Full text of H.16 Capital Market Developments : November 21, 1956

The full text on this page is automatically extracted from the file linked above and may contain errors and inconsistencies.

Not for Publication DECONTROLLED AFTER SIX MONTHS
H.lU

November 21, 1956

CAPITAL MARKET DEVELOPMENTS
Large public security offerings issued for new capital
last week totaled $70 million for corporations and $66 million for
State and local governments. During this holiday-shortened week
ending November 23, three State and local government issues amounting to #82 million were the only large offerings scheduled for sale.
The largest of these scheduled issues, however—the Connecticut
Expressway's revenue bond issue—has been indefinitely postponed.
This issue, which had been originally scheduled for sale on October 30 in the amount of @75 million was reduced to &5U million when
rescheduled for this week. The issue carried a U.00 per cent ceiling
on interest cost and received no bids.
Bond yields - Bond yields continued to move upward last
week for all categories of outstanding bonds, except for those on
U. S. Government obligations. The Government (new series) bond
yields remained stable while those for the old series declined .one
basis point. Yields on State and local Aaa- and Baa-rated bonds
have risen particularly sharply recently, surpassing their 1953
highs the first week in November. Currently at 2.85- per cent for
the Aaa's and 3.99 per cent for the Baa's, they are 12 and 20 basis
points respectively above previous 1953 peaks. Corporate bond
yields passed their 1953 highs in mid-August and are now 25 to 33
basis points above those levels.
Offering yields on new issues have also been rising in
recent weeks. . Texas Power and Light Company's Aa-rated 30-year
first mortgage bond issue was reoffered this week to yield U.30
per cent—10 basis points above that for the last comparable issue,
an offering made on October 31, and the same as the offering yield
for a similar rated first and refunding mortgage bond issue which
was floated last week.
Stock market credit - Customer credit in the stock market
(excluding U. S. Government securities) declined Jj?36 million during
October, to total $3,9llt million at the end of the month. This is
the smallest amount outstanding since August 1955. Both net debit
balances and bank loans to "others" continued to decline. Borrowing by member firms of the NYSE maintaining margin accounts, except
borrowings on U. S. Government securities, increased $15 million
while customers' net free credit balances declined $32 million.
These and other data on stock market credit f or September and October are shown in the following table.




H.

— 2 —

End of month
October September

Change

(Millions of dollars)
Customer credit
Excluding U. S. Govt, securities - Total
Net debit balances
Bank loans to "others"
Net debit balances secured by U. S. Govt, securities
Bank loans to others for purchasing or carrying
U. S. Govt, securities
Broker and dealer credit
Money borrowed except on U. S. Govt, securities
On customer collateral
Money borrowed on U. S. Govt, securities
Customers' net free credit balances

3,914
2,748
1,166
36
k2

2,086
1,788
kS

83b

3,950
2,782
1,168
33

-36

U2

0

2,071
1,777

15
11
3
-32

h2

r/866

r/ Revised

Stock prices - Stock prices, as measured by the SEC index
of 26$ common stocks, declined 2.8 points last week, closing at
272.9 on November 16. Daily figures through Tuesday of this week
indicate a further decline in prices.
More detailed information concerning recent capital market
developments is presented in the attached exhibits.

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




-3h

-2
3

HIGH-GRADE BOND YIELDS
Weekly

CORPORATE Aaa

STATE AND LOCAL
GOVERNMENT Aaa

U. S. Govt., long-term 2/
Corporate
Aaa 1/

Old series

New series

Spread between
State and
U. S. Govt.
local govt. (old series) and
Aaa 3/
Corporate I State and
Aaa
Ilocal Aaa

(Per cent)
3.1*2 (6/19)
2.99 (1/9)
3.09 (1/8)
2.85 (l|/23)
3.17 (12/23)
2.91 (1/7)
3.67 (11/16)
3.07 (3/2)

3.15
2.78
2.7k
2.hh
2.9U
2.62
3.27
2.80
3.16

•I

3.66
3-67
~

1:1

3.27
3.26

(6/6)
n.a.
(12/26) n.a.
(1/9)
n.a.
(8/7)
n.a.
(8/5) 3.03 (8/5)
(1/7) 2.89 (6/10)
(11/9) 3.29 (11/16)
(2/17) 2.92 (2/3)
3.22
3.27
3.29
3.29
3.29

