Full text of H.16 Capital Market Developments : May 2, 1960
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Not for Publication DECONTROLLED AFTER SIX MONTHS E.lk May 2, I960 CAPITAL M A R K E T D E V E L O P M E N T S IN T E E U N I T E D STATES A N D CANADA 4 idGO (Including a Review of Foreign Borrowing in International Capital Markets) Part I - United States During the week ending April 29, corporations sold large issues totaling $1|5 million and State and local governments sold bonds with total proceeds of $Lli9 million. This week, the calendar includes corporate issues for $55 million and State and local government issues aggregating $182 million. The State and local government financing total includes a $133 million Public Housing Authorities issue which is expected to be sold at mid-week. Bond yields - Yields changed little for seasoned bonds, except those for State and local government bonds which increased moderately. Yields on corporate bonds increased slightly, while yields on U. S. Government obligations declined slightly. A new Aa-rated, first mortgage electric utility bond issue . was offered to the public last week to yield ii.95 per cent, about the same as that for a comparable issue offered two weeks earlier. . Yields for corporate and State and local government bonds were relatively stable during April showing net increases from 1 to 6 basis points. U. S. Government bond yields increased throughout the month, with the rise for the month totaling 16 basis points. Mortgage recordings - For the third month in a row, the estimated amount of nonfarm mortgage recordings in February was below yearearlier totals. Conventional loans continued to represent about threefourths of total activity. The seasonally adjusted annual rate of mortgage recordings changed little in January. At $29.8 billion, it was the second highest rate on record for the month, but 7 per cent below a year earlier. May security volume estimates - The volume of public security financing for new capital for 'both corporations and State and local governments is expected to continue to be moderate in May. The volume of corporate security financing is estimated at $700 million, slightly below the volume in April and one-eighth smaller than in May 1959. Large public issues are expected to total over $200 million. -2- State and local government bond sales are expected to total #650 million in May, including a large Public Housing Authorities issue which is expected to be sold this week. This volume of bond sales would be one-tenth smaller than the April total, but one-tenth larger than the volume in May 1959. Stock prices - Standard and Poor's index of 500 common stocks declined further last week, closing at 39 on April 27. Trading volume averaged 3.0 million shares a day. Stock prices had increased during the first half of April, but in recent weeks have declined substantially with the net decline for the month being about 2 per cent. At the end of April, prices were 10 per cent below the January high and 2 per cent above the March low. More detailed information concerning recent capital market developments is presented in the attached exhibits. Developments in the Candaian capital ma rkets 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. HIGH-ORAP1 BOND YIELDS f LOWER-GRADE BOND /vf • U.S. G( YIELDS L W L l T Z i /\> / • c o i / VjXL/l /I Z / 1 1/ v f x J i J 11S7 $ O V M x_a f V J J list S 0 M T i ] VVk T o " i GOVT i "TUT S 0 M __J Hto. v_TU= S' T i l - 5 11.11* Exhibit B - Tables for Exhibit A High-grade Bond Yields State and local govt. Aaa y Spread between U. S. Govt, and State and Corporate local Aaa Aaa Corporate Aaa 1/ U. S. Govt, long-term 2/ Low High Low High Low 1960 - High Low 2.85 (lt/23) I t . l l t (9/27) 3-55 (5/2) I1.61 (12/31) U.09 (1/9) It. 61 (1/29) It.Ut ( V 8 ) 2.1.5 (8/6) 3.76 (10/18) 3.07 ( V 2 5 ) ij-37 (12/31) 3.83 (1/2) lt.l»2 (1/8) LOO (3/25) 1.90 (9/2) 3.1.5 (8/29) .60 3.06 (3/26) 3.53 (1/7) 3.28 ( V 7 ) .19 .68 Apr. Apr. Apr. Apr. Apr. 1*.1*5 u. a ia5 l*.lt5 k.k6 It. 07 lt.10 lt.18 It. 21 U. 20 3.28 3.28 3.29 3.29 3.3k .37 .34 .27 .21* .26 .79 .82 .89 .92 .86 Date (Per cent) 1951* 1957 1958 1959 - 1 8 15 22 29 2/ .30 .1*7 .31* .92 .53 .92 .22 .50 .16. .1*6 Lower-grade Bond Yields Date Corporate Baa 1/ State and local govt. Baa y Spread between Aaa and Baa I State and . Corporate 1local govt. (Per cent) 1951* 1957 1958 1959 - Low High Low High Low I960 - High Low 3.1*1* (12/31) 5.10 (11/29) l*.5l (7/11) 5.32 (12/31) It.83 (Vl7) 5.36 (2/12) 5.17 (lt/8) 2.93 (8/5) l*.5l (8/29) 3.61* (5/1) It. 1*6 (7/2) 3.92 (3/26) It. 1*6 (1/7) It. 22 ( V 7 ) Apr. Apr. Apr. Apr. Apr. 1 8 15 22 29 E/ 5.18 5.17 5.18 5.21 5.23 It. 22 It. 22 It. 21* lt.23 It. 28 .52 1.2? .77 .77 .56 .79 .71 .96 1.21 .93 .98 .79 .97 .93 .71* .73 .73 .76 .77 .91* .91* .95 .91* .91* 2/ Preliminary. 1/ Weekly average of dally figures. Average term of bonds Included Is 25-26 years. 2/ Weekly average of dally 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 on different dates for different series. STOCK MARKET 5 . .. P. M 1957 "MORTGAGE J . s °, 195$ RECORDINGS AND M - J 5 • 1959 I960 LOANS S-/-1 V-\ , V i J- -A/V » Exhibit D - Tables for Exliibii, C •7- Stock Market Stock price index 1/ Date Trading Stock market customer credit Coimnon Customers1 Bank volume Jl/ debit bal- loans to yields 2/ (millions ances 4/ "others" 5/ (per cent) of shares) (Millions of dollars) 1957-59 - High Low I960 - High Low 60.51 39.78 59.50 54.24 3.07 4.66 3.18 3.51 4.3 1.4 3.6 2.4 4,764 3,554 4,365 4,158 3,401 2,482 3,198 3,028 1,373 1,060 1,167 1,130 Februa ry March Apr. 15 Apr. 22 Apr. 29 2/ 55.69 55.02 56.43 55.^2 54.37 3.38 3.45 3.36 3.43 3.49 3.6 2.9 2.6 3.0 3.0 4,274 4,158 n.a. n.a. 3,129 3,028 n.a. n.a. 1,145 1,130 1,112 1,114 n.a. n.a.—Not available. g/ Preliminary. 1/ Standard and Poor's Tmposlte Index of 500.oonmon stocks, weekly closing prices, 1941-43=10. Monthly data are averages of dally 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 by Federal Reserve. Yields shown are for dates on which price Index reached its high or low. 3/ Averages of dally trading volume on the New York Stock Exoliange. — Aj 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 tanks account for about 70 per cent of loans to others. For further detail see Bulletin. Date 1959 - Feb. Mar. Apr.' MayJuly Aug. Sept. Oct. Nov. Dec. 1960 - Jan. Feb. Nonfarm Mortgage Recordings and Loans 1/ ' Unadjusted Total Seasonally FHA -VA. Unadjusted adjusted 2/ (Millions of dollars) Conv. 2,631 2,683 2,683 2,757 2,780 2,787 2,769 2,650 2,639 2,589 2,185 2,187 2,245 " • 2,586 2,776 2,768 2,974 3,100 2,871 2,834 2,799 2,442 2,487 2,079 2,149 506 530 490 478 521 524 504 • -510 523 448 451 417 368 238 260 231 211 221 227 202 221 238 220 241 195 170 1,500 1,796 2,055 2,079 2,233 2,349 2,165 2,103 2,039 1,775 1,794 1,467 1,612 n.a.—Not available. 1/ Total recordings data are estimates based on reports from about 450 areas and Include mortgages of $20,000 or less secured by nonfarm real estate, primarily residential properties. FHA-lneured loans represent gross amount of insurance written, and VA-guaranteed loans the gross amount of loans closed#on 1-4 family houses. Conventional data are derived as a residual, although total recordings and VA- and FHA loans are not strictly comparable in concept or timing. 