Full text of H.16 Capital Market Developments : May 31, 1960

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Not for Publication

DEC0HTR0LLED

after SIX MONTHS

XII*

May 31, I960.
CAPITAL MARKET DEVELOPMENTS
THE UNITED STATES AND CANADA
Part I - United States

The volume of large public security financing f o r new
c a p i t a l was quite small l a s t week—smaller than had been anticipated
a week e a r l i e r as the sale of a corporate issue f o r #25 million was
i n d e f i n i t e l y postponed and the State of California rejected the only
bid submitted for #50 million of bonds. During the week, however, two
State and l o c a l government issues with t o t a l proceeds of $23 m illion
and a Canadian provincial issue for #28 million.were sold. No large
corporate issues were sold.
The calendar f o r t h i s holiday-shortened week i s expected t o
be substantial, particularly f o r corporate s e c u r i t i e s . Corporations are
expected t o o f f e r s e c u r i t i e s with aggregate proceeds of $130 million.
One l o c a l government issue f o r $10 m i l l i o n i s a l s o scheduled f o r sale.
Bond y i e l d s - Changes in bond y i e l d s were mixed, but minor
l a s t week. Yields on high-grade corporate and State and l o c a l government bonds increased s l i g h t l y , while those on lower rated bonds remained
stable. Yields on U. S. Government obligations declined s l i g h t l y .
A new A-rated, 30-year, f i r s t mortgage e l e c t r i c u t i l i t y bond
i s s u e was offered to investors a t 5.20 per cent l a s t week; the l a s t
comparable i s s u e , sold two weeks e a r l i e r , had been offered to y i e l d
5.10 per cent.
fNMl secondary market operations - Mortgage offerings to
FNMA and purchases by FNMA under i t s secondary market operations dropped
substantially i n April, r e f l e c t i n g a s l i g h t easing i n general mortgage
market conditions. Offerings were at the lowest l e v e l in 10 months.
FNMA s a l e s continued to be n e g l i g i b l e .
June security volume estimates - The June volume of corporate
issues i s expected to t o t a l $1.1 b i l l i o n , t h r e e - f i f t h s larger than the
revised estimate f o r May and nearly one-tfifth l a r g e r than the volume i n
June l a s t year. Large public i s s u e s are expected t o t o t a l about $500
million and takedowns of private placements are expected to be seasona l l y large next month. The estimated volume of $2.U b i l l i o n of offerings
in the second quarter (6 per cent smaller than a year earlier) would
bring the f i r s t half new issue t o t a l to $k.6 b i l l i o n , $ . 2 b i l l i o n l e s s
than-the volume in the corresponding period of 1959.




State and l o c a l government security financing i s expected
to t o t a l §600 m i l l i o n in June. This volume would be about one-tenth
larger than t h i s month, but t w o - f i f t h s l e s s than in June 1959.
Including the June estimate, the volume of State and l o c a l government
security i s s u e s for new capital would t o t a l $1.9 b i l l i o n i n the second
quarter t h i s year (one-fourth smaller than a year earlier) and #3.8
b i l l i o n in the f i r s t h a l f , o n e - f i f t h smaller than the record volume
of the f i r s t half of 1959.
Stock prices - Common stock p r i c e s , as measured tiy Standard
and Poor's index of 500 stocks, fluctuated within a narrow range l a s t
week, closing at 55.7k on May 2?. Trading a c t i v i t y , averaging 3.2 mill i o n shares a day, declined from the heavy volume a week earlier.
More detailed information concerning recent capital market
developments i s presented in the attached exhibits.
Developments in the Canadian capital markets are presented
i n Part I I at the end of t h i s report.

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.




