Full text of H.16 Capital Market Developments : November 2, 1959
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Not for Publication DECONTROLLED AFTER SIX' M0HT2S K.lU November 2, 1959* CAPITAL MARKET DEVELOPMENTS (Including Quarterly Review of State and Local Government Security Financing) The volume of public security financing for new capital ia expected to be much smaller this week than in other recent weeks. Last week, ending October 30, corporations sold large issues totaling $116 million and State and local governments offered issues with aggregate proceeds of $90 million. The calendar for this week includes only one large corporate issue for $25 million and one large State and local government issue for $11 million.• Bond yields - Changes in yields on outstanding bonds were mixed last week. State and local government and lower grade corporate bond yields continued to decline, while high-grade corporate bonds remained stable. Yields on U. S. Government bonds increased slightly. Yields on corporate bonds increased somewhat in early October, then levelled off, showing a slight net increase for the month. In contrast, State and local government bond yields declined throughout October, showing a decline of about 15 basis points. Yields on U. S. Government obligations declined 18 basis points during the month. A number of 30-year first mortgage electric utility bond issues were offered to investors last week. Two Aa-rated issues were offered at a yield of 5.15 per cent—10 basis points below that for a comparable offering made a week earlier, but 20 basis points higher than the yield for a similar issue also sold last week, which had a 5-year refunding restriction. Two new A-rated issues were also offered to the public, one to yield 5.25 per cent and the other $.h0 per centre and 25 basis points respectively below the yield for a comparable offering made in mid-September. FNMA secondary market operations - FNMA operations in September reflected further pressures in residential mortgage markets. Offerings • to FNMA under its secondary market operations increased again for the eighth straight month, and FNMA purchases, which also rose, were much larger than a year earlier when conditions were easier. These trends prevailed despite FNMA's reduction of its mortgage commitment and purchase prices in May, July, August, and twice in September. In the third quarter of 1959, secondary market offerings to FNMA were the largest in nearly three years, and FNMA's purchases were the largest in over two years. FNMA sales, however, were the smallest since the 'end of 1957. H.llt - 2 - Security volume for November - Corporate security issues for the month of November are estimated at a total of $750 million, the same .as the revised estimate for <Qptober, but more than two-fifths larger than in November 1958. Large-publicly offered issues are expected to total about $1+00 million, including a $250 million debenture issue by AT&T, which is expected to be sold at mid-month. State and local government bond issues are expected to total $b75 million in November. This total would be one-fifth smaller than the volume last month, but about the same as in November last year. Stock prices - Stock prices, as measured by Standard and Poor's index of 500 common stocks, increased about'2 per cent last week, closing at 57.52 on October 30. Trading activity increased sharply, with the daily volume averaging 3.8 million shares a day. On balance, stock prices increased somewhat during October. After fluctuating within a narrow range during the first half of the month, prices dropped substantially, but subsequently more than recovered the loss. For the month, trading