High
Low
- High
Low

May 13
May 20
May 27
June 3
June 10 2/

3.W* (12/31)

2.93 (8/5)

£ £ ! 8 S »
5 : 81 ® '

i

5.28
5.28
5.28
5.27
5.2U

t s

5.36 (2/12)
5.17 (V8)

t

M

3.92 (3/26)
l».lt6 (1/7)
it. 22 ( V 7 )
It. 28
it. 32
It. 30

.52
1.27
.77
.'56
.83
.71

.96
1.21
'.98
.79
.97
.92

.83
.82

.81
.79
.80

I.92

g/ Prellnlnary.
1/ Weekly average of daily figures. A*iri«» tere of bonds Included ts 25-26 years,
2/ Weekly avenge of dully figures. The series Includes bonds due or callable In 10 years or more.
S/ Thursday figures. Only general obligation bonds are Included, average tere Is 20 years.
Note.—Highs and lows are for lwllvl*tal series and may be en different datee for different series.




SHORT-

AND

INTERMEDIATE-

TERM

INTEREST

RATES

GOVERNMENT

3 - $

YEAR

ISSUES

rv"V

r

k ^ v f i

3 - MONTH I I U S
MARKET YIEIDS

1

s

J S F I

i

MAIKI

M

lAJJV
1 " ]- / / 1
1 LLir1

R

*•

DISCOUNT

RATE

PRIVATE

Weekly




Per

Exhibit D - Tables for Exhibit C

-9-

Short- and Intermediate-term Interest Rates
Goveroment
Date

Discount
rate 1/

Yields
6-month
bills 2/

3-month
bills 2/

3-5 year
issues 2/

Spread between yields on
3-month bills and yields on
6-mo. bills 13-5 yr. issues

(per cent)
Low
High
Low
High
Low
1960 - High
Low

1.50
3.50
1.75
Loo
2.50
Loo
3.5o

May 13
May 20
May 27
June 3
June 10 2/

Loo
Loo
Loo
Loo
3.50

19514
1957
1958
1959

-

Date

.61 (6/11)
3.61 (10/18)

.
..
L 5 7 (12/26)
2.63
" (2/20)
L59 (1/8)

3.02
1|.91
2.92
" "
5.07

3.32
3.50
3.29
2.9k
2.61

3.55
3.77
3.61*
3.18
2.80

2.61 (6/10) 2.80

Stock Exchange
call loan 1/

1.66 (V30)
Lol* ( 1 0 A 6 )
2.11* ( 6 / 7 )
5 . 0 0 (12/21+)
3.70(1/2)
L 9 7 (1/8)
(6/10) L 0 2 ( 3 / 2 5 )

.26
.79
.19
.51
.16

.66
.86
.01*
1.1*2
.ItO
1.51
.38

L35
L5L
Ll*8
L23
L12

.23
.27
.35
.21*
.19

1.03
1.01
1.19
1.29
1.51

(12/26)
(12/31)
(1/2)
(1/8)

Spread between 3-month
Prime
Finance oompahy Treasury bill yield and
rate 1/
finance company
paper ]/
paper rates
(per cent)

19 51*
1957
1958
1959

Low
High
Low
High
Low
I960 - High
Low

3.00
L5o
3.5b
L75
3.75
5.50
5.00

3.00
L50
3.50
5.00
Loo
5.oo
5.00

1.25
3.88
1.13
L88
3.00
5.13
3.50

0
.59
-.35
.86
.13
1.02
.22

May 13
May 20
May 27
June 3
June 10 2/

5.oo
5.oo
5.oo
5.oo
5.oo

5.oo
5.oo
5.oo
5.oo
5.oo

3.88
3.88
3.88
3.83
3.53

.59
.89
.92

»
-

(12/18)
(7A9)
(8/29)
(10/9)
(12/U)
(3/25)
(Vl5)

1/ Weekly rate shown le that In effect at end of period. Discount rate la for federal Reserve Bank of Mew York.
Stock exoluuige call loan rate la going rate on oall loan* secured ty customers' atoek exchange collateral at
New York City banks. Prime rate la that charged by large banks on .short-term loans to bualneoa borrowers of
the highest oredlt standing.
Market yield; weekly averages computed from dally closing bid prises. Series of 3-S year Issues oflnalstw of
y
seleoted notes and bond-i.
y
Average of dally rates published ty flnanos companies for dlrsotly placed paper for varying maturities In the
90-179 day range.
Hot*.—Highs and lows are for Individual series and may be on different datee for different series. Fbr spreads,
n*gn refers to widest, and low to narrowest.




