Full text of H.16 Capital Market Developments : March 10, 1955

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l.u c

__

DECONTROLLED. AFTER SIX MONTHS

H.lk

March 10, 1955
CAPITAL MARKET DEVELOPMENTS

Heavy volume of security i s s u e s l a s t week - Proceeds from
l a r g e public o f f e r i n g s f o r .new c a p i t a l t o t a l e d 366 million d o l l a r s
f o r corporate issues and h9 million f o r S t a t e and l o c a l governments
during the week ending March
The volume of large issues t o be
f l o a t e d t h i s week i s Ho8 million d o l l a r s and includes 328.6 m i l l i o n
d o l l a r s from the General Motors common stock o f f e r i n g , the expirat i o n date for which was March 7.
Bond y i e l d s - Yields on outstanding corporate Aaa and
high-grade municipal bonds rose l a s t week. Corporate Baa y i e l d s
did not change, and y i e l d s on Treasury obligations decreased two
b a s i s p o i n t s . A decrease occurred in the Government y i e l d s on
Tuesday of t h i s week.
«
As indicated i n Exhibit F, y i e l d s on newly-offered 30-year
f i r s t mortgage e l e c t r i c power bonds with Aa- and A-ratings have r e cently been s u b s t a n t i a l l y above y i e l d s on s i m i l a r l y r a t e d outstanding bonds of somewhat shorter maturity. The A-rated newly-offered
bond y i e l d s had been below seasoned bond y i e l d s f o r most of 195k,
while o f f e r i n g y i e l d s on the Aa-rated bonds had been j u s t s l i g h t l y
above comparable seasoned y i e l d s .
Stock prices - The SEC index of 26£ common stocks i n creased f u r t h e r t o a new high of 231.0 for the week ending March h .
However, according t o d a i l y indexes, a sharp, decline occurred on
March 8, and a smaller decrease on March 9.
Corporate Security Offerings
Fourth Quarter and Year of 1953 and 195b
Net proceeds f o r new c a p i t a l
Net proceeds from corporate s e c u r i t y o f f e r i n g s for new
c a p i t a l i n 195U declined 11 per cent from the volume f l o a t e d in
1953 and t o t a l e d 7,5&1 m i l l i o n d o l l a r s , as shown in Table 1. The
volume of t h e l a r g e s t major i n d u s t r i a l group in both y e a r s , the
e l e c t r i c , gas and water u t i l i t i e s , decreased 8 per cent t o 2,673
m i l l i o n d o l l a r s ,from 2,905 million i n 1953* Sales finance companies declined from t h e i r high l e v e l of issues o f f e r e d in 1953 -•
and dropped t o 332 million d o l l a r s l a s t y e a r . Although the common
stock o f f e r i n g from banks, and in p a r t i c u l a r the National City
Bank of New York issue f o r 131 million d o l l a r s , are included i n




H.Ik
the finance and r e a l estate t o t a l , the volume for t h i s major group
was j u s t half as large in 195k as in the year e a r l i e r as a r e s u l t
of the decline in finance company issues.
^
Manufacturing companies as a whole issued about the same
volume of securities in both years. Three of the largest indust r i e s in the manufacturing group each year—namely, the iron and
s t e e l , petroleum and chemical companies in 195U, and the chemical,
petroleum and automobile companies i n 1953—were large primarily
. because of the inclusion of the proceeds from at l e a s t one issue
of over 100 million d o l l a r s .
An exception was the machinery company volume which was made up of a greater number of only modera t e l y large issues. The large issues r e f e r to public offerings or
single takedowns of private placements.. United States S t e e l ' s
300 million dollars of debentures i n July was the largest public
issue floated l a s t year.
The largest growth, both in dollar value and percentagewise was in the mining group, which rose from a 220 million dollar
t o t a l in 1953 to 460 million in 195k. Communication company f l o tations decreased primarily because of the American Telephone and
Telegraph financing program which offered 602 million dollars of
convertible debentures in December 1953 in contrast t o about 25>0
million of straight debentures in September 19%kIn the fourth quarter last, year, the volume of issues
f o r new capital was 22 per cent less than in the l a s t three months
of 1953. Manufacturing companies floated about the same amount of
issues both years. The General Motors offering mentioned above was
. the only large issue of over 100 million dollars issued in 1953 and
accounted f o r over half the manufacturing volume. In l?5k three
industries reached the level of over 100 million dollars—the chemi c a l , petroleum, and machinery companies—the two former cnes as a
r e s u l t of a very large o f f e r i n g . E l e c t r i c , gas and water u t i l i t y
offerings were l i t t l e more than half the volume of the fourth quart e r of 1953. The largest growth from one fourth period to the next
occurred in the f i n a n c i a l and r e a l estate group due mainly t o the
National City Bank o f f e r i n g . Consumer finance companies issued
about the same volume of securities in both fourth quarters. However, while the fourth quarter of 195k was the largest that year,
i n 1953 the l a s t three months t o t a l was the smallest and represented
a decline from the f i r s t three periods when finance offerings were
at t h e i r highest l e v e l .
A breakdown of net capital proceeds between public issues
and private placements i s not available. Estimates indicate t h a t
about one-half of bonds were privately placed, a s l i g h t l y higher
portion than in 1953. Affecting t h i s r e s u l t was the high repre- <
sentation in 195k of manufacturing issues, which are frequently p r i vately placed. Common stock issues for new c a p i t a l , although declining s l i g h t l y from the dollar amount offered in 1953, increased
s l i g h t l y as a r a t i o of t o t a l new c a p i t a l .