activity averaged 2.8 million shares a day, little different from the average volume for September. State and Local Government Security Offerings in the Third Quarter of 1958 State and local governments sold $L.6 billion of long-teim bonds during the third quarter of 1959, one-sixth less than in the corresponding period of 1958. Bond sales decline seasonally in the third quarterj however, the decline was sharper this year than in other recent years. For the first nine months this year, State and local government security financing totaled 6.3 billion, only slightly below the record total last year. Purpose of issue - Nearly all bonds sold during the third quarter were for the purpose of raising new capital, as the volume of refunding issues continued to be relatively small. School construction was the most important purpose of financing as it has been ,£or some years. Sales of bonds for this purpose totaled only #6l million, however, one-fifth less than in the third quarter of 1958. The decline was entirely in sales of bonds for financing elementary and secondary education; bond issues sold to finance higher education were in somewhat larger volume this year. New financing for highways, bridges and tunnels ranked second in importance, totaling nearly $300 million, one-fourth larger than a year earlier. Bonds sold to provide funds for veterans' aid was the only other major type that were sold in larger volume in the third quarter. It should be noted, however, that the total for this year included a $120 million issue sold in August by the State of Pennsylvania. Long-tern Security Issues of State and Local Governments Third Quarter 1954-59 (In millions of dollars) 1959 tissuing authority; •V State % County and township Municipality | School district f Special authority •I Unidentified 1/ I ; Total ,. * I 1958 1 1957 I 1956 119 87 295 29k 19k I 1955 195^ 1*67 lii6 176 26k 228 1436 126 70k 338 293 256 119 563 1,581 1,897 1,566 1,571 1,860 lt51ik 971 237 19U 35 260 96 120 339 57U 272 37 20 287 k7 75 232 k06 105 9 5 170 91 2 181 273 200 129 7 183 18 8 109 199 37 22 17 12 kk 1,581 1,897 1,566 1,136 1,232 Vpe of issue: I General obligation \ Revenue 999 120 1,200 Ml 1,110 393 680 2U8 681 333 59k k99 y: ^ | $ 202 bS 117 57 i s 100 159 30k 7 21 61 191 22 6 30 n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. 161 2 215 6ii 61 122 1 136 3 1,581 1,896 1,566 988 . 1,136 1,232 p Purpose of issue: New capital total \ I < .r 1 I % | | 4 Schools 2J Highways, bridges and tunnels Residential buildings Hospitals and institutions Sewer and water Misc. public service enterprises Veterans' aid Other Unidentified 1/ Refunding Total Utility Quasi-utility Special tax Rental f Public Housing Authority | Federal Government loans 3/ ? li6l 298 150 20 171 k9 152 270 Total 580 n 157 96 286 77 125 296 210 230 199 S 163 1,136 1,232 1A2L 1*188 272 271 iko 13 10. 106 159 n.a.—Not available. ;• 1/ Issues of less than $500,000 not further classified in 195U and 1955. i 2/ Data for years prior to 1956 probably understate school issues by about one-fourth because of unclassified small issues. | 3j Coverage for 1956-1959 is broader than for earlier years. | Note.—Details may not add to totals because of rounding. Source.