STOCK

MARKET

FEDERAL

NATIONAL

SECONDARY

MARKET

MORTGAGE
OPERATIONS




ASSOCIATION

—11*

Exhibit F - Tables l'or ExliiblL E
Stock Market
Stock price
index 1/

1957-59 - High
Low
I960 - High
Low

60.51
39.78
59.50
5k.2k

April
May
May 27
June 3
June 10 e/

55.73
55.22
55.7U
56.23
57.97

Common
stock
yields 2/
(per cent)

(7/31/59)
(12/27/57)
(1/8)
(3/11)

Stock maricet customer credit
Trading
Bank
Customers1
volume J/
Total debit bal- loans to
(millions
ances U/ "others" 5/
of shares)
(Millions of dollars)

3.07
it. 66
3.18
3.51

it. 3
l.U
3.9
2.it

3,it01
it,76it
2,482
3,55it
it,365 * 3,198
3,028
it,153

1,373
1,060
1,167
1,111

3.a
3.U2
3.U0
3.37
3.33

2.9
3.3
3.2
3.6
3.5

it,153
n.a.
n.a.
n.a.
n.a.

1,116
1,111
1,111
1,108
n.a.

3,037
n.a.
n.a.
n.a.
n.a.

n.a.<—Not available,
g/ Preliminary.
1/ Standard and Poor's rrmposlte Index of 500 common stocks, weekly closing prices, 1941-43=10, Monthly data
are averages of daily figures rather than of F M days' 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 dates on which price index reached its high or low.
3/ Averages of daily trading volume on the New York Stock Ebcoliange.
4/ Ehd of month figures for member firms of the New York Stook Exchai^e which carry margin accounts, excludes
balances secured by U. S. Government obligations,
6/ Wednesday figures for weekly reportiiy 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 tanks account for about 70 per oent of loan# to others. For further detail ses Bulletin.

Federal National Mortgage Association Secondaiy Market Operations 1/
Date

Eatimated Offerings to FNMA
Standby
Immediate
Total
purcliase commitment

Purchases
by
FNMA

Sales
by
FNMA

(Millions of dollars)
1959 - May
June
July
Aug.
Sept.
Oct.
Nov.
Dec.
1960 - Jan.
Feb.
Mar.
Apr.
May g/

80.6

8l.it
109.5
123.1
114.3
108.3
105.6
116.3
137.6
135.8
133.2
103.1
98.5

73.it

76.6

92.5
109.9
13b. 8
101.8
100.3

111. I

128.3
128.9

12U.6
96.1
93.8

7.2
7.8
17.1
6.5
5.3
U.9

y

8.6

7.3
it. 7

38.3
li9.it
62.3
71.7
05.it
165.5

1.1
.6

.3
.3

92.6
92.2
86.1

116.7
135.0

102.6
91.9

3.6

•—Leso thmn >50,000.
. .j exclusive of premiums,
1/ Dxta represent unp-ld principal bnlnnc*. of the mcrtRftr.ns involved,
nemunta of
or app
applications
durlnr. the period fran
discounts, or other ohnrgeo. Offerings are, neiounte
'"
""" received
""""
» Immediate purohane contract covers
erl ntinp, mortp.n,;«i
tract relates to proponed mortRHpioo,
i Include thooe under both Immediate purohase and standby
u.iuolly deliver within one yei-r. Pui-ehft.ien
—
conwlteimit contract,. Bat* crclude PUMA activity under Special Assistance and Management and


Liquidating Programs.


Exhibit 0
Long-term Corporate and State and Local Government
Security Offerings and Placements
(In millions of dollars)

I960
January
February
March
April
May

577
715
860
e/725

J/650

a/1,0SO
July
August
September

quarter
quarter
quarter
quarter

1st half
Three quarters
Year

New capital
1958

1960

State and local W
I 1959 r/1

728

821
738
646

1JS2/

736
620
fi/556

639
858
646

812
953
511

89b
785
88?,

1,140
597
887

e/725
e/550
e/800

932
593
1,006

798
895
551

535
740
703

1,107
540
-i,u4

879
' 864
900

862
518
920

2,151
e/2,li25

2,20k
2,567
1,979
2,642

3,139
2,623
2,760
2,300

3/U.576

4,771
6,750
9,392

October
November
December
1st
2nd
3rd
4th

Corporate 1/
1959

10,823

s

I
e/1,912

2,It)