Table 1
Corporate Security Offerings f o r New Capital
by Type of Business of Issuer
Fourth Quarter and Year of 1953 and 195k
(Net proceeds i n millions of d o l l a r s )
Year

Fourth quarter

Type o f ' b u s i n e s s

195k

All corporate o f f e r i n g s

1,8 99

Manufacturing
Iron and s t e e l
Nonferrous
Machinery
Automobile
Chemical
Petroleum
Other

' 531
S

6
115
17.
131
116
11*0

1

1953

195k

2,m

7,561

8,U95

2,131

1

1953

77
307
20
1*
117

153
336
107
21*8
. 293
631

2,128
105
72'
305
322
1*1*6
335
510

555
~~9
21

E l e c t r i c , gas and water u t i l i t i e s

hoQ

771

2,673

2,905

Communication

162

627

655

871

Railroad

6k

7k

213

267

Other t r a n s p o r t a t i o n

28

77

29k

286

Commercial and other

175

79

368

282

Mining
Financial and r e a l e s t a t e
Consumer finance companies
Other

•

11*9
382
I6H
278

92
168
100
68 _

.

160

220

766
332
it3li

1,536
1,268
268

Note.—Components of manufacturing t o t a l s are shown net of f o r e i g n s e c u r i t i e s .
D e t a i l s may not add t o t o t a l s due t o rounding.
Source.—Securities and Exchange Commission and Federal Reserve.




-4-

H.I4

Gross proceeds
Unlike new c a p i t a l , the volume of t o t a l corporate securi t y offerings was slightly larger in 1954 than in 1953* The volume
was 9,^63 million dollars l a s t year, and 8,898 million i n 1953 as
shown in Table 2. The major difference between the gross proceeds
from corporate offerings and net proceeds for corporate new capital
in 1954 as shovm in Table 1 i s the large volume of refunding issues
f l o a t e d . About 1,860 million dollars of such issues were offered
in contrast with 260 million offered during 1953• Approximately
one-third of the proceeds from refunding programs in 1954 was used
to refinance bonds which had been offered from April to September
1953 when i n t e r e s t rates were higher than they had been in recent
years. Increased refunding began at the end of March and remained
sizable throughout l a s t year; the December volume was the largest
month of the year.
Table 2 '
Total Corporate Security Offerings by Type of Issue
Fourth Quarter and Year of 1953 and 195b
(Gross Proceeds in millions of dollars)
Type of issue
. Total corporate offerings

Fourth quarter
1954
I 1953
2,581

2,540

Type of offering
Public
Private

1,400
1,180

Type of security
Bonds and notes
Public
Private

2,003
874
1,129

Preferred stock

151

Common stock

427

1%
9,563

8,898

1,691:
8JU6

5,844
3,719

5,580
3,318

2,113
1,305
808

7,515
4,004
3,541

7,083
3,856
3,228

.

.

98

814

330

1,204 .

Note.—Details may not add to t o t a l s due to rounding.
Source.—Securities and Exchange Commission.




