Full text of H.16 Capital Market Developments : May 8, 1961
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Not f o r Publication tirllt——| i MAY 1961 DECONTROLLED AFTER SIX MONTHS Hay 8, 1961. | CAPITALMS»J^aOPMHOTS f THE UNITED STATES i c security financing was large l a s t week but i s expected to be moderate t h i s week. Corporations sold publicly large bond i s s u e s t o t a l i n g $15>0 million during the week ending May 5. Three large State and l o c a l government bond issues with par value of $78 m i l l i o n were sold and a $15 million bond i s s u e of the Kingdom of Norway was publicly offered. This week large corporate i s s u e s , including i s s u e s f o r which subscription r i g h t s expire, t o t a l i n g $1*6 million are scheduled f o r s a l e while large State and l o c a l government issues t o t a l i n g million are on the calendar. Long-term bond y i e l d s . Changes in y i e l d s on long-tern bonds continued to be mixed. Last week y i e l d s on U. S. Government bonds declined f i v e basis points t o 3.73 per cent, a new low f o r the year. Yields on lower grade State and l o c a l government bonds a l s o declined, while y i e l d s on Aaa-rated municipal bonds remained s t a b l e . Corporate bond y i e l d s rose s l i g h t l y . Short- and intermediate-term i n t e r e s t r a t e s . Yields on threemonth Treasuiy b i l l s decreased s l i g h t l y l a s t week while those on s i x month b i l l s increased. Yields on three- to f i v e - y e a r U. S. Government bonds dropped nine b a s i s points to a new 1961 low of 3.23 per cent. The average of d a i l y e f f e c t i v e rates f o r Federal funds declined s l i g h t l y further to 0.70 per cent, the lowest l e v e l since January. Other shortand intermediate-term i n t e r e s t rates were unchanged. Mortgage and bond y i e l d s . Average secondary market y i e l d s on selected unseasoned FHA new home mortgages declined s i x b a s i s points further in March to 2.82 per cent. Since y i e l d s on newly o f f ered corporate bonds a l s o declined during March the spread between y i e l d s available cn mortgages and bends changed l i t t l e . In April, average y i e l d s on new o f f e r i n g s of corporate bonds, adjusted to a Aaa b a s i s , rose 16 b a s i s points to u.li2 per cent, the highest since l a s t December. Stock prices. Common stock p r i c e s , as measured by Standard and Poor's index of 500 common stocks, rose 2 per cent l a s t week, c l o s ing a t 66.52 on Friday. At t h i s l e v e l stock p r i c e s were only s l i g h t l y below t h e i r daily high of 66.68 reached April 17. Trading volume averaged h. 6 millio n shares a day l a s t week, about t h e same as a week earlier. More d e t a i l e d information concerning recent capital market developments i s presented in the attached exhibits. 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. „ LONG-TERM B O N D YIELDS HIGH-GRADE Weekly -3Exhibit B - Tables f o r Exhibit A Long-term Bond Yields High-grade Corporate Aaa 1 / State and local government A " 3/ U. S. Govt, long-term 2 / (per cent) 195U - Low 1957 - High 1958 - Low 1959-60 - High 1960 - Low 1961 - High Low ll.23 (9/9) 14.31* ( 1 / 6 ) It. 21 ( 3 A 7 ) Apr. 7 Apr. ll* Apr. 21 Apr. 28 May 5 e / It. 23 It. 24 It. 26 It. 28 / It. 29 / 2 . 