Full text of H.16 Capital Market Developments : March 14, 1960

The full text on this page is automatically extracted from the file linked above and may contain errors and inconsistencies.

Not for Publication DECONTROLLED AFTER SIX MONTHS
H.lii

March lit, i960,
(j^PITAL MARKET) DEVELOPMENTS
jjj THE UNITED STATES AND CANADA
i (Including Quarterly Review of State
•. and Local Government Financing)

IheJfolume of new public security financing was substantial
last week. During the week ending March 11 corporations sold large
security issues with proceeds totaling $135.0 million and State and
local governments offered bond issues amounting to $152.h million.
This week corporations are offering issues totaling $L10.5 million,
but there are no large State and local government bona issues scheduled
for sale.
Bond yields - Yields on all types of long-tern bonds declined
last week. The decline in yields on U. S. Government bonds was particularly sharp. Yields on all types of bonds were at the lowest level
of the year last week.
Mortgage yields - Average secondary discounts for EHA-insured
5-3/U per cent new home mortgagesremainedvirtually unchanged in
February for the fourth straight month and the implied yield of nearly
6—I/I4. per cent continued about 65 basis points above a year earlier.
Stock prices - Common stock prices declined somewhat further
last week. Standard and Poor's 500 stock index closedtinFriday at
$k»2k, 0.33 points lower than a week earlier. Average daily trading
volume was 3*2 million, the same as the preceding week.
State and Local Government Security Offerings in 1959
State and local governments sold new bond issues aggregating
a record $7.9 billion last year, slightly more than in 1958. About 60
per cent of the year's sales were in the first half of the year when
there was an unusually large volume of large revenue bond issues sold.
Refunding issues were sold in small volume as in other recent years.
Purpose of issue - Bonds sold to provide funds for educational
building totaled $2.2 billion and were, as in other recent years, the
most important purpose of issue. School bond sales last year were> however, $0.it billion less than the record 1958 volume. New highway finai cing also declined, reflecting in part a reduction in the Federal-aid
highway program which reduced the need to obtain funds to match Federal "
grants. New bond issues sold to obtain funds for miscellaneous public
service enterprises—primarily electric utilities—increased $0.5 billion to a total of #0,8 billion, reflecting primarily the sale of $0.1i
billion of bonds by the New York State Power Authority. Financing of
public housing also increased, while bond sales to provide funds for
other purposes were in about the same volume, as a year earlier.




Type of issuer - Special authorities were the most important
type of State and local governmental unit selling bonds in 1959. Bond
sales by these units totaled $2.1 billion, $0.7 billion more than in
1958. States, municipalities, and school districts sold a smaller
dollar volume of bonds last year than a year earlier.
Type of issue - Revenue bond sales rose sharply last year and,
aggregating $2.k billion, accounted for 30 per cent of last year's bond
financing, the largest proportion since 1955 when the volume of toll
highway financing was large. Much of the revenue bond financing consisted
of large bond issues sold to provide funds for electric utility systems.
Sales of general obligation bonds were in smaller volume last year than
in 1958. Offerings of public housing authority bonds—bonds secured
by the pledge of grants from the Federal Government—-rose to $0.3 billion,
the largest volume since 1955.
More detailed information concerning recent capital market
developments is presented in the attached exhibits.
Developments in the Canadian capital markets are presented in
Part II at the end of this report.

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




- 3 Long-term Security Issues of State and Local Governments
195b-59
(In millions of dollars)
19 59
Issuing authority:
State
County and township
Municipality
School district
Special authority
Unidentified 1/

1 1958

1 1957 1 1956

1 1955

1 1951*

1,609
1*99
2,351*
l,32lt
2,09k

2,016
Ski
2,106
1,1*71
1,368

1,508
1*31*
2,327
1,602
1,279

818
328
1,811*
1,111
1,103
351

1,1)08
1*72
1,313
1,005
1,097
683

2,01*7
1*1*2
1,601
828
1,1*63
587

Total

7,880

7,832

7,150

5,525

5,976

6,?69

Purpose of issue:
New capital total

LZZ3

L7U

M99

5*1*59

5*911

6J89

2,238
83b
701
115
1,120
81*1
355
1,569

2,6 l*b 2,551
1,172 1,61*1
530
299
216
136
1,089 1,020
31b
503
3#
333
l,bbl 1,216