HIGH-GRADE

BOND

YIELDS

f 0.$. GOmNMMT

LOWER-GRADE

BOND

YIELDS




- 511. Ill

Exhibit B - Tables f o r Exhibit A
High-grade Bond Yields
U. S. Govt,
long-term 2 /

Corporate
Aaa 1/

Date

Spread between
U. S. Govt, and
State and
Corporate
l o c a l Aaa
Aaa

S t a t e and
l o c a l govt.
Aaa y

(Per cent)
195b
1957
1958
1959

-

Low
High
Low
High
Low
I960 - High
Low

Apr. 29
May 6
May 13
May 20
May 27 2 /

(ii/23)
(9/27)
(5/2)
(12/31)
U.O9 ( 1 / 9 )
L 6 1 (1/29)

2.1*5
3.76
3.07
ii.37
3.83
li.li2

Loo (3/25)

1.90
3-to
2.6k
3.65
3.06
3.53
3.28

JU.U6

U.20
U.17
ii.13
L18
I4.I6

3.3k
3.32
3.32
3.37
3.38

2.85
li.lli
3.55
k.6l

LWi (Ve)

!

Li:5
lui6
it.ii7

(8/6)
(10/18)
XV25)
(12/31)
(1/2)
(1/8)

(9/2)
'
(8/29)
(5/1)
(9/2k)
(3/26)
(1/7)
(V7)

•30
.60
.22
.50
.16
• 1*6
.19

.30
.1*7
.3k
.92
.53
.92
.68

.26
.29
.32
.28
.31

.86
.85
.81
.81
.78

JL
Lower-grade Bond Y i e l d s

Date

Corporate
Baa 1 /

S t a t e and
l o c a l govt. .
Baa 2 /

Spread between
Aaa and Baa
S t a t e and •
. Corporate
l o c a l govt.

(Per cent)
Low
High
Low
High
Low
I960 - High
Low

3.a
5.10
li.5l
5.32
iw83
5.36
5.17

Apr. 29
May 6
May 13
May 20
May 27 e /

5.23
5.27
5.28
5.28
5.28

195U
1957
1958
1959

-

(12/31)
(11/29)
(7/11)
(12/31)
(L/17)
(2/12)
(V8)

2.93
it. 51
3.61
k.k6
3.92
2U6
L22
It. 28

1*. 28
L 28
L 33
4.33

(8/5)
(8/29)
(5/1)
(7/2)
(3/26)
(1/7)
(V7)

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

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

.77

.9k
.96
.96

.81

.83
.82
.81

.96

.95

p/ 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 yesrs 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 aey be on different dates for different series.




.

STOCK

MARKET

STOCK MARKET CREDIT

FEDERAL

NATIONAL

SECONDARY

MARKET

MORTGAGE
OPERATIONS




ASSOCIATION

-7-

Exhibit D - Tables f o r ExliibiL C
Stock Market
Stock price
index 1 /

Date

1957-59 - High
Low
I960 - High
Low
March
April
May 13
May 20
May 27 e /

60.51
39.76
59.5b
5U.214

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

55.02
55.73
55.30
55.83
55.7U

Stock market customer c r e d i t
Bank
Customers'
debit bal- loans t o
ances k / "others" 5 /
( M i l l i o n s of d o l l a r s )

Trading
Common
volume 2 /
yields 2 / (millions
(per cent) of shares)
3.07
it. 66
3.18
3.51
3.U5
3.U1
3.U2
3.ij0
3.U0

Total

it. 3
l.it
3.9
2.U

it,76it
3,55U
it, 365
U,l53

2.9
2.9
3.1
1/3.9
3.2

it,158
it,153
n.a.
. n.a.
n.a.

3,U01
2,U82
3,198
3,028

1,373
1,060
1,167
1,130

3,028
3,037
n.e.
n.a.
n.a.

1,130
1,116
1,110
1,110
n.a.

•

n.a.--Not a v a i l a b l e .
g / Preliminary.
1 / Standard and Poop's Topoolte Index of 500. ooirmon stocks, weekly closing p r i c e s , 1941-43=10. Monthly data
are averages of dally f i g u r e s rather than of Fridays' only. Highs and lows are f o r Fridays' data only.
2/ Standard and Poor's composite stock y i e l d based on Wednesday data converted t o weekly closing prices by
Federal Reserve. Yields shown are f o r dates on which price index reached i t s high or low.
3 / Averages of daily t r a d i n g volume on the New York Stock Exchange.
4 / End of month f i g u r e s f o r member firms of the New York Stook Exchange which carry margin accounts $ excludes
balances secured by U, S. Government o b l i g a t i o n s .
5 / Wednesday f i g u r e s f o r weekly reporting member banks. Be eludes loans for purchasing or carrying U, S,
Government s e c u r i t i e s * Prior to July 1, 1959, such loans are excluded only a t banks in New York and Chicago.
'Weekly reporting hanks account f o r about 70 par oent of loans t o o t h e r s . For f u r t h e r d e t a i l see B u l l e t i n .