Year
I 1953"

489
1,326

H»lii

-£>-

Public o f f e r i n g s and p r i v a t e placements changed only
s l i g h t l y in t h e i r r a t i o s t o t o t a l o f f e r i n g s as compared t o the
1953 f i g u r e s . Public o f f e r i n g s were 5# 81*4 million d o l l a r s , ,61
per cent of t o t a l corporate issues i n 1954. During the year b e f o r e , 63 per cent of a l l corporate o f f e r i n g s was publicly f l o a t e d .
Bonds and notes continued t o account f o r the major portion of o f f e r ings; lyShS m i l l i o n d o l l a r s were issued l a s t year and of t h a t t o t a l ,
ii,OOU million were publicly o f f e r e d . Common stock volume decreased
moderately both i n absolute and r e l a t i v e terms; p r e f e r r e d issues rose
t o about 9 per cent of t o t a l issues from 5 per cent in 195)3.
In the f o u r t h q u a r t e r , the proportions in the. two years
were somewhat d i f f e r e n t . L i t t l e more than half of the 2,581 million
d o l l a r s of t o t a l corporate volume was publicly offered in the fourth
quarter of 1954.. Bonds and notes represented about f o u r - f i f t h s of
t o t a l i s s u e s , but 1,129 million d o l l a r s or 56 per cent were p r i v a t e l y
placed. In the same quarter of 1953> privately-placed bonds and notes
were j u s t over one-third of t o t a l debt o f f e r i n g s . Both p r e f e r r e d
and common stocks accounted f o r s l i g h t l y larger proportions of t o t a l
issues in the l a s t three months of 195L than in the comparable period
of 1953.
Further d e t a i l s on c a p i t a l market developments available
from e x h i b i t s - More d e t a i l e d information concerning recent c a p i t a l
market developments w i l l be found in the following e x h i b i t s which
are attached h e r e t o :
A - Bond Yields
B - Stock Market
C - Corporate and S t a t e and Local
Government Security Offerings
and Placements
D - Large Public Security Issues
f o r New Capital (Other than
U. S. Treasury.)
E - Forthcoming Large Public Security
Offerings f o r New,Capital (Other
than U. S . Treasury)
F - Yields on Mew and Outstanding
E l e b t r i c Power Bonds, Rated Aa and A

Business Finance and Capital Markets Section,
Division of Research and S t a t i s t i c s ,
Board of Governors of the Federal Reserve System.




EXHIBIT A

BOND YIELDS
PER CENT PER ANNUM
4

WEEKLY

CORPORATE

Baa

CORPORATE A a a

4

GOVERNMENT

/ V

\S"

/ H I G H - G R A D E M U -N I C I P A L
V
I STANDARD AND POOR SxCORP.
I
JVLI M i l l I I I I I I 1 1 ' I I I I I
J
S
1952

B

I 11 I

Corporate 1/

J
S
1953
TJ. S. Govt,
long-term 2/

Spread between HighCorporate Aaa
and U. S. Govt.

K!V

(Per cent per annum)
1952 - Hi
Lor
1953 - High
Low
195U - High
Low
1955 - High
Low
February
February
February
February
March k

3.03

I2.99
S
3.09

4
11
18
25

.37
.19
.38
.19
.1*3
.32
.29
.25
.27
.28
.27

2.h3
2.00

jt

2.1.6

i3

2.56
2.23
2.U6
2.36
2.ia
2.L3

-/^Moody's Investors Service; weekly average of daily f i g u r e s .
2/ Federal Reserve; weekly average of daily figures.
i f standard and Poor's Corporation; Wednesday f i g u r e .
Note Highs arri lows are for individual series and may be cn d i f f e r e n t dates
for different series.
.




STOCK MARKET

Date

Bank loans
Trading Common stock Customers' to "others"
for purchases
yields 3 /
volume 2/
(per cent balances U/ of secur(millibns
ities y
(millions
(19?M9-100) of shares) •per annum)
of dollars) (millions
of dollars)
Stock price

1952 - High
Low
1953 - High
Low
195U - High
Low
1955 - High
Low
January
February
February 18
February 25
March h