8 5 (4/23) l l . l l * (9/27) 3.55 (5/2) If. 6 1 (1/29/60) 2.k5 (8/6) 3.76 (lo/is) 1 . 9 0 (9/2) 3.1*5 (8/29) (1/8/60) (8/5) (1/20) (5/5) • : S 2.64 (»A) 3 . 0 7 (4/25) 1*.1*2 3.75 3.92 3.73 Spread between U. S. Govt and Corporate S t a t e and Aaa l o c a l Aaa 3.65 .22 .59 .19 (9/24/59) (9A) _2.99 3 . 3 0 (1*/13) 3.12 ( 2 / 2 3 ) 3.82 3.81 3.81 : g 3.30 .1*1 i S : 8 3.2lt 3.2lt 3.78 3.73 1 I .52 .51 .57 Lower-grade Date Corporate Baa 1 / State and l o c a l govt. Baa y Spread between Aaa and Baa S t a t e and Corporate l o c a l govt. (per cent) Apr. 7 Apr. lit Apr. 21 Apr. 28 May 5 e / mliis' 1951t - Low 1957 - High 1958 - Low 1959-60 - High 1960 - Low 1961 - High Low 5.01 5.00 5.00 5.01 / 5.02 Z 2.93 (e/5) It. 5 1 (0/29) 3.61* (B/l) 4.1*6 (1/7/60) 3 . 9 8 (lg/29) 1*.06 1*.03 3.98 3.9& 3.95 .52 1.27 .77 .81* .71 .81 .73 ' . .78 .76 .71* • .73 •73 eZ Preliminary. 1 / Weekly average of daily f i g u r e s . Average term of bonde lraludad l a 23 *26 year#. i/ Meekly average of dally f i g u r e s . The series Includes bonds due or callable In 10 year* or more, 3/ Thursday f i g u r e s . Only general obligation bonds are inoluded) average term i s 20 years. Note.—Highs and lows are for individual series and may be on d i f f e r e n t dates f o r d i f f e r e n t series* Fbr spreads, high r e f e r s t o widsst* and low t o narrowest. .96 1.21 .93 1.08 .86 .93 .71 .76 .73 .7lt .71* .71 S H O R T - A N D I N T E R N I D I A T I - TERM INTEREST RATES GOVERNMENT W..kly_ V . S . S VIAI ISSNII ^Jl mi$ > V v v B , s v r u / Market Yle 1 BANKS AND OTHER PRIVATE BORROWERS IIMAJHCE COMPANY PAHI, / C # 1. DISCOUNT (ATI - | A -5Exhibit D - Tables for Exhibit C Qiort- and Intermediate-tern I n t e r e s t hates Government Date Discount rate V I951t - Low 1957 - High 1958 - Low 1959-60 - High i960 - Low 1961 - High Low 1,50 3.50 1.75 lt.oo 3.00 3.00 3.00 Apr. 7 Apr. Ik Apr. 21 Apr. 28 May 5 e / 3.00 3.00 3.00 3.00 3.00 Yields 6-month b i l l s 2/ (per cent) 3-month b i l l s 2/ ,61 (ViD 3.61 (lo/ia) Spread between y i e l d s on 3-month b i l l s and y i e l d s 01 6-mo. b i l l s 1 3 - 5 y r . issues 3-5 year issues 2/ 2.56 ( 3 / 3 ) 2.17 (1/27) 2.75 ( 3 / 3 ) 2.35 (lj/28) 1 . 6 6 (4/30) il.Ol* (10/16) 2.1U (6/6) 5 . 0 0 (12/24/69) 3.1|0 (12/30) 3.59 ( 1 / 2 0 ) 3.23 (5/5) 2.36 2.31 2.25 2.23 2.22 2.58 2,52 2.a 2.35 2,38 3.U5 3.10 3.38 3.32 3.23 , 5 8 (5/29) 3 . 0 2 (12/26) U.59 (1/8/60) 5.07 (1/8/60) 2 . 1 1 (10/28) 2 . 3 8 (12/30) ^ .66 .86 .Ok .26 .79 .16 .25 .12 .38 1.1*0 .92 .22 .21 .16 .12 . .16 1.09 1.09 1.13 1.09 1.01 1.81 • Banks an£, OtherrPrivate Borrowers Date Stock Exchange c a l l loan 1/ Prime rate 1 / Finance company paper 3 / Federal funds k/ Spread between 3-mo. b i l l s and finance co. paper (per cent) 195k - Low 1957 - High 1958 - Low 1959-60 - High, i960 - Low 1961 - High Low Apr. 7 Apr. lit Apr 21 Apr. 28 May 5 d / < 3.00 11,50 3.50 5.50 It. 50 U.50 li.5o 3.00 It. 50 3.50 5.00 14.50 It. 50 It. 5o li.5o it. so L5o lt.5o lt.5o It. 5o It. 50 L5o It. 513 It. 50 1.25(12/31) n.a. 3-88 (11/15) 3 . 