806
403
651
456
474
435

3/2,075

l1,571
is

2,276
2,214
1,860
1,365

e/3,987

4,674
6,222
7,793

76:$

4,520

Excluding finance companies h/
1st
2nd
3rd
4th

quarter
quarter
quarter
quarter

1,722
|/2,125

Year
e/
1/
2/
3/
U/

1,999
2,412
1,716
2,503

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

8,630

10,429

Estimated.
g/ Preliminary.
r/ Revised.
Securities and Exchange Commission estimates of net proceeds.
Investment Bankers Association of America estimates of principal amounts.
Includes $718.3 million AT&T convertible debenture issue.
Total new capital issues excluding offerings of sales and consumer finance
companies.




h.lh

Exi libit H
Other Security Offerings 1/
(In millions of dollars)
Long-term
Federal agency 3/
Foreign government 2/
I960
1958
1958
I960
I
1 1959
1
1959
1
/

January
February
March

2
75
70

April
May
June

81
60
2

196
53

• 58
50
1*2

139
198
120

182
150
150

199

. 523

85
1
35 >

October
November
December

33
30
70

58
123
7li

66

517

992

707

161*

9
5
17

.98
150

—

220

Short-term
State and local government lx/
January
February
March

—

—

. July
August
September

Year

1,163
251

175

—

2,321

Federal apency 3/

268
3l*5
365

190
U28
295

233
1*60
273

479
1*63
512

359
500
1*89

371
208
m*

.'365
267

563
1*11
215

357
351*
26H

509

2*86
675
289

209
161
329

July
Aufust
September

2li6
167
399

289
123
369

727
365
665

1*37
206
330

October
November
December

235
31*3
358

?31
H 5
21*3

733
1*71
288

liU
137

It,179

3,910

6,0),7

3,098

April
May
June

Year

1I5U

fiZ Preliminary.
1/ Data presented In this exhibit differ from thosi In Exhibit E In that refunding ls-tuns, an well as n«sw
capital laauea, ere .Included, Long-term securities ai*a defined as those irativAny in mare thar. oua yuan.
2/ Inoludos lecurlties offered In tho United States by foreign goverrsionts and thair cubdi visions andby
international organisations. "ourtii: Securlilea and Kxuhrvag# Commission.
3/ Isauts not guararrlt id by the U. S, Oovvrniir.'.. Sourasi lony-terre, Securities and Bto'nangt Cor.nl ail on |
short-terin, Federal Reserve,
4/ Principally tax and bond anticipation notos, warrants or certificates ar.d Public Housing Authorl'.y
no t»ii« In some instances PHI Mtes Included nay hive a gome what longer teis than ens year. Source t Bond Buyer.




Exhibit I

-ill-

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

Month .

Corporate

1959 - May
June
July
August
September
October
November
December
i960 - January
February
March
April
May

State and
local government

Other 2 /

258
635
19h
263
2lh
29h
163
217
388
283
225
370
23h

3h2
28k
110
363
199
100
h21
230
279
262
382t
309
139

50
60
50
98
175
20
70
100
320
191
71
28

Large Individual Issues Offered June 1 through 10

Issuer

Type 3/

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

CORPORATE
"Florida Lt. & Pwr. Co.
Mich. Wise. P. L. Co.
So. Elec. Generating Co.
Natl. Cash Register Co.
Northwestern Bell Tel. Co.
Midwestern Gas Transm. Co.
Baltimore Gas & Elec. Co.

Com. stk.
1st mtg.p.l.bds.
1st mtg. bds.
S.F. deb.
Deb.
1st mtg. bds.
1st ref.mtg.bds.

23.1
30.0
1*0.0
1*0.0
1*5.0
60.0
25.0

1980
1992
1985
1998
1980
1980

5-7/8
5-l/L
li-3/li
1-7/8
W A
4-7/8

5.70
5.20
It. 75
1*.80
5.70
L75

Baa
A
A
Aaa
—

Aaa

STATE AND LOCAL GOVERNMENT
King Co. Sch. Dist. #1,
Washington
Memphis, Tennessee
Penna. Gen. State Auth.
Los Angeles Dept. of Wtr.
and Pwr., California

10.0

G.O.
G.O.
Rev.-Rent.

