Full text of H.16 Capital Market Developments : March 27, 1961

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Not for ^Publication
H.lb

I
1

•ED AFTER SIX MONTHS
1

March 27, 1961.

CA£JX2LL3BlBKET DEVELOPMENTS
IN THE UNITED STATES AND CANADA.
Part I - United States

Corporate security financing for new capital continues to be
very small, aside from the AT&T stock issue now in process of subscription,
while new financing by State and local governments continues to be
moderately heavy. Recently, however, several new corporate offerings
have been scheduled for sale in April.
During the week ending March' 2h} one corporate issue for
$15 million and large State and local government issues with total proceeds
of $86 million were offered to the public. This week, State and local
government bond sales are expected to total $137 million, including a
$100 million Kentucky veterans1 bonus issue. No large corporate issues
are scheduled for sale.
Long-tern bond yields - Yields for all categories of outstanding bonds increased last week, except those for lower grade corporate
bonds which remained stable. The increase in yields on State and local
government bonds has been sharp in recent weeks as current and prospective
financing by these units has continued in substantial volume and
inventories of unsold bonds have remained very large, although somewhat
smaller than earlier in the month.
Yields on new corporate offerings have declined somewhat since
February. Three new, 30-year first mortgage electric utility bond issues
were offered to investors last week. The two A-rated issues were offered
at yields of L.bO and It. £0 per cent, about 10 basis points below the yields
on the last comparable issues, offered in mid-February.
The new issue rated Aa was offered to yield it.37 per cent—
7 basis points lower than the rate that was obtainable on an issue offered
at the end of January.
Short- and intermediate-term interest rates - Yields on Treasury
bills declined further last week, while those on intermediate Government
issues increased slightly. Rates on 3- to 6-month directly placed finance
company paper were also lowered last week, and the weekly average showed
a 10 basis point decline.
Data on Federal funds interest rates have now been added to
Exhibits C and D. The estimated effective rate (the weekly average.of
daily effective rate, which is the rate at which the heaviest volume
of transactions take place), for last-, week was 1.85 per cent, 20 basis points




-3lower than a week earlier and 115 basis points lower than the Federal
Reserve discount rate. Other major short-term money rates were unchanged
Mortgage recordings - In January, nonfarm mortgage recordings
declined about seasonally from December and were about the same as a
year earlier. Conventional lending was about 5 per cent larger than in
January i960, reflecting continued strong activity at savings and loan
associationsj Federally underwritten lending was about 10 per cent
smaller.
"
Stock prices - Standard and Poor's index of 500 common stocks
closed at 6k.U2 on March 2k, . Wl points lower than the peak reached
last Monday, bpt only .18 points lower than the close a week earlier.
Trading acti^Pby continued to be very heavy, averaging $,h million
shares a day.
More detailed information concerning recent capital market
developments is presented in the attached exhibits.
Developments in the Canadian capital market are presented in
Part II of this report.

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




v

l

L O N G - T E R M B O N D YIELDS

HIGH-GRADE

/vr

. T U.S. GOVEIHMfMT

*\f.

LOWER-GRADE




*'

le"0-l«rm

Exhibit B - Tables for Exhibit A

, -5-

Long-tenn Bond Yields
High-grade
Corporate

Date

U. S. Govt,
long-term 2/
(per cent)

1951* - Low
1957 - High
1958 - Low
1959-60 - High
I960 - Low
1961 - High
Low
Feb.
Mar.
Mar.
Mar.
Mar.

2k
3
10
17
2h 2/

i

2.85 (4/23)
k . l k (9/27)
3.55 (5/2)
It. 6 1 (1/29/60)

2.1*5 (8/6)
3.76 (lo/ie)

State and
local
government
Aaa 3/

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

1.90

3.29 (3/23)
3.12 (2/23)

.30
.60
.22
.59
.19
.50
. 1*0

.30
.50
.31*
.92
.53
.76
.51

3.12
3.13
3.18
3.26
3.29

.1*9
.1*6
.1*7
.1*3
.1*2

.61*
.61:
.57
.52
.51

li.23 (9/9)
l*.3l* (1/6)
h.21 (3/17)

3.07 (4/25)
k . k 2 (1/8/60)
3.75 (e/5)

(9/2)
3.15 (8/29)
2.61* (5/1)
3.65 (9/24/59)
2.99 (9/1)

3.92 (1/20)
3.75 (3/10)

L25
1*.23
k.22
h.2l
k.22 ^

3.76
3.77
3.75
3.78
3.80

.