2/ Three-month moving average, seasonally adjusted by Federal Reserve. Source1 Federal Home Loan Bank Board, Federal Housing Administration and Veterans Administration. Exhibit E Long-term Corporate and State and Local Government Security Offerings and Placements (In millions of dollars) I960 1 New capital Corporate 1/ State and local 2/ I960 1959 1 1958 1 1958 1 1959 638 858616 E/596 fi/739 E/775 81*0 7l*5 631 728 731* e/725 899 791 87U 1,11*0 597 887 e/700 e/650 July August September 531 718 709 1,107 510 1,111 567 511* 1*68, 806 1*03 651 October November December 887 8# 936 862 518 920 593. 513 lt55 1*56 1*71* 1*35 January February March April May June 1st 2nd 3rd iith quarter quarter quarter quarter S/700 g/2,110 1st half Three quarters Year 2,216 2,561* 1,9# 2,688. 3,139 2,623 2,760 2,300 1,780 6,738 9,U27 m 10,823 6/1,816 593: 1,00.6 2,11*2 ;js 1,562 4,673 6,223 812 953 511 " 7# If 2,276 2,2W* 1,860 1,365 1*,520 6,380 7,71*6 Excluding finance companies hj 1st 2nd 3rd l*th quarter quarter quarter quarter e/l,76Q Year 2,011 2,1*0 9 1,695 2,519 2,899 2,586 2,731 2,213 8,665 10,1*29 e/ Estimated. __ 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. %/ Total new capital issues excluding offerings of sales and consumer finance companies. -9~ H.ll* Exilibit F Other Security Offerings 1/ (In millions of dollars) Long -te m Federal agency 3/ Foreign government 2/ I960 I960 | 1959 1959 1 1958 1 1958 JanuaryFebruary March 77 59 2 196 53 April May June 56 50 1*2. 139 198 120 July August September 85 1 36 9 5 17 October November December 33 1*2 70 58 123 7l* 558 992 U*7 Year 182 150 . — 190 1*28 295 233 1*60 273 April May June 563 1*11 2 1*5 July August Sept emb er October November December 268 315' E/363 Year 1,163 251 — 523 — — 161* 98 150 — 220 86 707 Short-term State and local government 1*/ January February March 199 175 — 2,321 Federal agency 3/ 359 500 1*89 371 208 H*l* 357 351* 261* 1*86 675 289 209 161 329 21*6 1*67 399 289 1*23 369 727 365 665 1*37 206 330 235 3li3 358 231 1*15 21*3 733 1*71 288 1*51* 111* 137 h,179 3,910 6,01*7 3,098 1*79 1*63 1 EZ Pre Urinary. 1/ Data presented in this exhibit differ from those in Exhibit E in that refunding Issues, ao well as new capital issues, are Included. Long-term securities are defined as those maturing in more than one year. 2/ Includes securities offered in the United States by foreign governments and their subdivisions end ty international organizations. Source: Securities and Exchange Commission, 3/ Issues not guaranteed by the U. S. Government. Sourcet long-term, Securities and.Exchange Commission; short-term, Federal Reserve. 4/ Principally tax and bond anticipation not#s, warrants or certificates and Public Housing Authority notfcir. In some instances PHA notes included may have a somewhat longer term than one year. Source« Bond Buyer. Exhibit Q 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 1959 - March April May June July August September October November December i 9 6 0 - January February March State and local government 215 359 31*2 28U 110 363 199 Loo 1*21 230 279 262 381* 369 563 258 635 191* 263 211* 29l|. 163 217 388 283 225 Other 2/ 176 20 50 60 50 98 175 20 ~ 70 100 320 191 Large Individual Issues Offered during April Issuer Type y Amount Coupon (millions rate or Offering Maturity Rating of net inter- yield dollars) est cost CORPORATE Carolina Power & Lt. Co. 1st mtg. bds. 1st mtg. bds. Commonwealth Edison Co. 1st mtg. bds. Alabama Power Co. S.F. deb. National Fuel Gas Co. Pfd. stk. Kratter Corp. Mountain Sts.Tel.