17.7

25.0

1962-80/70 3.67
1961-90
3.33
1963-87/70 3.61

2.75-3.75,/A
2.25-3.50^ Aa
2.8O-3.7O
—

Rev.-Ut.

15.0

1961-90/65

2.1*0-3.75




3.'

Aa

Large Individual Issues Offered June 1 through 10 (Cont'd)

Issuer

Type y

Coupon
Amount
rate or Offering
(millions
Maturity net interyield
of
dollars)
est cost

Rating

OTHER
None
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.
2/ In the case of State and local government securities, G.O. denotes general obligations j Rev.-Ut., revenue obligations secured only by income from public utilitiesj
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 bends
secured solely by lease payments.
"
hj 1/4 per cent bonds of 1989 and 1/10 per cent bonds of 1990 not reoffered.




-16-

Exhibit J
Forthcoming Large Long-term Public Security Offerings for New Capital
(Other than U. S. Treasury) 1/
Expected Proceeds from Forthcoming Large Issues
Date of
computation

Subsequent to
date shown

During month following
date shown
0ther

Corporate
287
165
238
198
37k
385
226
210
20?
301
299
202
W

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

21*7
12*6
356
385
270
115
295
2*2*5
210
255
250
2U3
277

1/

Corporate I
|?™
w a\\ ™^ > h e r 2 /
761500
1*06
102
2*70
336
2*85
51*5
310
. 385
280
258
502

332
272
305
517
692*
509
271
280
252
372
32*2*
35?
553

. 50
25
70
30
2*5
35
30

Forthcoming Large Offerings, as of June 10
Issuer

Type

50
25
70
30
2*5
35
60

(

Amount
Approximate date
(millions
of offering
of dollars)

CORPORATE
Consolidated Edison Co. of N. Y.
James Talcott Inc.
Gulf States Utilities Co.
Tampa Electric Co.
Montgomery Ward Credit Corp.
Illinois Bell Telephone Co.

1st ref.mtg.bds.
Senior notes
1st mtg. bds.
1st mtg. bds.
Deb.
Com. stk.

^Commercial Credit Co.
Mississippi River fhel Co,
Northern Illinois Gas Co,
Texas Eastern Transmission Corp.
Commerce Oil Refining Corp.

" Senior notes
S.F. deb.
1st mtg. bds.
Deb.
Deb., bds. & com.

June 15
June 23
June 28
June 29
June 29
June 30
(rights expire)
July 6
50.0
July 8
22*. 0
July 12*
30.0
Indefinite
25.0
Indefinite
2*5.0
5o.o

20.0
17.0
25.0
50.0
61.0

STATE AND LOCAL GOVERNMENT
State of Kentucky
State of Michigan
Milwaukee, Wisconsin
Philadelphia Sch. Diet., Pa.
Commonwealth of Puerto Rico
Digitized*State
for
FRASER
of Connecticut



G.O.
Rev.-S.T.
Rev. -Ut.
G.O.
G.O.
G.O.

30.0
25.0
15.0
10.0
17.0
28.9

June
June
June
June
June
June

12*
11*
12*
12*
15
16

H.lli

-17-

J-2

Forthcoming Large Offerings, as of June 10 (Cont'd)
Issuer

Type

Amount
Approximate date
(millions
of offering
of dollars)

STATE AND LOCAL GOVERNMENT (Cont'd)
Oroville-Wyandotte Irr. Cist., Calif.
estate of Maryland
Alabama Education Authority
State of Ohio
New York State Power Authority
Maryland State Roads Commission
State of California
Florida Development Comm.
^State of North Carolina
Santa Clara Co., California
Carmen-Smith %dro-Elec. Proj., Ore,
Chesapeake Bay Bridge Tunnel Comm.

Rev.-Ut.
G.O.
Rev.-S.T.
G.O.
Rev.-Ut.
Rev.-Ut.
G.O.
Rev.—Ut.
G.O.
G.O.
Rev.-Ut.
Rev.-Ut.

62.0
13.5
50.0
15.0
100.0
20.0
93.0
16.8
10.7
11.5
25.0
200.0

June 21
June 21
June 21
June 21
June 21
June 22
June 28
June 29
July 6
July 12
July 19
Indefinite

S.F. deb.
Bds. & stk.