Lower-grade
Corporate
Baa 1/

Date

State and
local govt.
Baa 1/

Spread between
Aaa and Baa
State and
Corporate
local govt.

(per cent)
1951* - Low
1957 - High
1958 - Low
1959-60 - High
1960 - Low
1961 - High
Low

m

Feb. 21*
i'lar. 3
Mar. 10 .
Mar. 17
Mar. 21*

5.06
5.ol*
5.02
5.02
5.02

3.1*1* (12/31)

2.93

5 . 1 0 (11/29)
1*.51 (7/11)
5 . 3 6 (2/12/60)
1*.98 (9/9)

l*.5l (8/29)
3.614 (5/1)

m

.52
1.27
.77 '
.81*
.71
.81 •
.71*

(8/5)

1*.1*6 (1/7/60)

U IS1

3 . 9 8 (12/29)

1*.05
l*.o5
1*.09
1*.12
1*.16

"

.81
.81
.81
.81
.80

2/ Preliminary.
1/ Weekly average of dally figures. Average term of bomde Included is 23 *2.6 year#.
2/ Weekly average of daily figure*. 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 seriss and may be on different dates for different series,
Fbr spreads, high refers to widest, and low to narrowest,
,




.96
1.21
.93
1.08
M

.93
.92
.91
.86
.87

EXHIBIT C
SHORT-

AND

INTERMEDIATE-

TERM INTEREST RATES

GOVERNMENT

3 - 5 YEAR IS!iUES

Mark.VY

kA
Ay "A;
\

11 ?/i

F B.

'

DISCOUNT BATE

V 3 - MONTH 1
Market Yie

1
BANKS

AND

OTHER PRIVATE

DISCOUNT I
RATES
/




BORROWERS

-

$

Exhibit D - Tables for Exhibit G
Short- and Intermediate-tem Interest hates
Government
Date

Discount
rate
1/

1954 — Low
1957 - High
1958 - Low
1959-60 - High
I960 - Low
1961 - High
Low

1.50
3.50
1.75
3.00
3.00
3.00

Feb.
Mar.
Mar.
Mar.
Mar.

3.00
3.00
3.00
3.00
3.00

2k
3
10
17
2k 2/

Loo

Yields
6-month
bills 2/
(per cent)

3-month
bills 2/
.61 (6/U)
3 . 6 k (10/18)
.58 (5/29)

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

3-5 year
issues 2/
1.66 ( 4/30)
li.Olt (10/18)
2.1k (6/6)

3.02 (12/26)
5.07 (1/8/60)
2.38 (12/30)

5.00 (12/24/50)

2.56 (3/3)
2.17 (1/27)

2.75 (3/3)
2.k2 (1/27)

3.59 (1/20)
3.36 (3/10)

2.51
2.56
2.kk
2.35 ,
2.28^

2.68
2.75
2.56
2.17
2.45

3.48
3.493.36

4.59 (1/8/60)
2.11 (10/28)

3. ilO (12/30)

3.a

'3.45

.26
.79
. .16
.25
.12

.66
.86
.04
1.81
.38
i.4o
.92

.17
.19
.12
.12
.17

.97
.93
.92
1.09
1.17

Banks and Other Private Borrowers
1'
l

Date

Stock Exchange
call loan 1/

Prime
rate 1/

Finance company
paper 3/

Federal
funds 4/

Spread between
3-mo. bills and
finance co. paper

(per cent)
>1954 - Low
• 1957 - High
1958 - Low
1959-60 - High
i960 - Low
1961 - High
Low

3.00
4.50
3.50
5.50
4.50
4.50
4.50

3.00
4.50
3.50
5.00
4.50
4.50
4.50

Feb. 24
-Mar. 3
Mar. 10
Mar. 17
Mar. 24 £/

4.50
4.50
4.50
4.50
4.50

4.50
4.50
4.50
4.50
4.50

1.25 (12/31)
3.88 (11/15)

n.a.