-1954-1955, Bond Buyer and Federal Reserve; 1956-1959, Investment Bankers Assoc. of FRASER America. Data for 1956-1959 not strictly comparable with data for earlier years. Digitized for - h - Type of issuer - Municipalities and States were equally important groups of issuers this third quarter with each type selling bonds totaling about # 7 0 million. Last year, municipalities had been much more important, selling bonds with proceeds of more than $700 millionj States in this period sold bonds totaling $U36 million. New financing by counties and townships was in larger volume than last year, while financing by school districts and special authorities was in much smaller volume. gype of issue - All types of bond financing were in smaller volume than a year earlier. General obligation financing, continuing to be the most important type of issue, was one-sixth smaller in volume than in the third quarter of 1958 and revenue bond financing was oneeighth smaller. Federal Government loans were one-fourth smaller. It should be noted that the increased financing;of State and local governments in the first half this year over thatIqf a year earlier was a result of revenue bond financing, largely reffect&g the sale of a number of very large issues. Thus far this year saleb of general obligations have continuously lagged behind the pace of 1958, while revenue issues were larger than a year earlier until the third quarter. Table 2 Proceeds from Selected Types of Issues (Millions of dollars) General obligation bonds 1959 1 1950 1st Quarter 2nd Quarter 3rd Quarter 1,239 1,365 999 1,565 1,66k LtiOO 1st 9 months 3,621 h,h29 Revenue bonds 1959 1 1958 771 9k 6 U20 562 h6 7 181 2,137 1,510 More detailed information concerning recent capital market developments is presented in the attached exhibits. Capital Markets Section, Division of Research and Statistics, Board of Governors of the Federal Reserve System. / 3 HIGH-GRADE BOND YIELDS L-X LOWER-GRADE BOND YIELDS STATE AND 10CAI GOVT. Exhibit b Tables for Exhibit A High-grade Bond Yields Date Corporate Aaa 1/ U. S. Govt, long-term 2/ Spread between U. S. Govt, and Corporate State and Aaa local Aaa State and local govt. Aaa J/ (Per cent) 19514 - Low 1957 - High 1958 - High Low 1959 - High Low 2.85 (U/23) it.lit (9/27) U.13 (10/10) 3-55 (5/2) h.$l (10/9) it.09 (1/9) Oct. Oct. Oct. Oct. Oct. ii 2 9 16 23 30 2/ It. 56 lt.56 it.56 2.15 (8/6) 3.76 (10/18) 3.8U (12/26) 3.07 (it/25) It.30 (9/18) 3.83 (1/2) 1.90 (9/2) 3.U5 (8/29) 3.31 (9/11) 2..6U (5/1) 3.65 -(9/210 3.06 (3/26) It. 21 It. lit It. 13 It. 06 It. 09 3.6b .36 3.58 3.53 3.1t9 & 3.61 Corporate Baa 1/ State and local govt. Baa 2/ .16 \kl Lower-grade Bond Yields Date .30 .60 .51 .22 .50 ]j f r .72 .3U .92 .53 1 .57- Spread between Aaa and Baa State and Corporate local govt. • (Per cent) ... 195lt - Low 1957 - High 1958 - High Low 1959 - High Low 3.Wt (12/31) 5.10 (11/29) lt.96 (1/3) it. 51 (7/11) 5.29 (10/16) it.83 (it/17) 2.93(8/5) L51 (8/29) it.3L (9/11) 3.6k (5/1) it.it6 (7/2) 3.92 (3/26) .52 1.27 1.20 .77 .77 .56 .96 1.21 1.11 .93 .98 .79 Oct. Oct. Oct. Oct. Oct. 5.26 5.28 5.29 5.28 5.26 it.itit it.itl it.itO it.3it it. 31 .69 .71 .73 .72 .70 .80 .80 .82 .81 .82 2 9 16 23 30 e / 2/ Preliminary. 1/ Weekly average of daily figures. Average term of bonds included is 25-26 years. 2/ Weekly average of daily figures. The series includes bonds due or callable in 10 years or more. J/ 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 1*56 SECONDARY 1957 MARKET H5I 1159 OPERATIONS OMIIINOS 1 r v^\\ // Jj'•«««« 1 V \\i r j f y c U 115$ 1456 / / / / 1157 V 1151 1151 / Exhibit D - Tables for ExliibiL C Stock Market Stock price index 1/ 1953-1958 - High 1 5U.ll Low 22.95 60.51 37 1959 - High Low August September Oct. 9 Oct. 16 Oct. 23 Oct. 30 2/ Common stock yields 2/ (per cent) (12/21/58) (9/18/53) (7/31) 2/6 59.1*0 57.05 57.00 57.33 56.56 57.52 Trading Stock market customer credit volume y Customers1 Bank (millions Total debit bal- loans to of shares) "others" u K (Millions of dollars) 3.30 6.25 3.08 3.31 4.9 0.9 4.3 2.1 4,492 2,055 4,761* 4,443 3,285 1,31k 3,1(01 3,256 1,317 669 1,332 1,373 1,210 1,180 3.13 3.26 3.25 . 