30.0
30.0

June 16
Indefinite

OTHER
Alberta Municipal Finance Corp.
Liberian Iron Ore Ltd.

Included in table for first time.
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 for Reconstruction and
Development issues and non-guaranteed issues by Federal agencies.
Note.—Deletions for reasons other than sale of issue: None.
3/




Exhibit K

-18-

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

Date

1952-1959

High
Low

1959 - July
Aug.
Sept.
Oct.
Nov.
Dec.
1960 - Jan. 7
Feb. 25
26
Mar. 15

Aa-rated offering yields A-rated offering yields
Amount above
Amount above
Actual
Actual
seasoned yields
seasoned yields
(per cent)
(per cent)
(basis points)
(basis points)
5.30 (12/8/59)
2.93 (3/31/510
*4.93
it. 83 .

31
23

5.13^/
*5.08
*5.30

63

5.08
5.10

16
18

29
Apr. 6
8
11*
21
27
May 10

12

25

87
-3

6

5.65 (9A8/59)
3.00 (3/17/51*)

123
-15

5.07

17

*5.65
5.33

60
1*3

S.J&-

51
28

8

32
17

I1.8S

33

h.9h

39

k.95
U.88

39
32

5.00
1*.93

11

h.98

21

5.30

50

5.10

26
33

5.20

7

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.




June 13, I960
-19Part II - Canada
There was a general easing of rates in Canadian money markets last
week in sympathy with trends in United States markets. Canadian Treasury
bill and bond yields touched new lows for the year. There was only a small
net incentive to hold the 3-month Canadian bill. In the bond market, the
spread in favor of the Canadian bonds widened during the week. Stock prices
showed some rise over the week but remained relatively low for the year.
General bank loans continue to expand more than seasonally. There was
little change in the price of the Canadian dollar during the week.
Money market conditions. At last Thursday's auction the 3-month
Treasury bill declined by 27 basis points from 2.92 per cent a week ago
to 2.63 per cent, a low for the year. The 6-month bill also declined to a
low for the year, by 35 basis points, from 3.2U per cent to 2.89 per cent
(see Table). Last week the chartered banks decreased their bill holding
by $9 million while the general public holdings increased by an equivalent
amount; in the preceding four weeks, the chartered banks were heavy purchasers of bills and the general public heavy sellers (see Table). The
average closing rate on day-to-day loans increased to 2.95 per cent from
2.60 per cent the previous week.
For the first time since the end of April the yield on the
Canadian 3-month bill was above the rate for the United States bill. Because the premium on the 3-month forward Canadian dollar declined, the net
incentive in favor of the Canadian bill, fell from 0.31 per cent per annum
to 0.20 per cent (see-Table).
Bond market conditions. Bond yields generally declined during
the week, many to the lowest levels for the year. The spread between
selected comparable Canadian and United States securities (Thursday yields
for bills and Wednesday yields for bonds) was as follows (figures in parenthesis refer to the previous week):
0.02
0.06
0.1*2
0.98
1,37

per
per
per
per
per

cent
cent
cent
cent
cent

on
on
on
on
on

a 91-day bill (0.00)
a 182-day bill (0.09)
an 8-year bond (0^21)
a 20-year bond (0.92)
a 35-year bond (1.31)

There was little change in bond holdings during the week. The Bank of
Canada showed no net change and the chartered banks increased holdings by
$5 million while the general public decreased by $10 million including
savings bonds (see Table).
Maaitoba issued a $5 million 20-year 3 per cent bond priced at
71-lA to yield about 5.35 per cent. In the corporate sector, Alberta Gas
Trunk Line Co. has announced its intentions to offer $110 million of
securities ($65 million in the United States and $U5 million in Canada) in
the latter part of the year. The funds are to be used for constructing
pipe lines when U.S. distributors are given permission to import Alberta
gas. It is hoped that construction can begin this year and be completed
before 1962.