Federal.National Mortgage Association Secondary Market Operations 1 /
Estimated Offerings t o FNM
Immediate
Standby
Total
purchase commitment
1959 - Apr.
May

1960

July
Aug.
Sept.
Oct.
Nov.
Dec.
- Jan.
Feb.
Mar.
Apr. 2 /

8:8
8U.ii-

109.5
123.1
11*1.3
108.3
105.6
116.3
137.6
135.8
133.2
103. h

oorailtnent contracts. Data exclude

Liquidating Programs.


Purchases
by
MIMA.

(Millions of d o l l a r s )
7.7
50.1
38.3
7.2
73.it
U9.U
7.8
76.6
62.3
1
7
.
1
92.5
71.7
13.3
109.9
85.lt
13U.8
*'5
105.5
6
.
5
101.8
92.6
5.3
100.3
92.2
It. 9
lll.lt
86.1
9.3
128.3
116.7
6.9
128.9
135.0
8.6
12li.6
102.6
7.3
96.1

Sales
by
PNMA

1.1

.6
.3
.3

PUMA a c t i v i t y under Special Assletance and Management and

Exhibit E

-8-

Long-term Corporate and State and Local Government
Security Offerings and Placements
(In m i l l i o n s of d o l l a r s )

I960
January
February
March

I

Corporate 1 /
1
1959

New c a p i t a l
1958

I960

728

73b
. 620
E/556'

577
715
860

821
738
616

i , # y

6/725
1/650
e/1,050

894
785
887

l,l4o
597
887

July
August
September

235
740
703

- 1,107
540
1,114

October
November
December

879
864
900

862
518
920

April
May
June

1st
2nd
3rd
4th

quarter
quarter
quarter
quarter

1st half
Three quarters
Year

2,151
e/2,li25

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

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

e/lt,576

4,771
6,750
9,392

5,762
8,522
10,823

e/eOO

S t a t e and l o c a l 2 /
1
1959 r / I
1958
639
858
646

812
953
511

932
593
1,006

798
895
. 551

1

806
403
651

I

456
474
435

£ £
i,57i

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

4,674
6,222
7,793

4,520
6,380
7,746

2,143

e/3,787

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

quarter
quarter
quarter
quarter

e/1,722
e/2,%2

Year
1/
2/
3/
4/

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

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

8,630

10,429

S e c u r i t i e s and Exchange Commission estimates of n e t proceeds.
Investment Bankers A s s o c i a t i o n of America estimates of p r i n c i p a l amounts.
Includes $718.3 m i l l i o n AT&T c o n v e r t i b l e debenture i s s u e .
Total new c a p i t a l i s s u e s excluding o f f e r i n g s of s a l e s and consumer f i n a n c e
companies.




H.lii

Exhibit F

-9-

Other S e c u r i t y O f f e r i n g s 1/
( I n m i l l i o n s of d o l l a r s )
Long ~ t e xm
F o r e i g n government 2 /
Federal agency ;
I960
I960
1
1958
1959
1
1959
1
January
February
March

2
75
70

81
60
2

196
53

• 58
50
1*2

139
198
120

July
August
September

85
1
35

9
5
17

October
November
December

33
30.
70

58
123
7k

86

51*7.

992

707

April
May
June

Year

182
150
150

.

1,163
251

199
175

—

523
—

—

164

•
98
150

220

Short-term
S t a t e and l o c a l government k/.
January
February
March

1958

—

2,321

Federal agency 3 /

190
1*28
295

233
1*60
273

1*79
1*63
512

359
5oo
1*89

371
208
11*1*

563
1*11
21*5

357
351*
261*

509

1*86
675
289

209
161
329

July
August
September

21*6
1*67
399

289
1*23
369

727
365
665

October
November
December

235 '
31*3
358

231
1*15
21*3

733
1*71
288

3,910

6,01*7

April
May
'June

268 '
31*5'
365
E/339

Year

11,179

.