3.22 3.28 3.23 2.4 2.7 2.1; 2.3 2.8 3.8 4,528 4,443 n.a. n.a. n.a. n.a. 3,269 3,250 1,259 1,193 1,195 1,180 1,190 n.a. n.a. n.a. n.a.—Not available. g/ Preliminary. 1/ Standard and Poor's rrmposite index of 500 oommon stocks, weekly closing prices, 1941-43*10. Monthly data, are averages of daily figures rather than of Fridays' only. Highs and lows are for Fridays' data only. 2/ Standard and Poor's composite stock yield based on Wednesday data converted to weekly closing prices 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 Exoluwige. 4/ tod 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 0. S. Government securities• Prior to July 1, 1959, such loans are excluded only at banks in New York and Chicago, Weekly reporting hanks account for abotitr 70 per cent of loans to others. For further detail sea Bulletin. Federal National Mortgage Association Secondary Market Operations 1/ Estimated Offerings to FNmA Immediate Standby Total purchase commitment Date Purchases by mm Sales by FNMA (Millions of dollars) 1958 - Sept. Oct. Nov. Dec. 1959 - Jan. Feb. Mar. Apr. May June . July Aug. Sept. : ; 23.8 57.3 40.7 39.7 37.7 44.4 <2.4 <7.8 %.6 Bk. 4 109.5 123.1 141.3 22.0 49.6 39.2 35.3 33.9 h1.2 49.8 50.1 • 73.4 76.6 92.5 109.8 . 134.8 1.8 7.7 1.5 k.k 3.8 3.2 2.6 7.7 7.2 7.8 17.1 13.3 6.5 6.0 10.8 20.0 33.2 33.7 27.6 36.5 39.6 38.3 49.4 62.3 71.7 85.4 7.9 .8 1.1 .9 .3 .8 1.1 .6 .3 .3 * •—Less thnn |50,000. ' 1/ Dxta represent unpuld principal balances of the mortgages involved, exclusive of premiums, discounts, or other etrtrges. Offerings are amounts of applications received durinfi the period from nellern proposing that FVMA execute ourchanlnn contracts. An immediate purohane contract covers eriotlnr, mortgages which the seller muct deliver tofitHAwithin 45 day*. A standby commitment contract relates to proponed mortgages, on housing not yet under construction, which the seller must usually deliver within one ye nr. Pur chases Include those under both 1 immediate purchase and standby commitment contracts. Data crclixle PIMA activity under Special Asslotanoe and Management and Liquidating Programs. Exhibit E H.14 , Long-term Corporate and State and Local Government Security Offerings and Placements (In millions of dollars) 1959 New capita! Corporate 1/ State and local 2/ 1 1958 1 1957 1959 1 1958 1 1957 8 812 71*2 572 506 765 1,1*53 931 . 592 981 798 895 551 765 5146 393 ShO 1,114 1,003 924 973 566 ' •. 516 • 2/488' 806 403 651 529 584 431 862 518 920 1,090 789 1,076 456 m 435 698 633 698 2,138• 2,276 3,IAS 2,50k - 2,2Wi 3,U9 1,860 2,899 a/i,57i 2,951.. 1,365 1,820 1,704 1,51*4 2,029 6,59k 3,524 5,069 7,099 January February March 840 7 45 631 1,553^ 1,060 1,065 1,320 April May June 899 791 874 1,1140 597 887 July August September October November December 1st 2nd 3rd 4th quarter quarter quarter quarter 1st half Three quarters Year H e/750 e/750 728 lf 2,216 . 2,#4 6/1,888. 3,139 2,623 2,760 2,300 . 4,780 e/6,668 5,762 8,522 10,823 4ft3 645 e/600 e/475 4,642 2/6,213 1,520 Excluding finance companies 4/ 1st 2nd 3rd 4th quarter quarter quarter quarter 2,011 2,409 e/1,588. Year 2,899 2,586 2,731 2,213 3,237 2,889 2,582 2,810 10,129 11,518" e/ Estimated. 1/ Securities and Exchange Commission estimates of net proceeds, 2/ Investment Bankers Association of America estimates of principal amounts. 