5.13 (1/22/60)
2.88 (12/30)

3.50
.13
4.00
.95

2.88 (3/10)
2.63 (2/17)

2.85 (2/17)
.43 (1/27)

1.13 (8/8)

2.66
2.84
2.88
2.78
2.68

(11/8)
(5/29)
(5/13/60)
(12/2)

2.63
. 2.20
2.75
1.65
1.85

0
.63
-.35
1.02
.22
.56
.15

\

.15
.28
.44
.43
.40

1/ Hackly rate show* la that in effect at end of period. Discount rata la for federal Reserve Dank of New York.
Stook Exchange call lean rate ia going rate on call loa*n seourod by customers' atook exchanfle collateral at
Nan York City banks. Prime rate la that charged by large banks on short-term loans to bualmoa borrowera of
the highest credit standing,
2/ Market ylel4; weekly averagea computed from dally closing bid prloea. Seriea of 3-5 year Issues eonslata of
aelooted notes and bonds.
3/ Average of dally rates published by finance companies for directly plaied paper for varylig matiritlea in the
90-179 day rap^e.
4/ Weekly average of dully effeotlvu rate, which la the rate for the heavleat voliwe of purchase and sale tranaaotlonu
1
a.3 reported to the Federal Reserve Bank of Now York.
Not*.—Hlaha and lowe afe for Individual aeries and may be on different datea for different dates for different series.
For spreads, high refers to widest, and low to narrowest.




EXHIBIT E
STOCK

MARKET

STOCK MA1KIT CKIDIT
"*CHANGE IN SERIES
Millions of

MORTGAGE

RECORDINGS

AND




LOANS

Exhibit F - Tables for Exhibit h
Stock Market
Date

Stock price
Index 1/

1957-60 - High
Low
1961 - High
Low
JanuaryFebruary
Mar. 10
Mar. 17
Mar. 2k £/

Common

Trading
volume y
yields 2/ (millions
(per cent) of shares)

(7/31/59)
(12/20/57)

(3/17)
(1/6)
59.72
62.17
63.1*8
6k. 60
6k. k2

3.08
1+.72
3.01
3.32

1+.9
1.1+
5.8
3.6

3.28
3.13
3.06
3.01
3.01

1+.2
k.9
5.8
5.3
5.1+

Stock market customer credit
Customers1
Bank
debit bal- loans to
ances kZ
"others" s c
(In millions of,dollars)

Total

k,76k

(4/59) 3,/jOi (4/59) 1 373 (5/59)
3,55Il. (V59) 2,182 (12/57) 1 0 6 0 (H/57)

l+,52l+ (2/61)3,358 (2/61)1,172 (1/6)
li,la6 (1/61)3,253 (1/61)1,152 (3/10)
U,lil6
l+,52l+
n.a.

3,253
3,358
n.a.
- n.a.
n.a.

1,163
1,166
1,152
1,158

n^,-»Hot available.
jg/ Prelie-lkary.
V
Standard and Poor's composite Index nf 600 ooaaon rtoekj, weekly eloet.y prices, 1941-43-10. Monthly data are
averages of dally figures rather than of f H (ley's only. High,* and lone are for M d a y s ' data only,
1/ Standard and Poor's ecopoelte stock yield based on Wednesday data converted to weekly closing prleep by Federal
Reserve, Yields shown are for dates on which pries Index rcaohed Its high or low.
3/ Averages of dally trading volwe on the New York Stock Exchange.
ml K n d o f B o n * h 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 earning 0. S. Government
securities. Prior to July 1, 1959, such loans are excluded only at banks In Mow York and Chicago. Weekly reporting

Nonfarm Mortgage Recordings and Loans 1/
Total
Unadjusted
Seasonally
Unadjusted
FHA
VA.
adjusted 2/
(Millions of dollars)
1960 - Jan.
Feb.
Mar.
Apr.
MayJuly
Aug.
Sept.
Oct.
Nov.
Dec.
1961 - Jan.