2.73
1.98
2.21
1.90
2.3U
2.05
2.85
2.17
2.68
2.72
2.7h
2.79
2.85

(6/25)
.38
(1/8)
.19
(6/10) . .U3
(9/2)
.32
(9/8)
• 3U
(5/26)
.13
(11/15) •.lJi
(2/23)
.13

.81*
.30
.61
.29
.70
.51*
.68
.1*5

.la

•1|8
.50
.52
•1*8

.39
.39
.39

.la

.la

1/ Weekly average of daily figures. Average term of bonds included is 25-26

2/ Weekly averages of daily figures. The old series -includes fully taxable,
marketable 2 1/2 per cent bonds due or first callable after 12 years through
September 1955, and those due or callable in 10-12 years thereafter; the average
term to first call of the bonds included declined from lit years in early 1953 to
11 1/2 years in early 1956. The new series is comprised of the 3 per cent bond
of 1995 and the 3 1/U per cent bond of 1978-83.
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.




EXHIBIT B

LOWER - GRADE BOND YIELDS
Weekly

Per cent per annum

V -

Corporate
Baa 1/

Date

State and
local govt..
Baa 2/

State and
local govt,
rev. 1/

(Per cent)
1953 - High
Low
195 U - High
Low
1955 - High
Low
1956 - High
Low

3.89
3.50
3.7k
3.hh
3.63
3.U5
U.22
3.58

(9/18)
(1/2)
(1/8)
(12/31)
(12/30)
(l/lii)
(11/16)
(3/9)

October 19
October 26
November 2
November 9
November 16

U.16
U.18
a.20 It. 21
U.22

3.79 (6/25)
2.96 (1/8)
3.32 (1/7)
2.93 (8/5)
3.26 (12/29)
3.02 (1/6)
3 . 9 9 (13/15)
3.20 (3/8)

3.27 (6/26)
2.71 (1/2)
3.00 (1/1)
2.72 (8/13)
2.99 (12/30)
2.76 (1/7)
3.87 (11/16)
2.89 (2/210

3.71
3.77 .
3.82
3.89
3.99

3.56
3.6U
3.71
3.80
3.87

1/ Weekly average of daily figures. Average term of bonds
included is 25-26 years.
2/ Thursday figures. Only general obligation bonds are
included; average term is 20 years.
3/ Friday figures. Average rating of bonds included is
between Baa and A; average term is 20 years.
Note.—Hi$ts and lows are for individual series and may
be on different dates for different series.




STOCK MARKET

Stock price
index 3/

Stock market customer credit
Trading
Common
Customers1
Bank
volume 2/
stock
debit bal- loans to
(millions yields j/
ances jt/ "others" 1/
of shares) (per cent)
(Millions of dollars)

1953 -• High
195k - High
Low
1955 - High
Low
1956 - High
- Low
'September
October
November 2
November 9
November 16

167.1 (1/2)
lhh.O (9/18)
221.1* (12/31)
156.5 (1/6)
270.7 (12/30)
217. It (1/lit)
295.5 (8/3)
257.lt (1/20)
278.2
275.7
278.0
275.7
272.9

2.5
0.9

1.:!
1.5

%

2.0
1.8
2.1

2.3
2.0 '

2,ltlt5
2,055
1:11
3,1*36
t u
. 2,lt05
lt.22
It,030
3.78
3,537
k.2k lt,0lt7
3.86
3,91it

U.2U

It. 23

3,950
3,911t

1,665
l,3Ht
2,388
1,653

780
66U

l,0lt8

7.1*6
l,2ltl

1,018

2,810
2,7itO

1,267
1,159

2,782
2,7lt8

1,168
1,166
1,166

1,159

n.a.—Not available.
1/ SEC index of 265 common stocks^ weekly closing prices, 1939*100; converted
to 19«7-U9"100 by Federal Reserve. The conversion factor is 123-91.
2/ Averages of daily trading volume on the New York Stock Exchange.
3/ Moody's 200 common stocks; end of month figures.
u/ 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 at banks in New York and Chicago.
Weekly reporting banks account for about 72 per cent of loans to others.
Note.—-Highs and lows are for individual series and may be on different dates
for different series.