&Tel.Co. Deb. Iowa-111. Gas & Elec. Co. 1st mtg. bds. United States Plywood Corp S.F. deb. Middle South Util., Inc. Com. stk. Transcon.Gas Pipeline Co. 1st mtg. bds. Transcon.Gas Pipeline Co. Com. stk. 1st mtg. bds. Metropolitan Edison Co> Cincinnati Gas & Elec. Co. 1st mtg. bds. 25.0 30.0 19.5 18.0 23.6 1(0.0 15.0 25.0 16.k 35.0 16.2 15.0 30.0 1990 1990 1990 1985 li-7/8 1-5/8 5 5-1/8 U.85 a. 63 L98 5.05 Aa Aaa A Aa 2000 1990 1985 5 5 5-i/li lu 87 l*.9k 2.25 Aaa Aa Baa 1980 5-iA 5.33 Baa 1990 1990 5 5 li.9 5 4.88 Aa Aaa H.lli -11- G-2 Large individual Issues Offered during April (Cont1d) Type 1/ Coupon Amount Offering rate or (millions Maturity net inter- yield of est cost dollars) Rating STATE AND LOCAL GOVERNMENT State Public School Bldg. Auth., Pa. Rev. -Rent. N. I. City Msg. Auth. G.O. Puerto Rico Wtr. Res.Auth. Rev.-Ut. Chicago, Illinois G.O. State of California G.O. Term Triborough Br. & Tun.Auth. Serial Philadelphia, Penna. G.O. Cleveland, Ohio G.O. Los Angeles C.S.D.,Calif. G.O. State of Tennessee G.O. New York,i New York G.O. Sacramento Mun. Ut. Dist., Serial Calif. Term 16.0 4.00 3.10-4.05 1962-99/65 20.5 1962-2010/75 1.01 2.85-1.02 20.0 1962-97 4.40 3.00-4.38 10.0 1962-79 3.60 2.85-3.65 25.0 1962-86/81 3.84 2.80-3.91 Loo 74.0 1985 4.03 26.0 1970-75 3.50-3.75 1961-90 29.3 3.77 2.40-3.88 1961-80 ' 3.39 2.50-3.45 13.3 16.0 1961-85 \ 3.87 2.40-3.90 1961-80 15.0 3.32 2.40-3.35 3.86 2.65-3.90 1961-90 75.0 1966-80 11.3 3.25-3.60 3.9k 18.8 4.00 1999 A Ba< A Aa A Aa Aa Aa A Aa OTHER Federal Land Banks Commonwealth of Australia Bds. Bds. 1*6.0 25.0 1964 I960 4-1/2 5-1/4 4.40 5.45 1/ La eludes corporate and other security offerings of #15 million and over; State and local government security offerings of Sip 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; 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 frcm specific taxes only; Rev.-Rent., revenue bonds secured solely by lease payments. Forthcoming Large Long-term Public Security Offerings for New Capital (Other than U. S. Treasuiy) 1/ Expected Proceeds from Forthcoming Large Issues Subsequent to date shown During month following date shown Date of computation Corporate 21*6 287 165 238 198 37JU 385 226 210 207 301 299 202 Apr. 30 May 29 June 30 July 31 Aug. 31 Sept. 30 Oct. 30 Nov. 30 Dec. 31 Jan. 29 Feb. 29 Mar. 31 Apr. 29 ^ 25b 2h7 ll»6 356 385 270 115 295 bhS 210 255 250 2U3 |other 2/ 50 50 25 70 30 b5 35 — coi Porate 3U6 332 272 305 517 69U 509 271 280 252 372 3 liU 357 50 517 761 500 h06 h02 U70 336 185 BhS 310 3# 280 258 50 25 70 30 ii5 35 — Forthcoming Large Offerings, as of April 29 Issuer Type Amount (millions Approximate date of dollars) of offering CORPORATE - Columbia Gas System, Inc. Com. stk. E.T. General American Transportation Corjx S.F. deb. Uris Building Corp. Deb. Wisconsin Telephone Co. 1st nrfcg. bds. Milwaukee Gas Light Co. Deb. Texas Eastern Transmission Corp. 1st mtg. bds. Midwestern Gas Transmission Co. 1st mtg. p. 1. bds. Michigan Wisconsin Pipe Line Co. 1st mtg. bds. -^Southern Electric Generating Co. S.F. deb. -^National Cash Register Co. Commerce Oil Refining Corp. Deb., bds. & com. 25.0 30.0 20.0 20.0 22.0 25.0 60.0 30.0 I4O.O liO.O 1:5.0 May i| May 5 May 11 May 11 May 18 May 26 May June 2 June 3 June Indefinite STATE AND LOCAL GOVERNMENT State of Minnesota Public Housing Authorities Jacksonville, Fla. Cincinnati, Ohio ^Detroit, Michigan -^Memphis, Tennessee None G.O. G.O. Rev.