2,467
2,430
2,lila.

2,1+00

2,14+6
2,127
2,1,93
2,1+88
2,1+61+

2,1+51
2,1+26
2,1+07

2,079
2,11+9
2,1+06
2,366
2,500
2,690
2,528
2,781+
2,598
2,525
2,378
2,338
2,075

%

361
336
322
365
362
1+17
1+25
1+31+
1+01+

390

lao

195
170
173
153
155
&s
181
169
162
150

&

Conv.

1,167
1,612
1,872
1,878
2,023
2,150
2,006
*2,186
2,00l+
1,929
1,821+
1,806
1,533

n.a.—Not available.:
,
J/ fotal recordings data are estimates based on reports from about 460 areas and Include
mortgages of |20,000 or less secured by nontarm real estate, primarily residential properties.
FHA-laeured leans represent gross amewt of insurance written, and VA-guaranteed loans the gross ametart
of loans closed,on 1-4 family houses. Conventional data are derived as a reeldual, althoi*h total
recordings and VA and FHA leans ere net strictly comparable In concept or timing,
i/ Three-month moving average, seasonally adjusted by federal Reserve.
Seureei Federal Heme Lean Bank Beard, Federal Housing Administration and Veterans Administration,




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

1961
January
February
March

New capital
Corporate 1/
State and local 2/
1961
1 I960 1 1959
I I960 1 1959

g/526
e/650
e/500

- 577
715
860

April
May
June
July
August
September

1st
2nd
3rd
Jfbh

quarter
quarter
quarter
quarter

e/1,676

1st half
Three quarters
Year

738
6U6

e/725
e/600
e/650

739
623
582

766
567
1,03b

891*
785
887

731
550
1,033

727
962
738

535
71*0
703

572
602
689

871*
959
876

879
861*
900

339
502
fi/l*8l

2,151
2,367
2,1*27
2,709

2,201*
2,567
1,979
2,61*2

4,519
6,91*5
9,655

MS

"

October
November
December

eax

9,392

e/1,975

639
858
61*6
932
593 '
1,006

a

1*65

597
519
1*55"

1,91*3
2,316
1,863
E/1,322

2,11*3
2,531
1,51*8
1,571

4,259
6,122
E/7,W*

l*,67l*
6,222
7,793

Excluding finance companies
1st quarter
2nd quarter
3rd quarter
l*th quarter

e/1,376

Year

1,722
2,150
2,017
e/2,309

1,599
2,1*12
1,716
2,503

e/8,198

8,630

Estimated.
Preliminary.
Securities and Exchange Commission estimates of net proceeds.
—
i/
2/ Investment Bankers Association of America estimates of principal amounts.
3/ Total new capital issues excluding offerings of sales and consumer finance
companies.




Other Security Offerings
(In millions of dollars)
Gross long-termT7"
Foreign government 2/
Federal agency 3/
1961 | I960 | 195?
1961 | I960 | 1939"
81
60

182
150
150

34
72
40

58
50
42

11*8
354

25
1
36

85
1
35

199

34
41

33
30
70

160
149
181

86

533

547

1,672

707

2

175
70

2

2

199
175

150

Net short-term 47
Federal agency 3A
State and local government 5/
58
140
-80
70
-146
-157

197
-25
-197

48
415
-175

57
392
131

-196

-82

176
33

-202

-59
-277
170
320

/

#
368
286

95
23

362
133
79

-201 .

50
-189

-176
-117

-250

-23
-33

280
240
44

18

362

-633

1,969

-16

EZ
1/

' -4
181
4

-81

Preliminary.
.
These data differ from those In Exhibit 0 In that refunding Issues, as well as new capital Issues, are included.
Long-term
are defined as those maturing in more than one year.
Includes securities offered in the United States by foreign governnents and their subdivisions and by international organizations. Source: Securities and Exchange Commission.
3/ Issues not guaranteed by the U. S. G over m e a t . Source: long-term, Securities and Exchange Commission; shortterm , Treaswy Department and Federal Reserve.
4/ These data differ from those In Exhibit 0 and above In that they represent new offerings less retirements, whether
from the proceeds of refunding issues or from other funds. Dsita include only Issues with original maturity of one
year or less.
5/ Principally tax and bond anticipation notes, warrants or certificates and Public Housing Authority notes. I*
2/

aeotritiAs




Large Long-term Public Security Issues for New Capital
.(Other than U. S. Treasury) 1/
Proceeds of Large Issues Offered
(In millions of dollars)
Month
I960 - February
March
April
May
June
July
August
September
October
November
December
1961 - January
February

Corporate

State and
local
government

262
381*
309
139
a2
303
581
266
$66
1*65
260
11*7
26?