5 0 (11/8) 1 l .13 (8/8) 5l. 13 (1/22/60) 2; 88 (12/30) 2,88 (3/10) 2.50 ( 5 / 5 ) . • . 2.66 2.6k 2.53 2.50 . 2,50 .13 lt.00 .95 2.85 .1:3 1.55 2,35 1.15 • .75 .70 (s/29) (5/11/60) (12/2) (2/17) (1/27) 0 .63 -.35 1,02 ,22 .56 .15 .30 .33 .26 .27 .28 Weekly rate ehowa ISitltoVin effeot at end of period. Stock Exohange call lea ft fate Is going rate on oall lojtiia secured by customers' stock exchange collateral at Hsu York City banks, M e e rate lfl that charged by large banks on ihort-ter* loans to business borrower# of the highest credit standing, 2/ Market yield; weekly averages computed from dally oloalng bid prices. Series of 3-5 year Issues consists of eelooted notes and bonds, • 3/ Average of dally rates published by flnamoe companies for directly planed paper for varyleg maturities In ths 90-179 day rapge, 4/ Weekly average of dally effective rate, which Is the rate for the heaviest voluae of purchase and sals transactions as reported to the Federal Reserve Bank of New York, ' Kot-i,—-Highs and lews are for individual series and may be on different dates for different dates for different series, Digitized for For FRASER spreads, high refers to widest, and low to narrowest. STOCK MARKET STOCK IMIKiT CBEDIT M O R T G A G E A N D B O N D YIELDS New Inues I Exhibit F - Tables f o r Exhibit L Stock Market Date Stock price index 1 / Trading Comion stock volume 2 / y i e l d s 2 / (millions (per cent) of shares) 1957-60 - High Low 1961 - High Low 66.52 (5/5) 58.1*8 (1/6) 3.08 1*.72 2.92 3.32 March April Apr. 21 Apr. 28 May 5 e / 61*. 12 65.83 65.77 65.31 66.52 3.03 2.95 2.95 2.97 2.92 6 0 . 5 1 (7/31/59) 39.1*8 (12/20/57) 1*.'9 1.1* Stock market customer credit Custgmers1 Bank debit balloans to a n c e s ! ^ "others" 5/ (In millions of dollars) Total (4/59) 3,1401 (4/59) 1 , 3 7 3 ( 5/59) 3,55il (1/58) 2,1*82 (12/57) 1 , 0 6 0 (11/5?) 5.8 3.6 1*,778 (3/61)3,6ol* (3/61)1,21*1* (l*/28) 1*,1*16 (1/61)3,253 (1/61)1,152 (3/10) 5.1* 5.1 1*,778 t ! n.a. n.a. 3,601* n.a. n.a. 1,17k 1,216 I'.ti n.a. n.«.,».Kot available. 2/ Pr*>lle.ii;ary. 1/ Standard and Poor's ecmpoelte index nt 500 oezimon stock** weekly oloali-j prlese, 1941-43»10. Monthly data ar* averages of dally figure* rather than of Mdcy'e only. HI elm and lows are for Mdaye 1 data only. 2/ Standard and Poor's ocopodte otoek yield baoed on Wednesday data converted to weekly el oolite prices by Federal Reserve. Yields shown ore for dateo on which price Index roajhod Its high or low. 3/ Averages of dally trading volvae on the Hew York Stock Bcchaiye, 4/ End of month figures for member fires of the Haw 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 0. S. Government re curl t i e s . Prior to July I , 1959, such lo.-nn are excluded only at baiflca In How York and CMcr«o. Weekly report Wig banks account for about 70 per cent of loans to others. For further detail see Bulletin. Mortgage and Bond Yields 1/ 1953-58 - High Low 1959-60 - High Low 1960 - December 1961 - January February March April 5.63 1*.56 6.21* 5.57 (11/57) (2/55) (1/60) (3/59) 6.0I* 6.00 Spread between now Aaa corporate corporate bonds and bonds 1 / FilA mortf.'