-Ut. G.O. G.O. G.O. k8.8 133.4 30.0 12.2 19.0 15.0 May 3 May ii May 10 May 17 May 2li June 7 H-2 Footnotes •a—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. -ill- Exhibit I Yields on New and Outstanding Electric Power Bonds, Rated Aa and A 1/ Date 1952 - 1958 High Low 1959 - January February March April May June July Aug. Sept. Oct. Nov. 25 ' Ere. 8 9 10 1960 - Jan. 7 Feb. 25 26 Mar. 15 16 18 29 Apr. 6 8 1U 21 27 Aa-rated offering yields A-rated offering yields Amount above Amount above Actual Actual (per cent) seasoned yields (per cent) seasoned yields (basis points) (basis points) 5.00 (9/lh/$7) 2.93 (3/31/5W it h.97 *1.95 *li.93 b. 83 87 -3 1 37 29 31 23 5.13&/ 5.08 5.30 36 1|2 63 5.08 5.10 ¥1 2i6 trfy 17 iu85 33 li.Sli 39 h.?S 39. 5.50 (11/7/57) 3.00 (3/17/5U) 123 -15 *1I.752/ 23 *li.67 18 5.07 % 17 *5.65 5.33 60 h3 5.15 5.Wi,, 5.30^ 51 50 . 28 5.00 h.93 11 7 h.98 21 5.30 50 *—Single observation, not an average. \J 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. 2/ 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. May 2S I960 -Im- part II - Canada The Treasury bill yield declined rather sharply even though the Bank of Canada was a net seller of bills for the first time in ten weeks. The rate on the Canadian dollar increased slightly and the 3-month forward premium was eliminated. Bond yields declined during the weel% while stock prices fluctuated. Money market conditions. The yield on the short Treasury bill in last Thursday's auction declined 2h basis points from 3«£>0 per cent the previous week to 3.26 per cent. The yield on the 6-month bill declined 28 basis points during the same period from 3,71 per cent to 3#U3 per cent. For the first time in ten weeks, the Bank of Canada decreased its Treasury bill holdings by $10 million while the chartered banks and the general public increased their holdings by the same amount. The average rate on day-to-day loans eased slightly to 3.38 per cent. p The decline in the Canadian 3-month bill was slightly greater than the decline in the United States rate, resulting in a small decrease in the spread favoring the Canadian bill. The„3-month forward Canadian dollar, which was at a premium of 0.12 per cent (annual basis) the week before, was flat with the spot rate at last Thursday's closing. Bond market developments. Canadian bond yields declined during the week in all but the longest maturities. The spread between comparable Canadian and United States securities (Thursday yields for bills and Wednesday yields for bonds) were as follows (figures in parenthesis refer to the previous week): 0.10 per -0.13 per 0.70 per 0.97 per 1.U2 per cent on a 91-day bill (0.15) cent on a 182-day bill (-0.05) cent on an 8-year bond (0.80) cent on a 20-year bond (0.98) cent on a 35-year bond (l.UO) During the week, the Bank of Canada purchased modest amounts of bonds, the first week since February when it has not'been a net seller to the market (see Table). Press comments indicate a strengthening of the bond market from the previous week following a dearth of new issues. A break in prices the previous week came a few days after the offering of a $20 million Manitoba 5-1/2 per cent debenture as follows: 9-year maturities at 98-3/L yielding 5.68 per cent and 19-year maturities at 96-1/2 to yield 5.81 per cent. Bids on the 1979 issue fell three-quarters of a point below issue price during the general shake-out, then rose again last week. Exchange rate. The spot rate on the Canadian dollar recovered slightly last week to 103.72 (U.S. cents) following a steady U-week decline'. -16- The premium on the 3-month dollar was eliminated on April 28. Recent market rates for the Canadian dollar (U.S. cents) follow: March 17 31 April 7 1U 21 28 S£Ot 2 mos. forward 10^.27 10U.38 lOU.OO 103.86 103.67 103.72 105.1k 10U.31 103.97 103.89 103.70 103.72 Stock market. Prices of industrial stocks in the Canadian exchanges fluctuated last week after declining the week before, as noted in the following table: Date April 20 21 22 25 26 27 28 29 Toronto U90.52 U89.1t2 189.06 U85.81 U88.UO 188.23 U86.52 U85.27 Montreal 286.8 283.1 283.9 283.5 282.7 283.1 283.3 282.5 British Commonwealth Section Division of International Finance Board of Governors of the Federal Reserve System New York Standard & Poor 59.15 59.31 59.09 58.U2 58.63 58.63 58.09 57.85 J | -it-' Selected Government of Canada Security Yields 3-month Treasury billd/ Date 1957 - High 1958 - Low 1959 - High Low I960. - High Low April 7 1U 21 28 U.08 a Spread between Canadian & U.S. rates long-term 3-tao*. bonds/ billaS/ Longterm Govt.