1*37
206
330
1*51*
111*
137
3,098

eZ Preliminary.
1/ Data presented In this exhibit differ from those In Exhibit k In that refunding Issues, ao well as new
capital Issues, are Included. Long-term securities are defined as those m t u r i % In more than one year.
2/ Includes seourltles offered In the United States by foreign goverrmente and their subdivisions and by
International organizations. Source: Securities and Exchange Commission.
3/ Issues not guaranteed by the U. S. Government. Sourcei long-term, Securities and Exchange Commission;
short-term, Federal Reserve.
4/ Principally tax and bond anticipation notes, warrants or certificates and Public Housing Authority
not**, f n some instances PHA notes included may have a somewhat longer tern than one year. Source* Bond Buyer.




-10-

Exhibit 0
Large Long-term Public Security I s s u e s f o r New Capital
(Other than U. S. Treasury) 1/
Proceeds of Large I s s u e s Offered
( M i l l i o n s of d o l l a r s )
Corporate

Month
1 9 # - April
May
June
July
August
September
October
November
December
I960 - January
February
March
April

State and
l o c a l government
563
258
. 635
19k
263
21k
29k
163
217
388
283
225
370

359
3h2
26k
110
363
199
Loo
U21
230
279
262
38k
3#

Other 2 /
20
50
60
50
98
175
20
70
100
320
191
71

Large Individual I s s u e s Offered May 1 through 27

.Issuer

Type 3 /

Amount
Coupon
(millions
Offering
Maturity net i n t e r - y i e l d
of
dollars)
e s t cost

Rating

CORPORATE
Columbia Gas S y s . , Inc.
Wisconsin Telephone Co.
Gen. Amer. Transp. Co.
Wisconsin Elec. Pwr. Co.
Milwaukee Gas Light Co.
Uris Building Corp.
STATE AND LOCAL GOVERNMENT

Com. s t k .
Deb.
E.T.
Com. s t k .
1st mtg. bds.
S.F. deb.

G.O.
State of Minnesota
Pub. Housing A u t h o r i t i e s
G.O.
Rev.-Ut.
J a c k s o n v i l l e , Florida
G.O.
, l e t r o i t Sch. D i s t . , Mich.
Denver, Colorado
j Rev.-Ut.

26.0
20.0
30.0
18.1
22.0
23.0

1995
1980

4-7/8
k-7/8

4.80
~k.8k

Aaa
A

1985
1975

5-5/8
6-1/2

5.15
V

Baa

1*8.8
133,4
30.0
10.0
• 11.8

1961-79
1961-2000/75
196k-00/71
1961-85/74
1963-87/70

28.0

1980

2.50-3.50
3.45
2.10-3.90
3.83
3.18
A.70-3.b0
4.04 . 2 . 8 0 - 4 . 0 5
4.09
3.30-4.25

—

Aa
Aaa
Aa
A
Baa

OTHER
Montreal, Canada




S.F. deb.

5-3/6

5.40

A

H.Ik

G-2

-11-

Footnotes

1 / Includes corporate and other security o f f e r i n g s of &L5 million and over;
State and l o c a l government security o f f e r i n g s of $10 million and over.
2 / Includes foreign government and International Bank f o r Reconstruction and
Development issues and non-guaranteed issues by Federal agencies.
3/ In the case of State and l o c a l government s e c u r i t i e s , G. 0. denotes general
obligationsj Rev.-Ut., revenue obligations secured only by income from public
u t i l i t i e s j Rev.-Q.Ut., revenue bonds secured only by revenue from q u a s i - u t i l i t i e s ;
Rev.-S.T., revenue bonds secured by revenue from s p e c i f i c taxes only; Rev.-Rent.,
revenue bonds secured s o l e l y by lease, payments.
k / Uris Building Corp's $23 million i s s u e offered in units with stock.