Chartered bank loans. On a seasonally adjusted basis, general
bank loans rose by $1*7 million in May compared with increases of $ll* million
in April and $15 million in March. During the month, the banks bought
#78 million of Treasury bills and §9 million of bonds. Their liquid asset
ratio rose from 16.7 per cent on April 27 to 18.2 per cent on June 1.
Exchange rate. There is little change in the spot rate on the
Canadian dollar for the week before. The Canadian dollar closed at 101.88
last Thursday. The 3-month forward rate continued to show a slight premium
for the sixth straight week (see Table).
Stock market conditions. During the last week the industrial
indices on both the Toronto and Montreal exchanges increased, and for the
first time since mid-April the Toronto index reached 501. Both indices
continued to be well below their midpoint for the year as noted in the
following table:
New York
Toronto .
Montreal
Standard and Poor
I960 - high
Low
June 1
2
3
6
7
8

532.9k
1*81*. 60
496.75
1*98.31
199.06
1*99.00
500.63
501.25

320.0
277.9
28^.1
285.8
286.7
285.1
285.9
285.9

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




65.02
57.00
59.57
59.86
59.97
60.70
61.31*
61.83

Selected Canadian Money Market and Related Data
3-mo. Treas. bills
Spread
Canada
U.S */ over U.S.

Canadian dollar
Spot
3-mo. discount (-1
forward premium (+)<y

1959 - High
Low
1960 - High
Low

6.16
3.25
5.1b
2.65

b.b9
2.80
1.63
2.63

2.96
0.30
0.90
-0.69

105.51
102.58
105.27
•101.31

May 19
26
June 2
9

2.99
3.01
2.92
2.65

3.U2
3.26
2.92
2.63

-0.U3
-0.25

101.U7
101.31
101.9b
101.88

0.02

~

101.55
101.3b
102.02
101.92

Net incentive to
hold Can,
bill®/

0.31
-Q.72

0.b8
-0.57

0.31
0.12
0.31
0.18

-0.12
-0.13
0.31
0.20

a/ Average yield at weekly tender on Thursday.
"b/ Conposite market yield for the U.S. Treasury bill on Thursday close of business,
c/ Di U.S. cents.
d/ Spread between spot rate and 3-month forward Canadian dollar on Thursday
closing, expressed as per cent per annum.
e/ Spread over U.S. Treasury bill (column 3)> plus 3-month forward discount or
premium (column 6).
Selected Government of Canada Security Yields
6-mo. Treas. bills
Spread
Canada

uTi/

1959 - High
Low
1960 - High
Low

6.2b
5.11
5.33
2.89

May 19
26
June 2
9

3.2b
2.89

3.22
3.26

ol85

Intermediate
bonds (8 yr.)
Spread
over
Canada

u.s.fy

5.37
b.50

-0.69

b.b9

5.55

l.ii
0.21

-0.b8
-0.29
0.09
0.06

b.67
b.65
b.b9
b.5b

0.31
0.2b
0.21
0.b2

J

Long-term bonds
135 year)
Spread
Spread
Canada
over
Canada
U.S j Z

(20 year)

.

5.30
b.bb
5.b2
b.96
5.08
5.06

5.02

b.96

1.22
0.87

5.05
b.73
5.28
5.05

0.87
0.88
0.92
0.98

5.12
5.1b
5.09
• 5.05

Average yield at weekly tender on Thursday.
Spread between Canadian auction rate and conposite market yield of U.S.
on close of business Thursday.
c/ Government of Canada 2 - 3 A per cent of June 1967-68.
cy Spread over U.S. Government 2-1/2 per cent of 1963-68.
e/ Government of Canada 3 - l A per cent of October 1879*
"if Spread over U.S. Government 3-1/L per cent of 1978-83.
g/ Government of Canada 3-3/1* per cent of September 1996 - March 1998.
n/ Spread over U.S. Government of 1995.




sk
1.61
0.98
1.29
1.30
1.31
1.37

Canada: Changes in Distribution of Holdings of Canadian
Government Direct and Guaranteed Securities
(millions of Canadian dollars, par value)
Bank of Canada
Treas.
Bonds
bms.
April 6
13
20
27
May h
11
18
25
June 2
. 9

+
+
+
+
-

28
37
1h
10
9
3
15
0
- 5U
- l

- 30
0
0
+ 7
+ Hi
0
+ k
- U
- Ii8
0

Government
Total
- 3
- 11
+ 3
+ 2
+ 1
* 2
8
- 3
- 2
- 9

Chartered banks
Treas.
Bonds
bills
+
+
+
+
+
+
-

10
33
h
7
17
Hi
7
Uo
32
9

.+ 9
+ 3
+ 2
- 18
- 7
- 2
+ 17
+ 1
+ 8
+ 5

Source: Bank of Canada, Weekly financial Statistics,

General public
Savings Treas.
Bonds
bills
bonds
. -

6
7
5
8
7
8
7
7
7
7

+
+
+

19
Hi
11
3
26
26
6
39
h
9

+ 38
- 10
- 5
+ 7
- 8
0
- 15
+ 5
+ 73
- 3

"rt

y

14

•

Sales of New Government, Municipal, and Corporate Bonds
(millions of Canadian dollars)
I960
to June 6
Government (direct)
Government (guaranteed)
Provincial (direct)
Provincial (guaranteed)
Municipal
Corporation
Less short terra