> bonds/ 3.25 5.iii 3.01 U.81 3.31 5.30 U.U5 5.55 5.05 U.35 3.78 5.30 U.U1 5.U2 5.15 3.2b 3.58 3.50 3.26 . 5.08 5.16 5.1U 5.05 ' 5.13 5.22 5.2U 5.22 0.87 6.16 f Intermediate Discount on 3-mo. Canadian dollar^/ 1.19 0.U7 1.22 0.91 2.96 0.30 0.90 -0.01 0.72 (P)0.12 , 0.98 0.98 • 0.99 0.96 • 0.19 0.06 ,0.15 . 0.10 0.12 (P)0.12 (P)0.12 0.00 Average yield at weekly tender on Thursday. ' Government of Canada 2-3/1; per cent of June 15, 1967-68. Government of Canada 3-1/U per cent of 1979. U.S. Government 3 - l / U per cent of 1978-83• Government of Canada 3 - l A per cent of 1979* Bond prices are Wednesday closing quotations. 5 / Spread between Canadian auction rate and composite market yield for the U.S. bill on the close of business on Thursday. 6/ Spread between 3^K>nths forward and spot price of the Canadian dollar, expressed as per cent per annum, on Thursday. Canada? Changes in Distribution of Holdings of Canadian Government Direct and Guaranteed Securities (millions of dollars, par value) " Bank of Canada Treas. Bonds bills Government Total March 3 10 17 23 30 + + + + + 31 31 11 U3 25 - u - 7 - 10 - 9 - 3k , - 6 - 3 - 18 -17 - 10 April 6 13 20 27 + + + - 28 37 1U 10 - 30 0 0 t 7 -- 3 - 11 + 3 + 2 Chartered banks Treas. bills Bonds + + + 12 33 1 9 2 + 1U - 10 - 3 0 + 16 ' - 27 - 7 0 - 32 - 12 - 6 + 28 + 23 '+ 3 + 11 - 10 - 33 - U > 7 + 9 + 3 + 2 - 18 - 19 + 1U - 11 + 3 + 32 , - 17 - 10 - 1 Source: Bank of Canada, Weekly Financial Statistics. General public Treas. . bills Bonds C A N A D A - U N I T E D STATES THREE-MONTH TREASURY B I L L RATES Per cent Monthly G O V E R N M E N T M E D I U M TERM B O N D YIELDS L O N G TERM G O V E R N M E N T B O N D YIELDS May 2, I960 -19- Publicly-issued Foreign Borrowing in Major International Capital Markets, 1958 and 1959 , During 1959,, total flotations of publicly-issued bonds of foreign governments and private companies in major international capital markets declined about 16 per cent below the issues sold in 1958, according to a compilation of the Economic Staff of the Worid Bank. Figures on private placements and special institutional financing are excluded from the estimates. Total borrowings by foreigners in the four major international markets (United States,' United Kingdom, Switzerland and Germany) were reduced from $89U million in 1958 to $?5U million in 1959. The reduced flotations in the United States and British markets account for the drop. Publicly-issued Foreign Bonds in Major Capital (nominal amounts in millions of U.S,. dollars) United States 59U 35 m Grand total 667 1959 Government s New issues Refunding Total Private issues m 11 515 98 Grand total Switzerland Germany 126 li dsy 1958 Government: New issues Refunding Total Private issues U.K.a/ 173 U35 36 12 36 • 12 1*2 11 3k ' 107 3k 3 Sweden Total \ 6 72lt 6 # 891 -EE 5U1 1U8 389 J* —— 75U a/ Includes borrowings by independent members of the Commonwealth but excludes those of dependent members. Sources Economic Staff ,of the I.B.R.D. The United States remained the largest supplier of capital to foreigners but its share of the total declined from 75 per cent in 1958 to 68 per