283
225
370
23k
561
191
298
367
1*6
186
222
391
360

Other 2/
320
191
71
28
30
75
25
77
150
99

Large Individual Issues Offered March 1 through 2k

type 3/

Issuer

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

CORPORATE
Am. Machine & Foundry Co. Conv. deb.
39.5
Southwestern Pub. Serv. Co. 1st mtg. bds. 15.0

1981
1991

h.SO

Ba
A

3.53
3.89
3.55
3.16
3.35

1.50-3.60
1.75-4.00
2.85-3.60
2.1*0-3.30
1.60-3.50

A
A
Aa
Aaa
Aa

3! 20
3.W
3.51
3.50
3.44

2.10-3.65
1.90-3.85 Aa
1160-3.85 Aa
1.60-3.65 A

U-l/U
1-1/2

1.93

STATE AND LOCAL GOVERNMENT
Rev.-Ut.
Chicago, Illinois
Commonwealth of Puerto Rico
G.O.
Denver, Colorado
G.O.
State of New Jersey
G.O.
G.O.
St. Paul, Minnesota
Rev.-Rent.
Cherokee, Alabama
G.O.
, Duval Co., Florida
Rev.-Rent.
F!a. Gen. Stz%te Auth.
G.O.
"Columbus, Ohio
State of Massachusetts
G.O.
G.O.
State of Rhode Island
OTHER
Federal Land Banks

I




Bonds

30.0
ko.o
15.0
20.9
10.6
25.0
15.0
25.0
12.8
62.5
10.9
67.0

1962-85
1962-81
1972-99/81
1968-88/79
1962-91
1963-86
1962-81/71
1961i-88/71
1963-2001
1962-2010
1962-91
1966

3-5/8

3.90

—

i-a
Footnotes

-13-

1/ Includes corporate and other security offerings of $15 million and over; State
and local government security offerings of 43.0 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, 0.0. denotes general
obligationsj Rev.-Ut., revenue obligations secured only by income from public
utilities* Rev.-Q.Ut., revenue bonds secured only by revenue from qua siutilities j Rev.-»S.T., revenue bonds secured by revenue from specific taxes
only; Rev.-Rent., revenue bonds secured solely by lease payments,
h/ l/h per cent 1981 maturities not reoffered.




-Ik-

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

I960 - Feb. 29
Mar. 31
Apr. 29
May 31
June 30
July 29
Aug. 31
Sept. 30
Oct. 31
Nov. 30
Dec. 30
1961 - Jan. 31
Feb. 28

During month following
Subsequent to
date shown
date shown
Corporate State and Other 2/ Corporate State and Other 2/
local govt.
local govt.
301
299
202
1*83
237
596
216
276
14i0
260
91
110
55

2#
259
2li3
277
180
275
283
212
258
21*2
k12
181
307

35
30
30
77
50

—

372
3kk
357
553
155
1,006
731
836
585
335
1,036 l,0i|6
1,125

385
280
258
502
380
32I4
283
336
391
560
682
360
638

35
60
30
127
50

—

Forthcoming Large Offerings, as of March 2k
Type

Southern Calif. Edison Co.
*John Deere Credit Co.
Tennessee Gas Trans. Co.
Flintkote Co.
American Telephone & Telegraph Co.

Amount
Approximate date
(millions
of offering
of dollars)

1st ref. mtg. bds.
30.0
Deb.
25.0
Pfd. stk.
20.0
Deb.
35.0
Com. stk.
e/975.0

Deb.
Spiegel, Inc.
Deb.
Mead. Corp.
Transcontinental Gas Pipe Line Co. 1st mtg. p. 1. bds.
S.F. deb.
Minneapolis-Honeywell Regulator Co.
Pfd. stk.
Minneapolis-Honeywell Regulator Co.
Com. stk.
Duke Power Co.
Commerce Oil Refining Corp.
Realty Collateral Corp.