165.3
151.7
167.1
m.o
221.1;
156.5
231.0
217. it
2l8.lt
226.8
227.6
226.2
231.0

0.9.
2.5
0.9
3.7
l.lt
lt.6
2.8
3.6
3.2
3.L
2.9
3.0

5.77
5.13
5.75
5.15
5.33
lt.20

1,328
l,2ltl
1,665
l,3Ut
2,388
1,653

It .22
It .21

2,517

• . 295
250
327
252
-1*87
328
lt97
US
lt8l
2t90
189
U97
lt93

"1 / spr. Iriffor of
cnnvflrtpd to
•Irs. w n n l r l v fOofllncr nrio.A
19ii7-C9»100 by Federal Reserve. The cdiversion factor i s 123.91.
2/ Weekly averages of daily trading volume on New York Stock Exchange.
3 / Moody's 200 caamon stocks; end of month f i g u r e s .
It/ End of month figures for member firms of New York Stock Exchange; excludes
balances secured by U. S. Government s e c u r i t i e s .
5/ Wednesday figures for weekly reporting member banks in New York and Chicago;
excludes loans for purchase of U. S. Government s e c u r i t i e s . On March h, 1953, the
l a s t date on which figures for a l l reporting banks were available, New York and
Chicago accounted for US per cent of such loans. In the past New York and Chicago
loans have fluctuated more than t o t a l loans.•
n.a.—Not available.
Note.—Highs and lows are for individual series and may be on d i f f e r e n t dates
for d i f f e r e n t s e r i e s .




H.l4

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

1

Nevr capital

Corporate
1 1954
1

1953

5a
439
660

623
623
666

April
May •
June

486
652
859

779
675
. 1,123

July
August
September

898
346
776
1,008
298
592

1955
January
February
March

e/USO

e/350
e/1,150

. October
November
December
1st quarter
2nd quarter
3rd quarter
4th quarter
Year.

e/1,950

1st quarter
2nd quarter
3rd quarter
4th quarter
Year

e/1,575

1,643
1,998
2,021
1,899
7,561

State and local
1955 • 1 1954
1

5®
e/750

396

1953
389
360
426

&

3

853

329
649
434

183
325
753

279.
261
6JU9

519
259
475

577

594
423
877

453
408
774

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

1,176
1,412
1,253

1 , ^ /
1,912
2,578

e/1,595

8,195

1,636

5,477

Excluding finance companies 2/
1,562
1,931
1,9U
1,795
7,229

1,669
1,991
1,223
2,3a
7,227

-

2/ Total new capital issues excluding offerings of sales and personal finance
companies.
e/ Estimated.
Note*—Details may not add t o t o t a l s due to rounding.




.

H.ll;

Exhibit D
Large Public Security Issues f o r New Capital
(Other than U . S . Treasury) 1/
Proceeds of Large Issues Offered
(Millions of d o l l a r s )
Month

Corporate

19$h - February
March
April
May
June
July
August
September
October
November.
December
1955 ~ January
February

State and
l o c a l government

103
160
169

213
378
557
557
603
92
86
b55
388
268
689
3U
101

32k

#0
336
75
335

to

0

9h

1U
72

OtheF 2 /

-

50

30
35

Large Individual Issues Offered March 1 through 1*

Issuer

Type 3 /

Coupon
Amount
(millions
r a t e or
Offering
Maturity net i n t e r Rating
of
yield
dollars)
e s t cost

CORPORATE
May Department Store
SF deb.
25.0 . 1980
Central & South West Corp. Common s t k .
20.1
Union Oil Company
Conv. deb.
21.0
1975
P a c i f i c Gas & Electric Co. lst&refmtgbds 50.0
1987
General Motors Acceptance Corp.
Deb.
250.0
1960;1972

3 1/h

3.25

A

3
3 3/8

3.00
3.30

Baa
Aa

3;3 1/2

3.0053.50

—

STATE AND LOCAL GOVERNMENT
Portland, Oregon
S t a t e of Louisiana
Hempstead & N. Hempstead,
New York
Houston, Texas




G.O.
G.O.

8.0
10.0

1958-75
1960-70

2.01 - 1.15-2.20
2.23
1.50-2.35

Aa
A

G.O.
G.O.

15.5
15.0

1955-84
1956-85

3.08
2.59

Baa
A

1.10-3.13
1.00-3.10

\d

H.lh

D-2

Large Individual Issues Offered March 1 through ii (Cont'd)
Issuer

Type

Amount
Coupon
(millions
Offering Rating
r a t e or
Maturity
of
net i n t e r - yield
dollars)
est cost

.OTHER
None
over;"~State and local government security offerings of 5 million and over.
2/ Includes foreign government and International Bank f o r Reconstruction and
Development issues.
3/ In the case of State and local government s e c u r i t i e s , G.O. denotes general
obligationj. Rev,, revenue bonds; G.R., general obligations additionally secured by
f a c i l i t i e s revenues; and, L.L., l i m i t e d - l i a b i l i t y obligations secured by pledge
of.designated revenues.