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

1959 - May 29
June 30
July 31
Aug. 31
Sept. 30
Oct. 30
Nov. 30
Dec. 31
I960 - Jan. 29
Feb. 29
Mar. 31
Apr. 29
May 31

During month following
date shown
State and
Corporate l o c a l govt. Other 2 /
287
165
238
198
37k
385
226
210
207
301
299
202
1*83

21*7
116
356
385
270
115
295
10)5
210
255
250
243
277

50
25
70
30
1*5
35
30

Subsequent t o
date shown
State and
Corporate l o c a l govt. Other 2 /
761
500
1*06
1*02
1*70
336
1*85
51*5
310
385
280
258
502

332
272
305
517
m
509
271
280
252
372
3hk
357
553

50
25
70
30
16
35
60

i

Forthcoming Large Offerings, as of May 27
Type

Amount Approximate date
(millions
of o f f e r i n g
of dollars)

Florida Light & Power Co.
Michigan Wisconsin Pipe Line Co.
Southern Electric Generating Co.
National Cash Register Co.
Northwestern Bell Tel. Co.
Midwestern Gas Transmission Co.
^Baltimore Gas & Electric Co.
Consolidated Edison Co. of N. Y.
James Talcott Inc.
*Gulf States U t i l i t i e s Co.
*Tampa E l e c t r i c Co.
Montgomery Ward Credit Corp.
I l l i n o i s B e l l Telephone Co.

Com. stk.
1st mfcg. p. 1. bds.
1st mtg. bds.
S.F. deb.
Deb.
1st mtg. bds.
1st r e f . mtg. bds.
1 s t r e f . mtg. bds.
Senior notes
1st mtg. bds.
1st mtg. bds.
Deb.
Com. stk.

Texas Eastern Transmission Coip.
Commerce Oil Refining Corp.

Deb.
Deb.,, bds. & com.




June 1
June 2
June 3
June 3
June 7
June 8
June 10
June 15
June 21
June 28
June 29
June 30
June 30
(rights expire)
Indefinite
25.0
Indefinite
1*5.0
20.0
30.0
1*0 0
1*0.0
1*5.0
60.0
25.0
50.0
20.0
17.0
25.0
50.0
61.0

•

.'f
,'Z

H.lii

H-2

-13-

Forthcoming Large O f f e r i n g s , as of May 27 (Cont'd)
Issuer

Type

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

STATE AND LOCAL GOVERNMENT
King Co. Set. D i s t . No, 1 , Wash.
Memphis, Tennessee
Pennsylvania Gen. S t a t e Auth.
Los Angeles Dept. of Wtr. and Pwr.,
California
S t a t e of Kentucky
State of Michigan
Milwaukee, Wisconsin
•^Philadelphia Sch. D i s t . , Pa.
•^Commonwealth of Puerto Rico
•^Alabama Education Authority
State of Ohio
State of California
frCarmen -Smith Hydro-Elec. Pro j . , Ore.
^Chesapeake Bay Bridge Tunnel Comm.

G.O.
G.O.
. Rev.

10.0
15.0
25.0

June 1
June 7
June 7

Rev. -Ut.
G.O.
Rev.-Ut.
Rev.-Ut.
G.O.
G.oi
G.O.
G.O.
G.O.
Rev#.Ut.
Rev.-Ut.

15.0
30.0
25.0
15.0
10.0
17.0
5o.o
15.0
5o.o
25.0
200.0

June 8
June lit
June Ik
June Ik
June Ik
June 15
June 21
June 21
June
July 19
-• I n d e f i n i t e

S.F. deb.
Bds. & s t k .

30.0
30.0

June 16
Indefinite

OTHER
Alberta Municipal Finance Corp.
*Liberian Iron Ore Ltd.

*—Included i n t a b l e for f i r s t time,
1 / Includes corporate and other i s s u e s of $15 m i l l i o n and over; S t a t e and
l o c a l government i s s u e s of $10 m i l l i o n and over.
2 / Includes f o r e i g n government and I n t e r n a t i o n a l Bank f o r Reconstruction
and Development i s s u e s and non-guaranteed i s s u e s by Federal a g e n c i e s *
N o t e . — D e l e t i o n s f o r reasons other than s a l e of i s s u e : None.