1959
' to June 8

1958
to June 9

ll|2.5
153,8
282.U
305.6

• 3,1U5.0
150.0
111.0
1U3.8
170.6
167.1

U,273.U
2,760.0
1,513.U

3,887.5
2.9U5.0
9U2.5

3,625.-0
300.0
195.0
178.7
205.5
505.li
5,009.6
2,675.0
2,331.6

3,389.0

i

'§

Of the above, the following amounts have been sold in the United States
Provincial (direct)
Provincial (guaranteed)
Municipal
Corporation

25.0

22.0
110.7

75.0
56.2
ii.6

2U.0

100.0
70.0
67.2
102.1

208.0

159.8

339.3

JOjJ

Source: Weekly Bond Sales Summary* A. £. Ames & Co., Ltd.




i
i

June 13 I960
Appendix 1

0,

-o-

United Kingdom: Money and Capital Markets During May
Bates in money and capital markets in Britain showed little change
during May but conditions in the gilt-edged market deteriorated in early
June. Several developments disturbed the bond market. On June 1, an
economic assessment published by a well-known academic research staff concluded that Britain's economic situation has changed for the worse-and
recommended that the authorities let gilt-edged prices fall "in so far as
this is necessary to make monetary policy effectiveoH Secondly, external
developments — weakness in the sterling rate, a larger impart deficit in
April and "unexciting" gold and dollar figures for May — added to uncertainties about the outlook for gilt-edged prices. The spot pound declined
from $2,809 on April 29 to $2,802 on June 3.
Outside financial markets, the upward drift in interest rates
continued during May. The increased attractiveness of Treasury nbnm&rketable
securities introduced in the 1960-61 budget on April U (see "Capital Market
Developments for March," dated April 18, i960) led the building societies
as a group to introduce higher yields to their investors and higher rates
on their new and outstanding mortgages. In addition, the Treasury-sponsored
Agricultural Mortgage Corporation also raised its lending rate.
Money market conditions. The 3-month Treasury bill rate declined
from U.6? per cent to U.56 per cent on May 6 and remained unchanged through
the June 3 tender (see Table).
The spread favoring the London bill over the United States bill
remained wide through the month. After narrowing early in the month, the
spread increased to 1.91 per cent on June 3 compared with 1.63 per cent.
on May 6. The discount on the 3-month forward sterling changed little
during May. The net incentive to hold the United Kingdom bill fell sharply
on May 13 to only 0.L2 per cent, hut
reached 1.21 per cent (annual
basis) on June 3 (see Table).
Gilt-edged market. Gilt-edged yields fluctuated within narrow
limits during May, with yields slightly higher in the first week of June.
The changes in yields on selected maturities between May 6 and June 3 were
(the figures in parenthesis refer to April changes):
-0 oil per
0.18 per
0.07 per
0.20 per

cent
cent
cent
cent

on
on
on
on

a 91-day bill (0»05>)
a 6-year bond (-0.03)
a l^pyear bond (0.03)
an undated bond (-0.0U)

The higher yields on June 3 resulted from a fall in security prices
following the suggestion in this June issue of the London and Cambridge
Economic Service that additional monetary restrictions may be needed to
curb inflationary pressures. Some uneasiness about the pound in the exchange
market added to market concern about the outlook for gilt-edged prices.
Activity in gilt-edged was at a reduced level over the past month and on
Tuesday, June 7 the bond price index reached a I960 low of 81.5 compared
with 8£.U at the end of last year.