3/ Includes 5718.3 million AT&T convertible debenture issue. h/ Total new capital issues excluding offerings of sales and consumer finance companies. Exhibit F H.lU Other Security Offerings 1/ (In millions of dollars) Long-tern Foreign government 2/ Federal agency 3/ 1^9 "1959 I 1950 I 1957 1958 1957 January February March 77 59 2 196 .53 April May 56 50 42 139 198 120 July August September 73 9 5 17 1 October November December 123 74 Year 992 84 1*9 30 199 April May June July August September 72 523 125 175 I 60 28 7 30 164 4 60 220 215 100 1 2,321 507 Short-term . State and local government V January February March 1,163 251 572 Federal agency 3/" 190 128 295 233 460 273 326 455 147 359 500 489 371 208 144 638 430 565 563 411 245 357 354 264 205 337 153 486 675 209 161 329 336 469 501 2k6 1*67 E/325 289 423 369 272 252 272 727 365 665 437 206 330 . 224 370 512 231 415 243 5 459 454 114 137 1,238 3,910 3,274 3,098 5,543 October November December Year S d/ Preliminary. Data presented in this exhibit differ from those in Exhibit E in that refunding issues, as 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 and by international organizations. Source: Securities and Exchange Commission. ^ j/ Issues not guaranteed by the U. S. Government. Source: long-term, Securities and Exchange Commission$ short-term, Federal Reserve. 4/ Principally tax and bond anticipation notes, warrants or certificates and Public Housing Authority notes. In some instances PMA notes included may have a somewhat longer term than one year. Source: Bond. Buyer. http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis Exhibit 0 H.lli Large Long-term Public Security Issues for New Capital (Other than U. S. Treasury.) 1/ Proceeds of Large Issues Offered (Millions of dollars) Month 1958 - September October November December 1959 - January February March April May June July August September Corporate State and local government 825 259 -227 305 369 3140 215 359 3I42 281* 110 363 199 288 172 259 229 335 551 369 563 258 635 19b 263 2lh Other 2/ 18 209 100 79 m 35 176 20 50 60 50 98 175 • Large Individual Issues Offered during October type.3/ CORPORATE Boston Edison Co. So. New England Tel. Co. Columbia Gas System, Inc. Northern Natural Gas Co. Boston Edison Co. Philadelphia Elec. Co. American Elec. Pwr. Co. So. Bell Tel. & Tel. Co. Texas Gas Transm. Coip. Florida Pwr. & Lt. Co. Puget Sound Pwr. & Lt. Co. Hilton Hotels Corp. Northern Natural Gas Co. Central & South West Corp. Amount Coupon (millions Maturity rate or Offering Rating net inter- yield of dollars) est cost 1st mtg. bds. 15.0 Com. stk. 18.6 Deb. 25.0 20.0 Pfd. stk. Com. stk. I5.it 1st ref.mtg. bds .50.0 Com. stk. 55-5 Deb. 70.0 Pfd. stk. 15.0 1st mtg. bds. 20.0 1st mtg. bds. 20.0 Sub.S.F.deb. 25.0 S.F. deb. 25.0 Com. stk. 20.5 5.17 Aaa 1989 5 lA 1981 5 3/8 5.38 1989 5 lt.93 Aaa A 199k 5 1/2 5.35 Aaa 1989 1989 1984 1979 5 V> 5 1/2 6 5 1/8 5.15 5.1*0 6joo 5.13 Aa A A STATE AND LOCAL GOVERNMENT Port of New York Authority Wayne Co., Mich. Rev.-Ut. G.O. 25.0 1989 26.0 1962-68/^ U.37 L08 A h.31 3.504.00 A H0lU G-2 Large Individual Issues Offered*during October (Cont'd) Issuer Coupon Amount rate or Offering Rating Type 3/ (millions Maturity net inter- yield of est cost dollars) STATE AND LOCAL GOVERNMENT (Cont'd)"" G.O. Denver, Colorado 17.0 18.0 G.O. New York, New York State of New Hampshire G.O. 16.0 Public Housing Authorities • G.O. 102.1 Consumers Public Power Dist., Nebraska Rev.-Ut. 23.3 Los Angeles Flood Control Dist., California G.O. 21.2 Baltimore Co., Maryland G.O. . 20.0 Rev.-Rent. 25.0 Penna. Gen. State Auth. Montreal, Canada Ext.S.F.deb. 20.0 _L corporate and other 1970-98 1960-74 1960-88 1960-2000 3.65 3.65 3.22 3.86 3.25-3.75^ Aa 3.00-3.70 A 2.60-3.35 Aaa 2.75-3.93 Aaa A-Baa 1963-92 1U5 3.25-L50 1961-83 1961-99 1962-86 3.70 3.77 3.76 2.90-3.75,, Aa 2.90-^.052/ A 3.00-3.80 — 1979 5 5/8 5.63 1/ Includes security offerings of $15 million and over; State and local government security offerings of $10 million and over. 2/ Includes foreign government and International Bank for Reconstruction and Development issues and non-guaranteed issues by Federal agencies. 