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

1952-1959 - High
Low
1959 - July
Aug.
Sept.
Oct.
Nov.
Dec.
1960 - Jan. 7
Feb. 25
26
Mar. 15
16
18
29
Apr. 6
8
Hi
21
27
May 10
-

:

Aa-rated offering y i e l d s
A-rated offering y i e l d s
Amount above
Amount above
Actual
Actual
seasoned
y
i
e
l
d
s
(per cent)
(per cent) seasoned y i e l d s
(basis points)
(basis points)
5.30 (12/8/59)
2.93 (3/31/54)

87
-3

*4.93
4.83

31
23

5.13%/
*5.08
*5.30

36
42
63

5.08
5.10

44
46
32
17

It. 85

33

4.94

39

4.95

39
32

4.88

5.65 (9/18/59)
3.00 (3/17/54)

|
\

123
-15

5.07

17

*5.65
5.33

60
43

5.45./
5.30=/

51
28

5.00
4.93

11
7

4.98

21

5.30

50

5.10

26
33

5.20

*—Single observation, not an average.
1 / Covers only 30-year f i r s t mortgage bonds, as reported in Moody's Bond
Survey. Except where indicated, the actual y i e l d figure and the amount above
seasoned y i e l d s are averages of offerings during the indicated period and of
the d i f f e r e n c e s between these new o f f e r i n g y i e l d s and y i e l d s on seasoned i s s u e s
of similar quality f o r the same day. Average maturity for the seasoned issues
varies from 26 to 28 years.
2 / Provides f o r a 5-year period during which issue may not be c a l l e d f o r
refunding, at a lower coupon rate. Monthly averages so marked include one or more
i s s u e s with such a provision. Other issues have no such provision.




May 31, I960

-15*
Part I I - Canada
The Canadian dollar continued to decline l a s t week i n s p i t e of
a $28 million City of Montreal o f f e r on the United States market. The
margin by which the United States Treasury b i l l exceeded the Canadian b i l l
narrowed during the week* Shorter-term bond y i e l d s moved upward s l i g h t l y
as the Treasury dominated the bond market with the offering of a one-year
Treasury b i l l and a 2-1/2 year bond to refinance two maturing long b i l l s .
Money market conditions 0 Heavy chartered bank purchases of
Treasury b i l l s kept b i l l y i e l d s v i r t u a l l y unchanged l a s t week i n the face
of a substantial reduction i n the holdings of the general p u b l i c .
The average
y i e l d on the short Treasury b i l l rose only 2 basis points from 2.99 per
cent a week ago t o 3.01 per cent a t l a s t Thursday's auction (see Table).
%he y i e l d on the 6-month Treasury b i l l a l s o increased by lU basis points
from 3.22 per cent t o 3<>36 per cent. There was no change i n the Bank of
Canada Treasury b i l l holdings during the week. During the week the average
closing rate on day-to-day loans decreased to 2 <>56 per cent compared with
2.6^ per cent the week before.
the United
per c e n t .
during the
changed a t

With the s l i g h t decline i n the U»S0 b i l l y i e l d , the spread favoring
States 3-month Treasury b i l l was reduced from 0.U3 per cent t o 0.25
The premium on the 3=month forward Canadian dollar declined
week and the net incentive to hold United States b i l l s was un0.13 per cent per annum (see Table)„

Bond market conditions 0 The Canadian bond market was dominated
l a s t week by a $2U0 mill i o n Government financing. With Treasury borrowing
i n the form of 1 year b i l l s and 2-1/2 year bonds s bond y i e l d s i n the
shorter range of maturities (up t o 5 years) rose but y i e l d s declined i n
the intermediate- and long-term sectors of the market. Several maturities
declined t o t h e i r lowest l e v e l s f o r the year. The spread between several
comparable Canadian and United States s e c u r i t i e s (Thursday y i e l d s f o r b i l l s
and Wesnesday y i e l d s f o r bonds) was as f o l l o w s (figures i n parenthesis
r e f e r t o the previous week)s
-0.25
-0.29
0.2ii
0.88
1.30

per
per
per
per
per

cent
cent
cent
cent
cent

on
on
on
on
on

a 91-day b i l l (-0.U3)
a 182-day b i l l (-0.U8)
an 8=year bond (0.31)
a 20-year bond (0.87)
a 35-year bond (1.29)

The Treasury accepted tenders from primary distributors f o r $lU0
million Government of Canada s e c u r i t i e s on the following terms:

Amount
Treasury b i l l
Bond

$50 m0
$90 m.