1,682 * 1,516
701 1,362
258
570
61
98
817
712
663
I69
110
169
817
637
680
351

1,1*32
2,136
1*56
77
67I*
597
162
681
576

Schools 2/
highways, bridges and tunnels
Residential buildings
hospitals and institutions
Sewer and water
Misc. public service enterprises
Veterans1 aid
Other
Unidentified 1/

—

—

108

86

50

66

65

180

Total

7,880

7,832

7,150

5,525

5,976

6,969

rype of issue:
General obligation
Revenue

1,766
2,397

5,1*1*6
hJTQ

1*,795
1^961*

3,570

3,770
1,730

3,380
3^205

Utility
Quasi-utility
Special tax
Rental

1,593
bob
238
162

1,006
165
331
27 6

1,1*33
51*
289
188

n.a.
n.a.
n.a.
n.a.

n.a.
n.a.
n.a.
n.a.

333
381*

187
1*20

66
321*

199
llt6

1*71*
2

37b
9

7,880

7,832

7,150

5,525

5,976

6,969

Refunding

Public Housing Authority
Federal Government loans 3/
Total

—

1/ Issues of less than $500,000 not further classified in 195b and 1955 and first
half of 1956.
2/ Data for years prior to 1956 probably understate school issues by about one-fourth
because of unclassified small issues.
3/ Coverage for 1956-1959 is broader than for earlier years.
Note.—Details may not add to totals because of rounding.
Source.—195b, 1955 and first half 1956, Bond Buyer and Federal Reservej July 19561959
3
Digitized forInvestment
FRASERBankers Association of America. Data for 1956-1959 not strictly comparable with date for earlier years.



HIOH-OIAP1

BOND

YIELDS

t ' tLS. GOVEIHNill

LOWER-ORADI

BOND

YIELDS

>.0„

-"V
(01

/'

\ / \\

x _

J

V




J

V-Z

J
V

f

'A

V

5j0"

TT
V

X
To"

v A * TT

- 5 II.lit

Exhibit B - Tables for Exhibit A
High-grade Bond Yield?

Date

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

State and
local govt.
Aaa y

U. S. Govt,
long-term 2/

Corporate
Aaa 1/

(Per cent)
Low
High
Low
High
Low
I960 - High
Low
19$h
1957
1958
1959

Feb.
Feb.
Feb.
Mar.
Mar.

-

12
19
26
it
11 E/

2.85
U.lU
3.55
It. 61
k.09
U.61
It. 51
it. 57
li.SU
U.5U
o/U.SU
u.51

(li/23)
(9/2?)
(5/2)
(12/31)
(1/9)
(1/29)
(3/H)
*

2.16 (6/6)
3.76 (10/18)
3.07 (1/25)
it. 37 (12/31)
3.83 (1/2)
L 1 2 (1/8)
L U (3/11)

1.90
3.US
2.6U
3.65
3.06
3.53
3.37

it. 20
i*.l6
it. 22
it. 22
Lll

3.38
3.38
3.39
3.U0
3.37

(9/2)
<8/2?)
5/1)
(9/2U)
(3/26)
(1/7)
(3/30)

•30
.60
.22
.50
-16
.iiO
.19

•30
..it7
•3it
.92
.53

.37
.38
.32
•33
.itO

.82
.78
.83
.82
• 7U

:fu

Lower-grade Bond Yields,

Date

Corporate
Baa 1 /

State and
loc^l govt.
Baa y

. Spread between
Aaa and Baa
State and
Corporate
local govt.

(Per cent)
1951i
1957
1958
1959

-

3.^
5.10
U.51
5.32
it.83
5.36
5.28

Feb.
Feb.
Feb.
Mar.
Mar.

12
19
26
it
11 2/

5.36
5.33
5.31
5.31
5.28

Low
High
Low
High
Low
i960 - High
Low

(12/31)
(11/29)
(7/11)
(12/31)
(it/17)
(2/12)
(3/11)

2.93
U.51
3.6U
U.U6
3.92
. U.U6
U.31
U.3S
U.31
U.32
U.3S
U.31

(8/5)
(8/29)
(5/1)
(7/2)
(3/26)
(1/7)
(2/18)

.52
1.27
.77
•77
.56
.79
.71

.96
1.21
.93
.98
.79
.97
.93

.79
.78
.77
.76
.77

.97
.93
.93
•95
.9it

P/ Preliminary.
1/ Weekly average of daily figures. Average term of bonds included ie 25-26 year#.
2/ Weekly average of daily figures. The series includes bonds due or callable In 10 years or more.
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 en different dates for different series