Deb., uds. & com.
Coll. tr. notes

Apr. 5
Apr. 5
Apr. 6
Apr. 7 .
Apr. lk
(rights expire)
Apr. 15
liO.O
Apr. 18
25.0
Apr. 20
35.0
Apr. 20
25.0
Apr. 20
25.0
May
15.0
(rights expire)
Indefinite
1*5.0
•Indefinite
20.0

STATE AND LOCAL GOVERNMENT
Detroit, Michigan
Wash.
Sanitation Dist., Md.
for
FRASER
Detroit Sch. Dist., Mich.

Digitized


G.O.
G.O.
G.O.

16.7
10.0
10.0

Mar. 28
Mar. 28
Mar. 28

J-2

-15-

Forthcoming Large Offerings, as of March 2k (Cont'd)
Type

Amount Approximate date
(millions
of offering
of dollars)

STATE AND LOCAL GOVERNMENT CCont'd)
Commonwealth of Kentucky
State of Michigan
State of California
Cleveland, Ohio
•a-Univ. System Bldg. Auth. of Ga.
Public Housing Authorities
*-Los Angeles Unif. Sch. Dist., Calif.
Cincinnati, Ohio
Mass. Turnpike Auth.
Orleans Parish School Dist., La.
Dade County, Florida
New York State Housing Fin. Agency
* Jacksonville Expressway Auth.

G.O.
Rev.-Ut.
G.O.
G.O.
• Rev.-Q.Ut.
G.O.
G.O.
G.O.
Rev.
G.O.
G.O.
Rev.
Rev.-Ut.

100.0
25.0
190.0
1L5
13.0
50.1
30.0
21.5
175.0
10.0
1*6.0
100.0
1*0.0

Mar. 29
Apr. It
Apr. 5
Apr. 11
Apr. 11
Apr. 20
May 2
May 9
Indefinite
Indefinite
Indefinite
" Indefinite
Indefinite

OTHER
None
*—Included in table for first time.
e/ Estimated.
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 K
Yields on New and Outstanding
Electric Power Bonds, Rated Aa and A 1/

Date

1952-1959 - High
Low
1959 - Oct.
Nov.
Dec.
1960 - Jan.
Feb.
Mar.
Apr.
May
^
June
July 8
13
Sept. 15
23
28
Oct. 5
21
Nov. 1*
16
17
18
Dec. 7.
1961 - Jan. 12
18
25
Feb. 8
16
16
2.3
21

Aa-rated offering yields A-rated offering yields
Amount above
Amount above
Actual seasoned yields Actual .seasoned yields
(per cent) (basis points) (per cent) (basis points)
5.30 (12/8/59)
2.93 (-3/31/51i)
5.132/
*5.08
*5.30
5.09
I4.82

•li.91
*14.88
1.63

87
-8
36
1*2
63
16
25

37
32
26

5.65 (9/18/59) 123
3.00 (3/17/5L) . -15
5.33

143

5.l45 n/
*5.301/

51
28

14.97
5.114
5.15
*1.95
14.93
I4.86
I4.80

i

i

L78
14.85

33
140
149

I4.60

11

14.55

L r

8
2k

1

5.00
I4.I4I4

9
35
. 29
11
11

I4.88

26

5.05

143

li.60
14.65

-2
y

7
-2

s

I4.I47

L5o
LliO

5
-5

*—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.