Exhibit E

H.lh

Forthcoming Large Public Security Offerings f o r New Capital
(Other than U . S . Treasury) 1/
Expected Proceeds from Forthcoming Large Issues
Subsequent t o
date shown

During month following
date shown

Date of
computation

Corporate |

1954 - Feb. 26
Mar. 31
Apr. 30
May 28
June 30
July 30
Aug. 31
Sept. 30
Oct. 29
Nov, 30
Dec. 31
1 9 # - J a n . 31
Feb. 28

108
201*

323
332
336
100

$

m

16.
710

Other 2 /
1*98

50

I
596
86
5U
300
383
U36
661
567
682

27

Corporate
690
555

6U7
526
532
303
608
hih

30

135
2U6
216
122
1,395

|'Other 2 /
1,916
2,789
2,322
1,971
1,#4
1,553
1,876
2,158
1,957
2,682
2,1hh
1,961
1,978

50
27

30
30
35

Forthcoming Large O f f e r i n g s , as of March L
Type

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

CORPORATE
General Motors Corp.
Joy Manufacturing Company
New.England Telephone and Telegraph
Alabama Power
American Telephone and Telegraph

Consnon stock
SF d&b.
Common stock
1st mtg. bonds
Conv. deb.

328.6
20.0
15.7
15.0
650.0

March 7
March 22
March 31
May 2k
1955

STATE AND LOCAL GOVERNMENT
Multnomah County, Oregon
Metropolitan Water D i s t . of So. Cal.
New York Bridge Authority
S t a t e of South Carolina
S t . Petersburg, Florida .
•KOyster Bay, New York
S t a t e of Mississippi
State of New Jersey
New Jersey Turnpike Authority




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

15.5

8.0
16.0
20.0

12; .0
5.8

a

3U.0

March
March
March
March
March
March
March
March
March

8
9
9
9
10
10
15
15 17

H.lU

E-2
Forthcoming Large Offerings, as of March U (Cont'd)
Issuer

Type

Amount
Approximate date
(millions
of offering
of dollars)

STATE AMD LOCAL GOVERNI.IENT (Cont'd)
•^Georgia State School Building Auth.
I l l i n o i s Turnpike AuthorityConnecticut Expressway
Texas Turnpike Authority
*San Francisco", California
Los Angeles, California
^Louisville, Kentucky
W i c h i t a , Kansas
San Diego County, California
Inter-American Center Auth., Fla.
Michigan Turnpike Authority
State of Louisiana
Florida State Turnpike Authority
Sam Houston Turnpike Corp.
Texas Turnpike Company
Dade County Port Authority, Fla.
Springfield, I l l i n o i s
Allegheny County, Pennsylvania
Sanitary Authority
California Toll Bridge Authority
Jersey City 'Sewerage Auth., N. J .
North Carolina Turnpike Authority

Rev.
Rev.
Rev.
Rev.
n.a.
n.a.

30.2
390.0
100.0
58.5
6.9
5-10.0
7-5
7.it

Rev.
Rev.

60.0
186.0
80.0
7lt.O
1U6.0
HiO.O

Rev.
Rev.
Rev.
Rev.
Rev.
Rev.
Rev.

8.U

21.0
9.0

85.0

235.0
16.0
200.0

March 22
March
Winter
Winter
April L
April 6
April 20
April 26
Spring
Spring
Spring
Spring
Spring
1955
1955
1955
1955
1955
1955
1955
1955

•

OTHER
None
1/ Includes corporate and other issues of 15 million dollars and over; State
•and local government issues of 5 million and over.
2 / Includes foreign government and International Bank for Reconstruction and
Development issues.
n.a.—Not available.
•a—Included in table for f i r s t time.




Exhibit F
Yields on New and Outstanding
Electric Power Bonds, Rated Aa and A 1/
Date.
1952 average

Aa-rated offering yields
A-rated offering yields
Amount above
Actual . Amount above
Actual
(per cent) seasoned yields (per cent) seasoned yields
(basis points)
(basis points)
3.16

13

3.U3

15

3.79

195k average

3. Ok

3

3.12

195U - January
February
March.
April
May
June
July
August
September
October
November
December

3.20
3.02
*2.93
2.99
3.00
*3.00
None
None
3.02
3.03
None
None

6
0
0
5

*3.35
*3.20
3.05
3.10
3.Hi
3.14
*3,13
3.11
*3.10
3.10
None
.3.11

1955 - January 19

3.15

13

3.H

7

February 2h
25

k

1

3
3
—

12

3.35

1953 average

3.23

y.27
"•=3

7
}

-

-l
-10
-6
0
-2
-1
-1
-3
-2
0

9

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. Aver age. maturity for the seasoned issues
varies from 26 to 28 years.
*—Single observation, not an average.
"