STOCK

MARKET

MORTGAGE

AND

BOND

YIELDS

Monthly




Per

M

cent . per

annum

- 7 -

Exhibit D - Tables for ExhibiiL C

H.lU

Stock Market
Stock price
index 1/

Date

1957-1959 - High
Low
I960 - High
Low

60.51
39.78
59.50
5U.2U

January
February
Feb. 26
Mar. ii
Mar. 11 2/

58.03
55.69
56.16
54.57
54.2k

Trading
Stock market customer credit
Common
Customers'
Bank
volume 2/
yields 2/ (millions
Total debit bal- loans to
(per cent) of shares)
ances h/ "others" 5/
(Mil]Lions of do]Jars)

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

3.07
It. 66
3.18
3.51

it. 3
l.lt
3.6
2.7

it,761*
3,551A
n.a.
n.a.

3,1*01
2,it82
n.a.
n.a.

1,373
1,060
n.a.
n.a.

3.28
3.38
3.37
3.it7
3.51

3.2
3.0
3.2
3.2
3.2

it,365
n.a.
n.a.
n.a.

3,198
n.a.
n.a.
n.a.
n.a.

1,167
1,11*5
i,iit5
i,iK)
n.a.

.

n.a.—Not available.
g/ Preliminary.
1/ Standard and Poor's Tmposlte Index of 500. common stocks, weekly closing prices, 1941-43=10. Monthly data
are averages of daily figures rather than of Fridays' 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 J>y
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 Bcoliange.
4/ 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.
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 per oent of loans to others. For further detail see- Bulletin.

Mortgage and Bond Yields 1/
FHA
mortgages 2/ •

Date

Spread between new
Aaa corporate
corporate bonds and
bonds 1/
Mew 3/ 1 Seasoned k/FHA mortgages|Seasoned bonds

1959 - High
Low

5.63 (11/57)
It. 56 ( 2 / 5 5 )
6.2k
5.57

I1.8I (6/5?) Iwl2 (9/57)
2.7k (3/5k) 2 . 8 5 ( V 5 W
li.6l
5.29
it. 12
It. 29

1959 - October
November
December
1960 - January
February

n.a.
6.23
6.23
6.2k
6.23

5.10
5.07
5.16
lt.95
It. 96

1953-1958

High
Low

1.96
- .5it
1.29
.83

it. 57
it. 56
it. 58
it. 61
it.56

1.16

1.07
1.29
1.27

.90
-.12
:S
.53
fs
»3h

.ho

\ f Keithor mortgage nor bond yields take into account servicing cootc which are much higher for mortgages than
bonds. Generally, bonds pay interest semi-annually; mortgages, monthly. Mortgage yields, if computed as equivalent
to a semiannual interest investment, would be slightly higher than given in the table.
2/ Based on FHA field-office opinions about average bid prices in the private secondary market for new-home

s i
rated Aaa, Aa or A by Moody's Inventors Service (except serial and convertible issues and offerings of natural gas
and foreign companies) weighted by size of issue. Yields on Aa and A issues are first adjusted to an Aaa basis


4/ Moody* s Inventors Service. Monthly averages of daily data.


See Exhibit B.

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

I960
January
February
March

e/£?06
e/700

1

New capital
Corporate 1/
State and local 2/
I960 1 1959
1959
1 1958
1 1958
8U0
745
631

728
1,5535/

638
858_
646

e/700
f &

812
953
511

April
May
June

899
791
871

1,140
597
. 887

July
August
September

531
718
.70 9

1,107
540
1,114

ti
4#

October
November
December

887
865
936

862
518
920

593
513
2/444

456
474
435

2,216
2,264
1,9#
2,688

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

2,142
i S
e/1,550

2,276
2,244
1,860
1,365

4,780
6,738
9,427

5,762
8,522
10,823

4,673
6,223
2/7,773

4,520
6,380
7,746

1st
2nd
3rd
4th

quarter
quarter
quarter
quarter

e/1,896

1st half
Three quarters
Year

. .931
593
1,006

e/1,775

2

798
895
551

.

806
403
651

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

quarter
quarter
quarter
quarter

550

Year

2,011
2,409
1,69$
2/2,538

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

e/8,651t

10,429

e/ Estimated.
p/ Preliminary.
'
'
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.