March 27, 1961
Part II - Canada

-17-

Canadian interest rates rose last week and there was some widening
of the spread favoring Canadian securities over comparable U.S. securities.
There was little change in the security holdings of the Bank of Canada.
However, the chartered banks sold significant amounts of bills and the
general public were net purchasers. The Canadian dollar eased slightly below 101 (U.S. cents) and a small discount developed on the forward rate as
the spread favoring the Canadian bill widened to almost 1 per cent per annum.
Industrial prices continued to rise to new highs.
Money market. There was a rise in short-term Treasury bill yields
last week. The 3-month bill rate rose 12 basis points to 3.28 per cent on
March 23, compared with 3*16 per cent on March 16. The 6-month bill yield
rose 10 basis points to 3«Wl per cent from 3*3U per cent the week before.
The. Bank of Canada sold only $7 million of Treasury bills during the week,
while the chartered banks sold $37 million and the general public purchased
$Ul million.
There was a further rise in the spread favoring the Canadian
over the United States 3-month bill, but a small discount on the forward
Canadian dollar resulted in a slight decline in the advantage to the
Canadian bill on a covered basis, but the difference continued at close to
0.9 per cent per annum.
Bond market. Yields on Canadian Government bonds rose for all
maturities during the last week, and for most maturities there was an increase in.the spread over yields on comparable U.S. securities. The spread
between comparable Canadian and U.S. securities (in per cent per annum)
follows;

91-day bill
182-day bill
8-year bond
30-year bond
35-year bond

March 16

March 23

Change

0.83
0.85
0.97
1.30
1.1*6

0.99
0.96
0.98
1.36
1.U5

+0.16
+0.11
+0.01
+0.06
-0.01

There was little change in bond holdings during the week. The Bank of
Canada showed no changes and chartered banks increased their holdings by
$2 million while the general public sold $7 million.
The press reported some slack in the buying of the new $50 million
Province of Ontario issue which it attributes largely to the low level
of orders from institutional investors. However, it is expected that "retail"
buying will take up the slack before long. The new issue permits a choice
between 5-l/U per cent 7-year debentures and $-1/2 per cent 20-year
debentures, both priced at par. The Commonwealth of Australia is offering
$20 million, 5-3A per cent 20-year bonds at 98-1/2 to yield £.88 per cent.
This is only the second time that Australia has gone to the Canadian market
for borrowing purposes; the first time was in 1955.




-18-

Stock exchanges. Industrial stock prices continued to rise
through the week ending March 22 as noted in the following table:
New York
Standard & Poor

Toronto

Montreal

I960 - High
Low
1961 - High
Low

532.90
U72.38
560.00
535.75

320.0
258.5
307.5
287.0

65.00
55.3k
68.66
62.77

March 15
16
17
20
21
22

555.00
588.38
559.75
559.7k
558.56
560.00

~ 301.3
30U.6
307.1
307.5
306.3
307.1

67.27
67.99
68.1*2
68.66
68.UU
68.36

total value of shares sold during the week ending March 17, rose to
$11,775 million compared with $9.Wi9 million the week before.
Foreign exchange. The spot rate on the Canadian dollar eased
some during the week and closed at 100.9 (U.S. cents) oh March 23 compared
with 101.3 (U.S. cents) the week before. A small discount developed on the
forward Canadian dollar as the yield spread between Canadian and. U.S.
Treasury bills widened further.




r

*

Selected Canadian Money Market and Related Data
3-m<). Treas. bills
Canada
Spread
P.s^/ over U.S.

I

.

Canadian dollar
3-ao* discount (-1
S
|T
forward preadum(+)£/

1959 - High
Low
1960 - High
Low

6.16
3.25
5.1U
1.68

U.U9
2.80
U.53
2.10

2.96
0.30
1.62
-0.82

105.51
102.58
105.27
100.33

'

Mar. 2
9
16
23

3.21
3.21
3.16
3,28

2.5U
2.U3
2.33
2.29

0.67
0.78
O.83
0.99

101.50
101.72
101.25
100.91

101.U8
100.71
101.27
100.88

-

Net lncentive to
hold Can,
bill®/

0.99
-0.91
-0.06
0.06
0.06
-0.12

• 1.99
-0.57
0.61 •
0.8U
0.89
0.87

-

| a/ Average yield at weekly tender on Thursday,
.
b/ Composite market yield for the U.S. Treasury bill on Thursday dose of business*
I y In U.S. cents.
5 cf/ Spread between spot rate and 3-month forward Canadian dollar on Thursday
i 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
1959 - High
Low
1960 - High
Low