«fteo|Sfeasonod bonds New 3/ I Seasoned U7 .90 1.96 1*.12 (9/57) -.12 .51* 2.71* (3/51*) 2.81* (V51*) .77 1.76 (1/60) l*.6l .08 .83 i*.12 (1/59) 1*.79, 1*.35 1*.31 1*. 26 1*.35 It. 32 U.27 1*.22 "1*.25 1.25 1.65 1.57 1.56 n.a. MEi 5.88 5.82 n.a. 1*.1*2 .1*1* '.Oh .01* .17 Exhibit G 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 ) January "February March April May June 1961 Corporate 1 / 1 I960 | e/526 E/653 fi/529 577 715 860 e/2,000 i/95o July August September 1st 2nd 3rd 4th quarter quarter quarter Quarter 1st half Three q u a r t e r s Year S t a t e and l o c a l 2 / 1 I960 r / | 1959 r / 708 634 e/800 700 611 568 648 859 638 766 567 1,034 89k 785 887 e/725 e/550 719 545 991 93k 568 987 727 962 738 535 740 703 492 606 683 443 521 470 874 9# 876 879 864 900 348 501 491 593 450 478 2,151 2,36? 2,1*27 2,709 2,20k 2,567 1,979 2,642 1,880 2,256 1,780 l,3h0 2,145 2,488 1,133 1,521 It,519 6,915 9,o55 ' 4,771 6,750 -9,392 4,136 5,916 7,257 4,634 6,067 7,588 \ E/1,708 1961 821 738 6# ' October November December New c a p i t a l 1959 . e/2,142 Excluding f i n a n c e companies 3 / 1st 2nd 3rd 4th quarter quarter quarter quarter ]o/l,408 Ye a r 1,722 2,150 2,017 2,358 8,248 , 1,999 2,412 1,716 2,503 8,630 "ej Estimated. g / Preliminary. tJ Revised. 1 / S e c u r i t i e s and Exchange Commission estimates of net proceeds. 2 / Investment Bankers Association of America estimates of p r i n c i p a l amounts. 3 / 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. Exhibit H 4 - Other S e c u r i t y O f f e r i n g s ( I n m i l l i o n s of d o l l a r s ) F o r e i g n government 2 / 1961 1 I960 1 195? January February March Federal agency 3 / I960 1 1961 | 1959 2 175 70 81 60 2 182 150 150 April May June 31* 72 ho 58 50 1*2 11*8 351* July August September 25 1 36 85 1 35 199 October November December 3h 2 1*1 33 30 70 160 11*9 181 86 533 51*7 1,67? 707 *3 Year 199 175 — 98 150 — Net shorl - t e r m k/ S t a t e a n d l o c a l government 5 / Federal agency 3 / Januaiy February March 160 58 11*0 -80 -1* 181 1* -196 -202 -59 -82 176 33 -277 170 320 50 368 286 95 23 -201 . 362 133 79 -81 -176 -117 -23 -33 -250 280 21*0 1*1* 362 -633 April May June 70 -11*6 -157 197 -25 -197 July August September 1*8 &5 -175 57 392 131 October November December -16 5b -189 • • Year 18 -11*1* -162 -171* 1,969 e / Preliminary. 1/ These data d i f f e r from those In Exhibit 0 i n that re fundi:* Issues, as well as new oapital 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 and by international organisations. Source« Seourltles and Exchange Commission. 3/ Issues not guaranteed by the U. S. Government. Sources long-term, Securities and Exchange Commission; shortterm , Treasury Department and Federal. Reserve. 4/ These data d i f f e r free those in ttchibit 0' and above in that they represent new offerings less retirements, whether from the proceeds of refunding issues or from other funds. Data Include only issues with origiml maturity of one year or l e s s . 