H.lii

Exiiibit F
Other Security Offerings 1/
(In millions of dollars)
Long-term
Foreign government 2/
Federal agency ;$/
I960
I960
I 1959 -I 1958
1959
1 1958

JanuaryFebruary
March

77
59
2

196
53

April
May
June

56
50
42

139
198
120

July
August
September

85
1
36

9
5
17

33
42
70

58
123
74

558

992

October
November
December
Year

199

.

175

190
h28
295

233
460
273

April
May
June

563
4n
245

July
August
September

246
167
399

October
November
December
Year

—

523

164

98
150

—

220
86.
707

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

1,163
251

—

2,321

Federal agency 3/
359
500 '
489

371
208
144

357
354
264

486
675
289

209
161
329

289
423
369

727
365
665

437
206
330

235
3U3
306

231
415
. 243

733
471
288

454
114
137

4,127

3,910

6,047

3,098

.

479

EZ Preliminary.
1/ Data presented in this exhibit differ from those in Exhibit E in that refundi
Issues, aa well as new
capital Issues, are included. Long-term securities are defined as those suturing in more than one year.
2/ Includes securities offered in the United States try foreign governments and their subdivisions and by
international organizations. Source: Securities and Exchange Commission.
3/ Issues not guaranteed by the D. S. Government. Sourcei long-term, Securities and Exchange Commission*
short-term, Federal Reserve.
4/ Principally tax aqd bond anticipation notes, warrants or certificates and Public Housing Authority
noto*. In some instances PHA cotes included may have a somewhat longer tern than one year. Souroei Bond Buyer.




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

Corporate

Month

.19# - February
March
April
May

State and
local government

3k0
215
3#
3b2
28h
• 110
363
199
llOO
121
230
279
262

July
August
September
October
November
December
I960 - January
February

Other 7j

551
369
$63
2^8
635
19b
263
21U
29U
163
217
388
283

32
176
20
50
60
50
98
175
20
70
100
320

Large Individual Issues Offered March 1 through 11

Issuer

States Steamship Co.
Imperial Investment Co.,
Ltd.
Coastal Sts. Gas Prod. Co.
Gen. Motors Accept. Corp.
Gen. Tel. Co. of Fla.

Type 3/

Ins. bds.

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

20.2

19dl

Coll.tr.bds. 15-0
I960
S.F. deb.
20.0 ' 1980
Deb.
100.0
1981
1st mtg. bds. 15.0
1990

5

5.00

Aaa

6-1/2
6
5
5

6.50
6.00
5.ok
5.05

Ba .

—

A

STATE AND LOCAL GOVERNMENT
Grand Rapids Expressway,
Mich.
Rev.-S.T.
18.0 1961-85
b. 12 3.00-1*. 15
Dade Co. fort Auth., Fla. Rev.-Ut.
19.2 1999/63
It. 67
L73
State of Louisiana
G.O.
15.0 I96I-8U/69 3.80 2.80-3.75
tiook Co., Illinois
Rev.-S.T.
25.0 1961-70
2.80-3. h$
3.a
State of Delaware
G.O.
12.1- 1961-80
3.25 2.60-3.30
State of California
G.O.
100.0 1961-86/80 3.95 2.75-3.95
OTHER
3 k.S 1965-90 5-5-1/8 5.00-5.15
Metropolitan Toronto,Can. S.F. deb.
it. 75-5.15
Instal. deb.
6.9 1961-80




A
A
A
Aa
Aa
A
A

H.Ik

G-2

—11—

Footnotes

1/ Includes corporate and other security offerings of $15 million and over;
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. 0. 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.