6„2U
5.11
5.33
1.99

Mar. 2
9
16
23

3.U3
3.U1
3.3U
3.UU

Sk

i:E
0.69
0.91 .
.0.85
0.96

Intermediate
bonds (8 yr.)
Spread
Ca^da
uTJ/
5.27
lt.50

Long-term bonds
(20 year)
(35 year)
Spread
Spread
Cagpta
Canada
uTi/

a

5.55

1.11
0.21

5.30"
u.uu
5.U2
u.63

U.66

0.99
l.OU
0.97
0.98

5.06
5.09
5.16

U.09

U.65

U.66
U.70

5.06

1.36
0.85

5.05
-U.73
5.28
U.68

1.61
0.95

1.30
1.31
1.30
1.36

5.06
5.0U
5.50
5.07

1.U8
1.U9
1.U6
1.U5

a/ Average yield at weekly tender on Thursday.
T>/ Spread between Canadian auction rate and composite market yield of U.S.
bill on close of business Thursday.
c/ Government of Canada 2-3/h per cent of June 1967-68.
a/ Spread over U.S. Government 2-1/2 per cent of 1963-68.
e/ Government of Canada 3-lA per cent of October 1979,
7/ Spread over U.S. Government 3-lA per cent of 1978-83.
&/ Government of Canada 3-3A per cent of September 1996 - March 1998#
n/ Spread over U.S. Government of 1995#




-20-

Canada: Changes in Distribution of Holdings of Canadian
Government Direct and Guaranteed Securities
(millions of Canadian dollars, par value)
Bank of Canada
Treas.
bills
Bonds
Jan. 19
26
Feb. 2
9
16
23
Mar. 2
9
16
23

Sourcet

.

- 1U
- 20
- 18
+ 5
+ 10
- H.
+ h
+ 2
- U6
- 7

+
+
+
+

Government
Total

25
1
I4.6
L
30
12
U2
1
77
0

+
+
+

Chartered banks
Treas.
Bonds
bills

25
15
61
6
9
6
36
k
1
8

+
+
+
+
+
-

10
I4I4.
2h
33
8
18
3
2
0
- 37

- 17
- 6
+ 51
+ 8
+ 22
-+ 7
+ 1
- 5
+ #
+ 2

General public
Savings Treas.
bonds bills Bonds
+
-

7
7
3
3
7
7
6
3
0
- 9

+
+
+
+

3
10
8
31
6
9
7
1
5
la

+
+
+
+
+
-

17
7
56
6
8
19
7
1
21
7

Bank of Canada, Weekly Financial Statistics.
Selected Canadian Financial Statistics
(in millions of Canadian dollars or per cent)
Dec.

1. Money supply:
Currency and deposits
Lees: Govt, deposits
Equals: privately held
Change in period
2, General bank loans
Change in period
3. Total Govt, securities:
Of -which: Treas. bills
Bonds
Savings bonds
u. New security issues^/
Of -which sold in U.S.

Monthly
Jan.

Feb.

Mar. 1

Weekly
Mar. 8

Mar. 15

-

13,811
5U8
13,263
+ 123

13,763
35U
13,409
+ 1U6

13,798
U15
13,383
26

13,798
las
13,383
+ 160

13,773
388
13,385
+
2

14,117
+ 90

1/5,076
- la

1/5,113
+
37

5,003
+ 12

.5,027
+ 2U

17,760
1,985
12,179
3,596
1,311
lit

17,239
1,985
12,161
3,1*93
788
1

17,729
1,985
12,160
3,581

17,729
1,985
12,160
3,581
131
0

17,726
1,985
12,160
,
. 3,581
U21
0

5. Chartered bank liquidity:
Cash reserve
1,017
1,027
1,016
1,001
999
Cash ratio
8.2
8.2
8.0
8.1
8.0
Liquid assets
2,189
2,093
2,281
2,28k
2,282
Liquid asset ratio
16.8
18.2
18 .U
17 .U
18.3
1/ Seasonally adjusted.
""
' '
2/ Source:
A. E. Ames & Co., Ltd. (Includes public and private securities.)




17,825
1,935
12,309
3,581

1,009
8.1
2,272
18.3