5/ PriMlpally tax and bond anticipation notes, warrants or certificates and Public Housing Authority notes. I * PHA PT «»te s Included may have a somewhat longer term than one year. Source * Bond Buyer and -10- Exhibit I Large Long-term Public Security Issues f o r New Capital (Other than U. S. Treasury) 1 / Proceeds of Large Issues Offered (In millions of dollars) Month Corporate I960 - April May June July August September October November December 1961 - January February March April State and local government 309 139 442 303 581 266 566 465 260 147 267 70 1,572 370 234 561 191 298 367 46 186 222 391 360 405 383 Other 2/ 71 28 30 75 25 77 150 99 67 — .. Large Individual Issues Offered May 1 through 5 Issuer Type 3/ Amount Coupon Offering rate or (millions Maturity net i n t e r - y i e l d Rating of dollars) est cost CORPORATE B e l l Tel. of Pa. Nippon Tel. & Tel. Coip. Washington Gas Light Co. Continental Oil Co. Deb. Ex. bds. Ref.mtg.bds. Deb. 20.0 15.0 15.0 100.0 2001 1976 1986 1991 4-3/4 4-1/8 4-1/2 4.60 6.47 4.85 4.55 Aaa A Aa STATE AND LOCAL GOVERNMENT Los Angeles Unif. Sch. D i s t . , Calif. Grand Rapids, Mich. Port of New York Auth. G.O. Rev. -Ut. Rev. -Ut. OTHER None 30.0 • 1962-86 1962-82 13.1 1962-81 • 35.0 3.42 3.31 3.41 1.50-3.60 1.60-4.10 1.60-3.60 Aa Aa A h.lh - 1-2 -11' Footnotes 1/ Includes corporate and other security offerings of $15 million and over3 State and l o c a l government security offerings of £>10 million and over. 2 / Includes foreign government and International Bank f o r Reconstruction and Development issues and non-guaranteed i s s u e s 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 obligations; Rev.-Ut., revenue obligations secured only by income from public u t i l i t i e s ; Rev.-Q.Ut., revenue bonds secured only by revenue from q u a s i - u t i l i t i e s j 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 bj l e a s e payments. Bxliibit J —12— i-'orVlicoiiiing Large Long-term Public Security Offerings for New Capital (Other than U. S. Treasury) 1/ Expected Proceeds from Forthcoming Large Issues During month following date shown State and ^ Corporate l o c a l povt. Other 2 / Date of computation I960 Apr. 29 May 31 June 30 July 29 Aug. 31 Sept. 30 Oct. 31 Nov. 30 Dec. 30 Jan. 31 Feb. 28 Mar. 31 Apr. 28 202 1*83 237 596 216 576 WiO 260 91 110 55 1,580 512 213 277 160 275 283 212 258 2k2 kl2 181 307 559 236 30 30 77 50 15 Subsequent to date shown State and Corporate local povt. Other 2/ 357 155 1,006 731 836 585 335 1,036 . 1,0146 1,125 1,700 687 . 258 502 380 32k 283 336 391 560 682 360 638 806 579 —— 60 30 127 50 15 Forthcoming Large Offerings, as of May 5 Type Issuer Amount Approximate date (millions of offering of dollars) U. S. Freight Co. Conv. sub. deb. 15--U Haloid Xerox, Inc. Conv. sub. deb. 15.1 Aerojet-General Corp. Duke Power Co. S.F. deb. ' Com. stk. 15.0 16.6 Tennessee Gas Transmission Corp. New York State Elec. & Gas Co. Federal Paper Board Co. New England Tel. & Tel. Co. Ohio Edison Co. *Armco Steel Corp. xAllegheny-Ludlum Corp. Michigan Consolidated Gas Co. Consolidated Natural Gas Co. New Orleans Public Service Coip. Aldens, Inc. Clark Equipment Credit Corp. for FRASER Indiana and Michigan Electric Co. Digitized ' Deb, 1st