H.lii.

#

Exhibit D
Corporate and State and Local Government
Security Offerings and Placements
(In millions of dollars)
New capital
1956

January
•February
March

Corporate
I 1955
1

1954

1956

State and local
1 1955
1

1954

579
70U
790

535
1407
1,223

547
426
635

4o4
696
390

535
312
538

396
411
565

April
May
June

816
1,11*
830

1*78
886
687

497
656
842

377
490
735

427
350
641

734
748
853

July
August
September

1,066
669
836

6kb

909
3#
747

376
199
e/350

470
249
406

279
261
649 0

October
November
December

e/800 2/
e/T,100

1,162 y . .
632
900

1,003
290
604

9/635
e/275

919
658
108

594
423
877

2,165
2,0$2
1,217
1,911
6,128
2,695
8,821

1,608
1,995
3,603
1,991
5,59k
1,896

1,490
1,603
3,093
j/925
e/4,018

1,385
1,418
2,803
1,121*
3,927
1,984
5,911

1,372
2,331
3,706
1,188
4,894
1,89k
6,789

1 1st quarter
2nd quarter
1st half
3rd quarter
Three quarters
i+th quarter
Year

2,073
2,790
1,863
2,571
7,h3k

597
670

'

7,h90

Excluding finance companies 3/
1st quarter
2nd quarter
3rd quarter
iith quarter
Year

1,617
2,520
2,321

1,727
1,870
l,k3k

2,55k
7,569

1,527
1,927
1,911
1,792
7,158

e/ Estimated.
1/ Includes $637.2 million AT&T convertible debenture issue.
2/ Includes $571.5 million AT&T common stock issue.
3/ Total new capital issues excluding offerings of sales and consumer finance
companies.
Note.—Details may not add to totals due to rounding.




1 :
H.l4

Exhibit E
Large Public Security Issues for New Capital
(Other than U. S, Treasury) 1/
Proceeds of Large Issues Offered
(Millions of dollars)

Month

Corporate

1955 -..October
November
. December
1956 - January
February
March
April
May
June
July
August
September
October

1

State and
local government

805
221
263
95 ,
212
278
395
6%
185
592
217
558
386

716
401
227
192
444
163
157
233
463
164
35
184
383

Other 2/

25
50

50
20
37
.

35

Large Individual Issues Offered November 1 through November 16

Issuer

Type 3/

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

CORPORATE
Allied Stores Corp.
S.F. deb.
American Tel. & Tel. Co. Common stk.
Northspan Uranium
Mines, Ltd.
Gen.mtg.bds.
Public Service Electric
and Gas Co.
1st & ref.
mtg. bds.
. Pacific Lighting Corp.
Conv. pfd.

15.0
571.5

1976

4 3/4

4.75

1*5.0

1963

5 3A

5.93

50.0

1986

4 3/8

4.30

Aa

2.25-3.35
2.10-3.00
2.40-3.60
3.50-3.65

Aa
Aa
A
A

19.8

A

STATE & LOCAL GOVERNMENT
Los Angeles, Calif.
Trenton, New Jersey
/-•San Antonio, Texas
Chicago, 111.

Elec. rev.
G.O.
G.O.
(Water rev.


http://fraser.stlouisfed.org/
1
Federal Reserve Bank of St. Louis

13.5
5.3
5.0
5.0

1957-86
1957-81
1957-76
1970-74

3.36
2.99
3.57
3.73

.
H.lli
^

E-.2

Large Individual Issues Offered November 1 through November 16 (Cont'd)

Issuer

Type y

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

Rating

STATE . & LOCAL GOVERNMENT
(Cont'd)
Newark, N. J.
Chicago Board of
Education, 111.
Cleveland, Ohio
State of Oregon
Houston, Texas
Hempstead School District No. 5, N. Y.

G.O.

12.5

1957-76

3.59

2.50-3.55

A

G.O.
Water rev.
G.O.
G.O.

10.0
7.it
5.7
20.0

1959-76
1961-81
1969-71
1958-82

3.62
3.58
3.06
3.75

2.75-3.60
3.00-3.56
2.90-3.00
2.60-3.75

A
A
Aa
A

5.6

1957-86

h. 30

3.95-1.15^ Baa

G.O.