Maturity
June 2S 1961
Dec. 1, 1962

Coupon

Average
issue
price

Average
yield

—
L-l/k

96.71
99.91

3«39
U.29

-16-

In addition, the Bank of Canada took $50 m i l l i o n of the one-year b i l l s and
$50 million of the 2-1/1* year bonds. The new offering w i l l provide f o r
the refinancing.of $200 million of one-year Treasury b i l l s maturing on
June 10, I960 and $1*0 million of a 253-day b i l l of l a s t October maturing on
June 10. The Minister of Finance a l s o announced that $1*6.6 m i l l i o n residual
amounts of the Sixth Victory Loan w i l l be paid o f f a t maturity on June 11,
I960.
"
In early trading, the new bonds eased t o 99#65 compared t o the
99.91 issue p r i c e . A c t i v i t y i n the corporate and l o c a l government sectors
of the market was limited during the week.
The City of Montreal sold $28 m i l l i o n of s e c u r i t i e s in the United
States l a s t week. Half the t o t a l i s due on June 1, 1980 and the remainder
on June 15, 1980. The bonds were purchased a t 98.63 to y i e l d 5 - 3 / 8 per cent
and w i l l be reoffered t o the public a t 99*70 t o y i e l d 5«U per c e n t . Press
reports s t a t e that the Alberta Municipal Financing Corporation has increased
i t s proposed borrowings i n the United States to $30 million; debentures
maturing on June 15, 1985 with sinking funds w i l l be o f f e r e d .
Exchange r a t e . The Canadian dollar continued t o decline during
the week. At Thursday's c l o s i n g , i t was at 101.31 U.S. cents compared
with 101.1*7 U.S. cents a week e a r l i e r (see Table).
Housing loans and s t a r t s . During the period January t o April,
housing loans declined from $171 m i l l i o n i n 1959 t o $1*0 m i l l i o n i n i 9 6 0 .
The chartered banks reported only 3U loans i n t h i s period i n i960 compared
with 6,1*60 loans a year e a r l i e r . Reduced direct Government assistance i n
housing loans and the mid-December r i s e i n mortgage i n t e r e s t r a t e s from
6 t o 6 - 3 A per cent account f o r the curtailed mortgage a c t i v i t y i n I960.
Adverse weather conditions have a l s o hindered construction a c t i v i t y . In
c i t i e s with population above 5,000, housing s t a r t s declined from It,520
units i n 1959 to 2,1*07 s t a r t s i n I960 i n the f i r s t four months of the year.
Stock market conditions. Prices of i n d u s t r i a l stocks increased
early l a s t week following the trend of the previous week as noted i n the
following table:
New York
Toronto
Montreal
Standard & Poor
May 11
18
25

1*88.91*
L93.50
1*97.21

279.1
283.1
285.8

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




58.11
59.12
59.32

Selected Canadian Money Market and Related Data
3-mo. Treas. b i l l s
Spread
Canada
y
U.sJb/ over U.S.

£/
Spot

1959 - High
Low
1960 - High
Low

6.16
3.2$
5.1k
2.67

k.k9
2.80
U.63
2.86

2.96
0.30
0.90
-0,69

105.51
102.58
105.27
101.31

May 5
12
19
26

2.82
2.67
2.99
3.01

3.09
3.36
3.U2
3.26

-0.27
-O069
-0.U3
-0,25

103.30
102.59
101.U7
101.31

Canadian dollar
3-mo» discount ( - ) ,
forward premium(+)2'

103.31
102.63
101.55
101.3k

-17Net incentive to
hold Can,
billi/

0.31
-0.72

0.1*8
-0.57

0.06
0.12
0.31
0.12

-0.21
-0.57
-0.12
-0.13

a/. Average y i e l d at weekly tender on Thursday.
2 / Composite market y i e l d f o r the U.S. Treasury b i l l on Thursday close of business,
c / In U.S. centso
a / Spread between spot rate and 3-month forward Canadian dollar on Thursday
c l o s i n g , expressed as per cent per annum0
e / (Column 3) spread over U.S. Treasury b i l l , plus (column 6) 3-month forward
discount or premium*
Selected Government of Canada Security Yields
6-rao. Treas - b i l l s
Spread
Canada
y
1959 - High
Low
1960 - High
Low

6.2k

May 5
12
19
26
a/
1W/
bill
c/
3/
e/
7/
g/
ry

Intermediate
bonds (8 yr„)
Spread
Canada
,73?