mtg. bds. S.F. deb. Com. stk. 75.0 25.0 20.0 U5.0 1st ratg. bds. S.F. deb. S.F. deb. 1st mtg. bds. Deb. 1st ratg. bds. S.F. deb. Deb. S.F. deb. 30.0 50.0 15.0 30.0 140.0 15.0 15.0 20.0 20.0 May 8 (rights expire) May 8 ( r i ^ i t s expire) May 8 May IS ( r i g h t s expire) May 16 May 17 May 18 May 19 (rights expire) May 23 May 23 May 2k May 2k May 25 May 25 May May June 1 Forthcoming Large Offerings, as of May 5 (CpntTd) Type Amount Approximate date (millions of o f f e r i n g of dollars) ! CORPORATE (Cont'd) Columbia Gas System Inc. •^Brooklyn Union Gas Co. Michigan-Wisconsin Pipe Line Co. *Union lank Car Co. Commerce Oil Refining Corp. Realty Collateral Corp. Deb. 1st mtg. bds. 1 s t mtg. p . l . bds. S.F. deb. Deb., bds. & com. Coll. t r . notes 30.0 20.0 30.0 I4O.O 1*5.0 20.0 June 2 June 8 June 15 June Indefinite Indefinite STATE AND LOCAL GOVERNMENT Cincinnati, Ohio Puerto Rico Water Resources Auth. Chicago Board of Education, H I . Pennsylvania State Public School Bldg, Auth. Ownesburg, Kentucky *State of Ohio ^Houston, Texas New York State Housing Fin. Agency Monroe County. Water Resources Auth. New York Sacramento Mun.-Utility D i s t . , Calif. Massachusetts Turnpike Auth. Orleans Parish School D i s t . , La. Dade County, Florida Jacksonville Expressway Auth, G.O. Rev. -Ut. G.O. 1*0.0 21.5 22.0 May ? May 9 May 1$ Hev.-Rent. Rev. -Ut. G.O. G.O. Rev. 2L6 25.0 32.0 17»2 50.0 May 17 May 23 May 21* May Zk May Bev.-Vt. 17,0 Rev. -Ut. Rev. G.O. G.O. Rev.-Ut. 30.0 175.0 10.0 1*6.0 1*0.0 June 1 Indefinite Indefinite Indefinite Indefinite S.F. deb. 25.0 May June 1 OTHER *City of Montreal, Canada . *—Included an t a b l e f o r f i r s t time. 1/ Includes corporate and other i s s u e s of $15 million and over; State and l o c a l government issues of $10 million and over. Includes foreign government and International Bank f o r Reconstruction and Development i s s u e s and n on-guaranteed issues by Federal agencies. Note.--Deletions f o r reasons other than s a l e of i s s u e : City Products Corp.j $15.0 million—$13.5 million for refunding. 2/ -IllExhibit K Yields on New and Outstanding Electric Power Bonds, Rated Aa and A 1/ Aa-rated offering yields 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. it 16 17 18 Dec. 7. 1961 - Jan. 12 18 25 Feb. 8 16 16 liar. 23 2h Apr. 13 Actual (per cent) Amount a b o v e seasoned y i e l d s (basis points) 5.30 (12/8/59) 2.93 (3/31/5U 87 -8 5.132/ *5.08 , *5.30 36 it2 63 5.09 it.82 • it. 91 *it.88 it. 83 it5 25 37 32 26 . 27 A-rated offering yields Amount above Actual seasoned y i e l d s (per cent) (basis points) 5.65 (9/18/59) 3.00 (3/17/51) 123 -15 5.33 13 5.45v *5.3#/ 51 28 it.97 5. lit 5.15 ^•it. 95 it.93 it.88 it. 80 9 35 29 11 11 8 2it U.88 26 5.05 it3 2k 22 it. 78 It. 85 5.00 it. 60 it.55 it.Ut a.37 33 itO it9 11. 7 -2 it.60 it. 65 it.it7 it. 50 It.itO h. 65.-- -1,3 5 - 5 17 *—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 yield 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 ences 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, luonthly averages so marked include one or more issues with such a provision. Other issues have no such provision.