'

OTHER
None
~y
Includes corporate and other security offerings of $15 million and over;
State and local government security offerings of $5 million and over.
2/ Includes foreign government and International Bank for Reconstruction and
k
Development issues.
,
3/ In the case of State and local government securities, G.O. denotes general
obligation; Rev., revenue bonds; G.R., general obligations additionally secured
by facilities revenues; L.L., limited liability obligations secured by pledge of
designated revenues.
h/ 1957-62 maturities not reoffered.

*



1

Exhibit F

H.lli

Forthcoming Large Public Security Offerings for New Capital
(Other than U. S. Treasury) 3/
• Expected Proceeds from Forthcoming Large Issues
Subsequent to
During month following
date shown
date shown
State and o t t e r g,
State
and
Other 2/ Corporate
Corporate
local govt.
r1
local govt.

Bate of
computation
- Oct. 31
Nov. 30
Dec. 30
1956 - Jan. 31
Feb. 29.
Mar, 30
Apr. 30
May 31
June 29
July 31
Aug, 31
Sept. 28
Oct. 31

202
215
70
176
123
380
568
198
U37

330
205
121
327
220
132
173
332
81

2h7

—

369
315
683

131
359
162

i|12
230
• 85
376
233
1,013
818

50
—
—
«6«.

hhS

. 37

—

567
1,096
. 1,202
1,009
990

1,650
756
618
917
785
811
832
9ll
690
726
958
1,197
955

50
—
—
—

37

—

Forthcoming Large Offerings, as of November 16
Type

Issuer

Sinclair Oil Corp.
Chase.Manhattan Bank

f

^-Michigan Bell Telephone Co.
Long Island Lighting Co.
Public Service Electric & Gas
^Florida Power & Light Co.
Burroughs Corp.
•it-National Cash Register Co.
Michigan Wisconsin Pipe Line Co.
Southern New England Telephone Co.




Amount
Approximate date
(millions
I of dollars) of offering

Conv. sub. deb.

170.6

Cap. stk.

U7.0

Deb.
1st mtg. bds.
Common stk.
1st mtg.' bds.
Deb.

30.0
20.0
33.0
15.0
30.2

Conv. sub. deb.

28.3

1st mtg. bds.
Common stk.

25.0
20.4

December 3
(rights expire)
December 3
(rights expire)
December U
December 5
December 5
December 11
December 17
(rights expire)
December 19
(rights expire)
Winter
Winter

V
H.llt

; b

F-2
Forthcoming Large Offerings, as of November 16 (Cont'd)
Issuer

Type

Amount
Approximate date
(millions
of offering
of dollars)

STATE AND LOCAL GOVERNMENT
Long Beach, Calif.
*Chelan Co. P. U. Dist., Wash.
Florida State Board of Education
Niagara Falls, New York
^Maryland State Roads Commission
^Norfolk, Virginia
Memphis, Tennessee
Pennsylvania Turnpike Commission
Washington State Toll Bridge Auth,
Inter-American Center Auth;, Fla.
New York State Thruway Authority
Jacksonville Expressway Authority
Florida State Turnpike Authority
Oklahoma Turnpike Authority
State of Connecticut

G.O.
Rev.
L.L.
G.O.
G.O.
G.O.
Elec. rev.
Rev.
Rev.
Rev.
G.O.
Rev.
Rev.
Rev.
Expressway rev.

5.0
23.1
9.3
6.1;
15.0
5.0
15U.0
62.0 .
227.0
20.0
50.0
1*2.0
185.0
65.0
5k. o

November
November
November
November
December
December
December
Winter
Winter
Winter
Winter
Winter
Winter
Winter
Winter

20
21•
27
28
k
18

OTHER
0

City of Montreal, Canada

"

Deb.

22.5

Winter

*—Included in table for first time.
1/ Includes corporate and other issues of $15 million and over; State and
local"government issues of $5 million and over.
£/ Includes foreign government and International Bank for Reconstruction
and Development issues.
Note.--Deletions for reasons other than sale of issue: Seaboard Finance
Company, $15.0 million issue and J. P..Stevens & Company, $28.7 million
issue—withdrawn from registration with the Securities and Exchange Commission.