3/ In the case of State and local government securities, G.O. denotes general obligations; Rev.-Ut., revenue obligations secured only by income from public utilities;'Rev.-Q.Ut., revenue bonds secured only by revenue from quasi-utilities; Rev.-S.T., revenue bonds secured by revenue from specific taxes only; Rev.-Rent., revenue bonds secured solely by lease payments. V Is of 1998 not reoffered. jy 1997-99 maturities not reoffered. H.lU Exhibit H Forthcoming Large Long-term Public Security Offerings for New Capital (Other than U. S. Treasury) 1/ Expected Proceeds from Forthcoming Large Issues Date of computation — Octi 31 Nov. 28 Dec. 31 - Jan. 30 Feb. 27 Mar. 31 Apr. 30 May 29 June 30 July 31 Aug. 31 Sept. 30 Oct. 30 Subsequent to During month following date shown date shown State and Other 2/ Corporate State and Other 2/ Corporate local govt. local govt. 20k 301 210 270 198 396 22*6 287 165 238 198 • 37k 385 258 229 261 551 292 550 2$k 2k? Ik6 356 385 270 115 326 Uoi 370 365 279 k76 3k6 332 272 305 517 69k 509 71 75 k5 20 50 " 50 25 675 683 515 856 k81 761 517 761 500 lt06 Ii02 k70 336 71 75 h$ 20 50 50 25 —• — Forthcoming Large Offerings, as of October 30 Issuer Type Amount (millions Approximate date of dollars) of offering CORPORATE Sylvania Electric Products, Inc. •Tennessee Qas Transmission Co. S. Fidelity and Guaranty Co. American Telephone & Telegraph 'Co. Transwestern Pipeline Co. Gulf States Utilities Co. New York Electric & Gas Co. •Arkansas Power & Light Co. Publicf^Service Electric & Gas Co. Corraafrrce Oil Refining Corp. AmeAcan Educational Life Ins. Co. S.F. deb. Pfd. stk. Cap. stk. 25.0 30.0 24.1 Deb. Sub. deb. & stk. 1st mtg. bds. Com. stk. 250.0 ko.o 16.0 15.0 1st mtg. bds. Com. stk. Deb., bds. & com. Com. stk. 15.0 25.0 1*5.0 23.8 Nov. 5 Nov. 11 Nov. 17 (rights expire) Nov. 17 Nov. 18 Nov. 25 Dec. 7 (rights expire) Dec. 9 Dec. 16 Indefinite Indefinite STATE AND LOCAL GOVERNMENT •Humboldt Bay Municipal Wtr.Dist.,Cal. State of Mississippi •State of South Carolina State of New York Philadelphia, Pa. Los Angeles Sch. Dist., California 0.0. 0.0. 0.0. 0.0. 0.0. 0.0. " 10.7 lii.O 10.0 55.1 2U.8 a.5 Nov. Nov. Nov. Nov. Nov. Dec. 1* 10 17 18 19 1 H.LII H-2 Forthcoming Large Offerings, as of October 30 (Cont'd) Issuer Type Amount Approximate date (millions of offering of dollars) STATE AND LOCAL GOVERNMENT (Cont'd) Columbus3 Ohio Chesapeake Bay Ferry Commission G.O. Rev.-Ut. 10.0 190.0 Dec. 1 Indefinite OTHER None *—included in table for first time. 1/ Includes corporate and other issues of #l£ million and over3 State and local government issues of $10 million and over. 2/ Includes foreign government and International Bank for Reconstruction and Development issues and non-guaranteed issues by Federal agencies. Note.—Deletions for reasons other than sale of issue: None. Exhibit I Yields on New and Outstanding Electric Power Bonds, Rated Aa and A 1/ Date 1952 - 1958 High Low 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 M / 5 7 ) 2.93 (3/31/5U) 1959 - January February March April May 1 2 20 21 26 June h 17 26 July 9 10 15 . 30 Aug. 5 20 Sept. 18 Oct. 22 23 28 29 30 87 -3 # 37 U 10 17 4.95 1.95 I 5.oo 4.95 it. 93 38 29 31 4.85 4.80 24 22 L95E/ 5.15 46 16 1*0 5.15 42 5.50 (11/7/57) 3.00 (3/17/54) *4.75%/ 123 -15 23 *4.67 18 4.85 5.06 17 13 5.13 27 4.923/ 5.io . 6 24 19 5.oo 5.io 19 13 5.65 60 5.25 5.4o $ 5.io *—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. 