'

—2li—

—-—

Installment credit controls. The effectiveness of the recently
established installment credit restriction is difficult to estimate at
this early date. The press reports that the hire-purchase controls appear
to have had little effect on the demand for most durable consumer items
subject to these new regulations. For many of these items, such as automobiles, a several-month lag between orders and deliveries continued to
exist. According to trade estimate? the decline in contracts on automobiles in May were only about £<>6 per cent below the number of contracts registered in May 1959. Thus far, cancellations have not been unusual.
For some smaller items, such as radios and television sets, consumers
appear to be ready to meet the new requirements without any noticable decline in demand.
Total installment credit debt rose in April by £29 million compared
with increases of £31 million in Mapch and £16 million in February. Credit
outstanding totaled £9k9 million at the end on April compared with £6U2
million at the end of April 1959.
Stock prices. Stock prices fluctuated widely during the period
under review. After reaching a I960 low of 295.8 on May 9, the Financial
Times industrial index rose to a peak of 322.2 on May 31 (see Table). On
June 1, however, the index dropped to 318.1 but by June 8 '
recovered
to 322.3.
During the month, the gap in yields between stocks and bonds
widened as the Consols yield rose and the share yield declined with rising
stock prices (see Table). The gap in favor of bonds reached a minimum
of 6.73 per cent on May 6 but had widened to 1.23 per cent on June 3.
Mortgage loans. The national organization of building societies
announced an increase in mortgage rates from 5-1/2 per cent to 6 per cent
effective immediately for new borrowers and after a three months delay for
existing borrowers. Savings invested in building society shares will
receive 3-1/2 per cent beginning July 1 as against 3 - 1 A per cent at present,
but interest on deposits will remain at 3 per cent. These new rates affect
all members of the Building Society Association. The Halifax Board, one
of the largest nonmembers, has not yet announced a change but is expected
to do so soon because of growing difficulties of the building societies
in maintaining their inflow of new funds to meet their mortgage demands.
National Savings Movement <> Receipts by the National Savings
Movement exceeded repayments by £53*25 million during the first nine weeks
of the current fiscal year as compared with £55*838 million during the
same period last year. However, after accounting for an early Easter,
the current year rate of saving exceeds that of the record year in 1959.

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




-25Unlted Kingdom: Treasury Bill Yields and Exchange Rates

Date

3-mo. Treasury-bill
Discount
y
. Differ^ on 3-mo. ,
U.Kjy U.S^S/ ence
sterling^/

3.6
3.0
U.62
3.75

t.7
2.6
U.59
2.65

-1.1
O.U
1.9k
-0.8U

(P).6U
.92

April 29
May 6

U.65
U.67
L.56
U.56
U.56
U.56

3.0U
3.0U
3.a
3.25
3.09
2.65

1.61
1.63
1.12
1.31
1.U7
1.91

.87
.80
.70
.70
.68
.70

June 3

Exchange rate
Spot
Discount
sterling
on 3-mo. .

__

1959 - High
Low
I960 - High
Low

13
20
27

Net
incentive
to hold .
U.K. billS/

„„
1.30
- .23

281.17
279.83

(P).U7

.65

.7k
.83
.1*2
.61
.79
1.21

280.91
280.8U
280.71
280.53
280.32
280.20

.61
.56
•U9
.19
•U8
.U9

. Average yield at Friday weekly tender.

Closing market yield for Friday in New York.
T%/c/ Spread
between spot and forward rate in per cent per annum.

cy Net of difference in bill yield less discount on 3-month sterling,
e/ Spot rate in New York market in U.S. cents.
• I/ Spread between spot and forward rates in U.S. cents.

United Kingdom: Selected Capital Market Yields
6-year
bond£/

15-year
bondjy

War
loang/

I960 - High
Low

5.53
U.93

5.75
5.33

5.73
5.53

April 29
>lay 6
13
20
27
June 3

5.52
5.35
5.35
5.U2
5.39
5.53

5.75
5.65
5.59
5.6U
5.62
5.72

5.70
5.58
5.59
5.62
5.62
5.69

Consols

3/

,

Share
yield®/

as

Share .
pricesfi/

5.U0
5.03

U.17
3i7U

1.36
0.76

333
297

5.35
5.26
5.28
5.35
5.33
5.46

U.28
U.53
U.UO
U.36
li.23
U.23

1.07
0.73
0.88
0.99
1.10
1.23

305
297
307.U
309.9
319.7
319.7

a/ 5-1/2 per cent Exchequer, 1966.
2/ 3 per cent Savings Bond 1965-75*
c/ 3-1/2 per cent War Loan (undated).
2/ 2-1/2 per cent Consol (undated).
e/ Financial Times.
7/ Difference between yield on 2-1/2 per cent Consols and share yield,
j/ Financial Times.