Exhibit H
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

19# - Feb. 2?
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

Subsequent to
date shown

During month following
date shown
Corporate^ ^Jotherg/
198
396
21*6

287
165
238
198
37li
385
226
210
207
301

292
12
21*7
11*6
356
385
270
115
295
1*1*5
210
255

Corporate

20
50
50
25
70
30
1*5
35

279
1*76
31*6
332
272
305
517
69I*
509
271
280
252
372

Other 2/
1*81

761

20
50

s
500
1*06

50

1*02

25

1*70
336
1*85
515
310
385

70
30
1*5
35

Forthcoming Large Offerings, as of March 11
Approximate date
of offering
CORPORATE
Deb.
Chesapeake & Potomac Telephone Co.
1st mtg. bds.
Northern Indiana Public Service Co.
Com. stk.
General Telephone & Electronics Corp.
Sub. deb. & stk.
Mid-American Pipeline Co.
1st mtg. bds.
Louisiana Power & Light Co.
Gen. mtg. bds.
Niagara Mohawk Power Co.
S.F. deb.
Coastal States Gas Producing Co.
1st mtg. bds.
^Carolina Power & Light Co.
1st mtg. bds.
*Commonwealth Edison
1st mtg. bds.
-^Alabama Power Co.
S.F. deb.
National Fuel Gas Co.
1st mtg. bds.
Puget Sound Power & Light Co.
1st mtg. bds.
Metropolitan Edison Co.
S.F. deb.
United States Plywood Coip.
Deb., bds. & com.
Commerce Oil Refining Corp.
Pfd.
stk.
Kratter Corp.

25.0
15.0
50.0
20.5
20.0

5o.o

20.0
25.0
30.0
19.5
18.0
20.0
15.0
25.0
1*5.0
26.0

Mar. 16
Mar. 16
Mar. 16 "
Mar. 17
Mar. 30
Mar. 30
Mar.
Apr. 5
Apr. 6
Apr. 7
Apr. 12
Apr. 21
Apr. 27
Apr.
Indefinite
Indefinite

STATE AND LOCAL GOVERNMENT
Chicago Board of Education, H I .
Ventura Port Dist., Calif.




G.O.
Rev. -Ut.

25.0

10.0

Mar. 30
Mar.

H.lli

• 13 -

H-2
Forthcoming Large Offerings, as of March 11 (Cont'd)
Type

Amount
Approximate date
(millions
of offering
of dollars)

STATE AND LOCAL GOVERNMENT (Cont'd)
*New York, New York
^Sacramento Municipal Utility Digt.,
California
Triborough Bridge & Tunnel Auth.
Jacksonville, Fla. -

G.O.
Rev.
Rev.-Ut.
Rev.-Ut.

20.5

Apr. 27

30.0
100.0
30.0

Apr. 28
April
May 10

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




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

1952 - 1958
High
Low

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

5.00 (9/H/57)
2.93 (3/31/5U

1959 - January
February
March
April
May
June
July 9
10
15
30
Aug. 5
20
Sept. 18
Oct. 22
23
28-

Nov.
Dec.
1960 - Jan.
Feb.

29
30
25
8
9
10
7
25
26

87
-3

3
k.97
*4.95

10
17
37
29

iu,93

31

It. 85
a. 80

5.15
5.15

5.08
5.30

5.08
5.10

1*6
16
hO
U2
k2
63

hh
L6

5.50 (11/7/57)
3.00 (3/17/510

123
-15

*4.752/

23

*U.67

18
25
15
19

5:01^

5.10

5.10

5.00

19
13

5.65

60

5.25
5.1*0

35
50

$.b$

51
50
28

5:302/

-x—Single observation, not an averager
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.
3/ 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.




- 15 March

I960

Part II n Canada
There were substantial declines in short money rates in Canada
last week. The spread between Canadian and United States yields widened
through the entire range of Treasury bills and longer-dated securities.
Activity in the corporate and local government sectors of the bond market'
was slowed down by expectation of a coming Government of Canada offering.
Stock prices continued to decline during the week.
Money market conditions. The short Treasury bill yield declined
from U.£>7 per cent to U.3I4. per cent at last Thursday's auction; the yield
on 6-month bills fell from U.8U per cent to U»57 per cent. During the
week, the chartered banks were substantial seillers but the Bank, of Canada
and government accounts reported offsetting acquisitions. The rate on dayto-day loans eased from It.15 per cent to U.05 per cent for the week ending
March 9.
The spread in favor of the 3-month Canadian bill compared with
the U.S. bill continued to widen during the week as U.S. bill rates declined more sharply than Canadian rates (see Table). However, the increase
in the discount on the 3-month Canadian dollar resulted in a reduced incentive for holding Canadian bills as compared with the previous week.
Bond market developments. Canadian bond yields eased during the
week. However, the substantial declines in U.S. bond yields caused the
spreads to widen in favor of Canadian bonds. On Thursday, the spreads
between comparable Canadian and United States securities were (figures in
parenthesis refer to the preceding week):
0.68
0.71
0.98
1.21
1.U0

per
per
per
per
per

cent
cent
cent
cent
cent

on
on
on
on
on

a 91-day bill (0.59)
a 182-day bill (0.52)
an 8-year bond (0.85)
a 20-year bond (1.19)
a 35-year bond (1.25)