cent in 1959. Flotations in Britain were also sharply BS 83 ~~5 reduced. Britain's share fell from 19 per cent of the total in 1958 to 13 per cent in 1959; moreover, refundings and not new cash issues made up the bulk of the British flotations. In 1958, Switzerland was the second major market for publicly-issued foreign borrowings as its total lending increased from the restricted level of only $36 million in 1958 to $107 million last year. There was a further growth during 1959 in foreign borrowing in Germany as money rates were reduced and the activity in the German capital market increased. In the United States, borrowings by European countries during 1959 were maintained at the 1958 levels but borrowings by Canadian governmental units and by Commonwealth countries were sharply reduced. Comparative flotations by areas (in millions of U.S. dollars) were: 1958 1959 Canada Commonwealth Europe Other areas 325 1U6 133 .63 276 38 128 -J2 Total 667 5IU The countries (other than Canada) borrowing as much as $50 million were: in 1958, Australia, South Africa and the European Steel Community; in 1959, France. Foreign flotations in Britain declined from $173 million in 1958 to $98 million in 1959» However, new cash issues (excluding refundings) were reduced from $126 million in 1958 to only $30 million last year. Borrowings were confined to four Commonwealth countries, as may be seen in the following figures on foreign borrowings in London (in millions of U.S. dollars): Government . II Government new issues 1959 1958 1959 1958 1959 U2 56 28 .U5 56 28 1U 98 Australia New Zealand Hhodesian Federation South Africa Total 126 28 2 2 12 87 56 28 2 30 U7 68 173 56 -21- Withdrawal of temporary restrictions on foreign borrowing in Switzerland, announced in late 1958, was followed t?y a rapid growth in Skis s lending in 1959. The large number of private company flotations makes Switzerland the leading center for private foreign borrowers. During the past two years European corporations have been the principal borrowers but even U.S. and Canadian issues were reported. Total Swiss landings increased from $ 3 6 million in 1958 to $107 million in 1959> broken down as follows (in millions of U.S. dollars): Government new issues ' 1958 1959 Europe Austria Belgium Denmark Eurofima France Germany Interfrigo Norway Sweden U.K. Total Private new issues 193# l9f>9 12&/ 15 9 12 3 \/ ia 2U Total 195B T359 15 9 _13 37 2k 5 12 12 3 12 15 9 2 15 9 _13 78 Other areas Canada U.S. South Africa Total 12 12 "12 "17 ™12 5 12 12 29 Total, all areas 53 36 5U 36 107 — ' 12 a/ Refunding. West Germany emerged as an exporter of long-term capital in the form of publicly-issued securities in 1958 and 19595 a private South African loan by a consortium of German banks in 1958 was reported to have been the first foreign flotation in Germany since 191b. The rapid reduction in bond yields in Germany, especially in 1959; contributed to the increase in total new issues from $22 million in 1558 to $3U million in 1959= The.breakdown of these totals are as follows (in millions of U.S. dollars): ioS/ 2k 7 10 31 Other areas Japan South Africa Total 10 10 2U To 31 *3 Ill 1 Total, all areas 3y — Total 1956 rolro ! Europe Austria NorwayTotal Private new issues 1956 1959 II Government new issues 1956 1959 1 1 12 -3U 12 — 22 3 ~3 3h a/ Includes $10 million of an original Austrian issue of $25 million in the United States which was reoffered in Germany. b/ Includes $3 million of an original Japanese issue of $30 million in the United States which was reoffered in Germany. British Commonwealth Section Divison of International Finance Board of Governors of the•Federal Reserve System