2.90

o'es
-0.69

5.37
U.50
5.55
1+.65

1.11
0.21+

3.00
2.90
3*22
3.26

=0.1+2
-O069
—0.1+8
-0.29

5.0k
U.85
U.67
k.65

0.76
0.71
0.31
0.21+

Long-term bonds
(20 year)
(35 year)
Spread
Spread
Canada
ovw
Canada
over.
U.sJ/
&/
u.s3/

e/

5.30
k.kk
5.U2
5.06

13
5.08
5.06

1.22
0.87

5.05
k.73
5.28
5.11

—
—
1.61
0.98

0.93
1.01
0.87
0.88

5.21+
5.20
5.12
5.1k

1.1+1
1.U1+
1.29
1.30

Average y i e l d at weekly tender on Thursday.
between Canadian auction rate and composite market y i e l d of U.S.
on c l o s e of business Thursday,
Government of Canada 2-3/1+ per cent of June 1967-68,
Spread over U.S. Government 2-1/2 per cent of 1963-68.
Government of Canada 3-1/% per cent of October 1879•
Spread over U.S. Government 3 - l A per cent of 1978-83.
Government of Canada 3-3/k per cent of September 1996 - March 1998.
Spread over U.S. Government of 1995.
rSpread




—18—

Canada? Changes in Distribution of Holdings of Canadian
Government Direct and Guaranteed Securities
(millions of dollars, par value)
Bank of Canada
Treas.
bills.
Bonds

Government
Total

Chartered banks
Treas.
bills.
Bonds

General public
Savings TPGclS •
bonds b i l l s - Bonds

March 23
30

+ U3
+ 25

- 9
- 3h

- 17
- 10

+ 9
•K 2

0
+ 16

-

7
8

- 32
- 12

+ 10
+ 19

April 6
13
20
27
May U
11
18
25

+
+
*
+
-

- 30
0
0
+ 7
+ 1U
0
+ U
- u

*
+
+
+
-

>
+
*
+

+
+
+
+
+

-

6
7

+ 38
- 10

-

8
7
8
7
7

+
+
-

Sourcei

28
37
lU
10
9
3
15
0

3
11
3
2
1
2
8
3

10
33
h
7
17
1U
7

+ Uo

9
3
2
18
7
2
17
1

- 5

19
1U
11
3
26
26
6
39

Bank of Canada, Weekly Financial S t a t i s t i c s .

Sales of New Government, Municipal, and Corporate Bonds
(millions of Canadian dollars)

Government (direct)
Government (guaranteed)
Provincial (direct)
Provincial (guaranteed)
Municipal
Corporation
Less short term

I960
to May 2k

1959
to May 25

1958
to May 26

3,lk9.0

2,875.0
150.0
111.0
127.8
Ui2.9
152.1
3,558.8
2,675.0
888.8

3,395.0
300.0
195.0
I50.ii
186.U
U53.7
U,680.U
2,Ui5.o

138.5
153.8
218.1
273.7
3,933.0
2,520.0
1,1113.0

2,235.1

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

25.0
22.0
82.7
U2.0
171.7

75.0
56.2
U.6
2U.0
159.8

Weekly Bond Sales Summary,, A. E. Ames & Co., Ltd.




100.0
70.0
66.2
82.8
319.0

- 5

+ 7
- 8
0
- 15

+ 5

CANADA - UNITED
THREE-MONTH
Monthly

TREASURY

STATES

BILL RATES
Par cernl

/ \ y

GOVERNMENT

LONG

TERM

MEDIUM

TERM

GOVERNMENT




BOND

BOND

YIELDS

YIELDS

IA

CANADA

,—

'

'

UNITED STATES

1959

1