. Press reports indicate that activity in the corporate and local
government sectors of the bond market will be slowed down in the coming
week by the expectation of a sizable Government of Canada issue in the
near future. During the past week, two larger corporate offerings were
well received. A $17.5 million T. Eaton Acceptance Co. debenture was
offered at a 6.80 per cent yield to maturity. A $25 million Bell Telephone
Ill-year first mortgage bond with a 6-l/U per cent coupon was offered at par.
Several local government issues are scheduled for the current
week. A $15 million 6 per cent debenture of the Province of Manitoba will
be offered in two tranches: a 1968 bond yielding 6.12 per cent and a
1980 bond yielding 6.20 per cent. A $3»U million 20-year Vancouver issue
at
6-l/U per cent is to be available at a 6.32 per cent yield. A
$2.8 million 6 per cent Three Rivers bond is being offered at a 6.35 per




- 16 -

cent maturity yield in an 11 to 20 year range of maturities. The press
reports that Regina is negotiating a $1.9 million bond flotation in the
New York market.
An official survey of private and public investment intentions far
I960, released last week, she: that a resurgence in business capital
spending is anticipated for i960 following a sharp-decline In 1958 and a
further easing in 1959 (see Table). This pickup in business demands for
funds has already led to a resumption of corporate borrowing in the
Canadian security market during the first two months of this year (see
Table for March 7). Although construction is to be at a peak level, a
continued decline in residential housing is expected. Total investment for
i960 will be at $8.8 billion or fractionally above the previous peak in
1957.
Stock markets. Prices in Canadian stock markets continued to
decline during the past week. On Thursday, the Toronto industrial index
was at U75.U compared with 509.79 a month ago and 535.69 a year ago; the
i960 high was 533*65. The Montreal industrial index was 277.2 compared
with 302.1 a month ago and 321.5 a year ago; the I960 high was 320.0.

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




17 Selected Government of Canada Security Yields

Date
1957 - High
1958 - Low
1959 - High
Low
I960. - High
Low
Feb. 18
25

Mar. 3
10

f

Latermediate

Longterm
Govt. t
bo"dj/

U.81

3.31
5.30
U.U5
5.55
5.28

U-35
'3.78
5.30
U.U1
5.12
5.2U

a.62

5.36

5.2U

a.57
U.3U

5.37

3-month
Treasure
blHslr

a

h.08

0.87

6.16

3.25
5.1U
U.3U

U.61

5.17

5.28

i:S

5.36

Spread between
Canadian & U.S. rates
long-term
3-mo>/
bonds/
bills2/

1.19
0.U7

Discount
on 3-mo.
Canadian
dollar^

2.96
0.30

1.21

0.90
0.31

0.2U

1.05
1.05
1.19

0.58
o.a
0.59

O.Ul
0.36
0.30

0.91

1.21

0.68

0.72

0.U8

Average yield at weekly tender on Thursday.
Government of Canada 2-3A per cent of Jane 15, 1967-68.
Government of Canada 3-VU per cent of 1979.
5/ U.S. Government 3-lA per cent of 1978-83. Government of Canada 3-VU 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 Bmrsdey.
6/ Spread between 3-oontbs forward and spot price of the Canadian dollar,
expressed as per cent per annum, on Thursday.
Outlook for Private and Public Investment, i960
(in billions of Canadian dollars)
1956

1957

1958

1.1
1.2
0.6
0.8
hi
5.o

1.2
1.6
0.7
1.0
hi
5.7

0.7
1.3
0.7
1.0
1.2
U.9

0.6
1.1
0.8
0.9
hi
U.7

0.8
1.1
0.9
0.9
1.3
5.0

Housi
sing and social capital:
Housing
ousing
Institutional services
Government and waterworks
Total

1.5
o.U
M
3.0

l.U
0.5
1.2

1.8
0.5
1.2

3.1

3.5

1.8
0.5
hk
3.7

1.7
0.6
hi
3.8

Total capital expenditures

8.0

8.7

8.U

8.U

8.8

Forest and minerals
Fuel and power
Commerce and finance
Transport
Other
Total

19592/

196(2/

1/ Preliminary.
[5/ Intentions.
Source: Private and Public Investment in Canada: Outlook i960, Department
of Trade and Commerce, Ottawa.