3/ Provides for a 7-year period during which issue may not be called for refunding at a lower coupon rate. Appendix 1 November 2, 1959 MONET AND CAPITAL MARKET DEVELOPMENTS IN CANADA The successive declines since late September in Canadian money market and bond yields came to an end last week. There were no signs of significant market action by the Bank of Canada. On Friday, the Canadian Government unexpectedly halted the flow of government funds into low cost home mortgage loans. Direct 6 per cent loans to builders were cut off because the demand had exhausted appropriated funds. Parliament will be asked to vote new funds for direct loans next January. Money market rates - Last Thursday1 s auction rate on 91-day bills rose to 5.02 per cent from lj.,93 per cent the week before. The 182-day bill rate also increased, rising to 5.53 per cent compared to 5.36 per cent a week earlier. The average of closing rates for dayto-day loans for the week ending Wednesday, down sharply to U«P5 per cent the week before, was at U.10 per cent. This general but modest tightening in money market rates followed five weeks of consecutively falling yields. Bond market developments - Another large Canadian issue was sold in the New York market last week as the Province of Manitoba placed a $20 million private issue yielding 5.375 per cent. The issue, which matures in 25 years, was the first borrowing by Manitoba in the United States since 1951. The bond market in Canada was reported rather congested due to last week's heavy provincial and municipal offerings, totaling nearly $100 million. Yields on medium- and longterm government bonds rose slightly, interrupting a three week decline for most issues. At midweek, spreads between comparable Canadian and United States Government securities1 yields were: 1.00 1.03 0.79 1.15 1.05 per per per per per cent cent cent cent cent on on on on on 91-day bills 182-day bills 9-year bond a 20-year bond a 36-year bond Stock prices - Canadian stock prices firmed last week with particular strength sffaown by western oil -companies with natural -gas interests. At Friday's close, the industrial average on the Montreal exchange was almost 2 per cent above the -close a week earlier. O Appendix 1-2 Selected Government of Canada Security Yields Date 3-month Treasury bills!/ Intermediate Govt. bond2/ 195U-55 - Low 1957 - High 1958 - High Low 1959 - High Low 0.78 U.08 3.65 0.87 6.16 3.25 2.81 U,81 U.52 3.31 5.30 U.U5 Longterm Govt, bondj/ Spread between Discount Canadian & U.S. rates on 3-ao. long-tena 3-oo. . Canadian bonds/ billsSZ dollar?/ 3.33 U.35 U.U2 3.78 5.30 U.Ui 1.19 0.U7 2.96 0.30 1.3j8 Oct. 7 5.28 5.25 1.2k 5.27 2.19 114 5.1fl 5.01 1.66 ,0.75 21 5.16 U.93 0.83 1.66 28 5.02 5.22 1.00 5.17 1.U2 Average yield at weekly tender on Thursday following Wednesday date shown. 2/ Government of Canada 2-3/1; per cent of June 15, 1967-68. 3/ Government of Canada 3-1/U per cent of 1979* y U.Se Government 3-l/U per cent of 1978-83. Government of Canada 3 - l A per cent of 1979. 5/ Spread between average auction rates: on Monday preceding Wednesday date shown for the United States; on Thursday following Wednesday date shown for Canada. 6/ Spread between 3-months forward and spot price of the Canadian dollar, expressed as per cent per annum, on Friday following Wednesday date shown. IS l;l Sales of new Canadian Government Municipal and Corporate Bonds (in millions of Canadian dollars) 1959 to Oct. 19 Government Provincial Municipal Corporation Less short-term financing (less than one year) 6,933 1*99 328 282 B7E? 5,5b8 T5OT 1958 to Oct..19 7,110 608 319 628 . 3755* 5,581 57o5IT Of the above, the following have been sold Provincial 206 Municipal 86 Corporation Ul , m Sources A. E. Ames & Co., Lixoitea. . ' •• • 1957 to Oct. 21 in New York 170 108 107 3 8 ? 6,029 1*39 255 928 7T55? 5>280 2373 2