Full text of H.16 Capital Market Developments : November 23, 1959

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Not for Publication DECONTROLLED AFTER SIX-MONTHS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 23, 1959 •
CAPITAL MARKET DEVELOPMENTS
(Including Monthly Review of Sources and
Uses of Funds of Financial Intermediaries)

The volume of public security financing for new capital last
week was very large, but is expected to be very small during this holidayshortened week. During the week ending November 20, corporations sold
large issues, including a $250 million AT&T debenture issue, with aggregate
proceeds of $336 million. State and local government issues amounting to
$128 million were also sold. The calendar for this week includes only two
corporate offerings totaling $31 million and one State and local government issue for $10 million.
Bond yields - Changes in yields on outstanding bonds were mixed
last week. Yields on corporate bonds continued to remain stable, while
those on State and local government bonds declined. Yields on U. S. Government obligations increased.
Housing starts - Private nonfarm Housing starts declined more
than seasonally in October, and dropped nearly 11 per cent to a seasonallyadjusted annual rate of 1,180,000 units, according to preliminary Census
Bureau estimates. This was about one-sixth below the peak level in April,
and the lowest rate in fifteen months. Through October of this year, the
cumulative total of private starts remained slightly ahead of the same
period in 1955 and close to the record pace set in 1950. The relative
distribution of starts by type of financing, however, was different. So
far this year, 6? per cent of all private starts were financed by conventional mortgages or without borrowing5 in the same period of 1955#
the percentage was lt9» and in 1950, it was 51. The remainder was financed
by Federally-underwritten mortgages.
ing that
totaling
occurred
"others"

Stock market credit - Customer credit in the stock market (excludon U. S. Government securities) continued to decline in October,
$U.U billion at the end of the month. The decline of %li2 million
primarily in net debit balances as the decline in bank loans to
was slight.

Borrowing by member firms of the New York Stock Exchange maintaining margin accounts (excluding borrowing on U. S. Government securities)
increased in October. This was the first increase since June and brought
the total to $2.2 billion at the end of the month. On the other hand,
customers' net free credit balances, amounting to *1.0 billion, declined
in October. These and other data on stock market credit for October and
September are shown in the table on the following page.




fi.lk

2 -

End of month
October | September
Customer credit
Excluding U. S. Government securities - total
Net debit balances
y
Bank loans to "others"
Net debit balances secured by U. S. Govt, securities
Bank loans to others for purchasing or carrying U. S.
Government securities
Broker and dealer credit
Money borrowed except on U. S. Government securities
On customer collateral
..Money borrowed on U. S. Government securities
Customers' net free credit balances

Change

*•

(Millions of dollars)

|

kykOl
3,210
1,191
168

3,250
1,193
156

-h2
-iiO
-2
+12

158

162

-h

2,178
1,923
227
967

2,Ik?
1,906
231
1,039

+29
+17
-h
-72
3

Stock prices - Stock prices, as measured by Standard and Poor's
index of 500 common stocks showed little change last week, closing at
56.97 on November 20. Trading activity increased with the daily volume
averaging 3-U million shares a day.
Institutional investors - Savings inflow in September was one-,
half smaller than a year earlier at life insurance companies, about the
same at savings and loan associations, and one-fourth smaller at mutual
savings banks. In most other months thus far this year life insurance
company assets and savings capital at savings and loan associations have
increased more than in the comparable months of 1958. However, the growth
in deposits at mutual savings banks has continuously been much smaller
this year. (The increase in time deposits at commercial banks has also
been much less than the very rapid growth last year.)

I

Combined growth at these three major institutions—life insurance
companies, savings and loan associations and mutual savings banks—totaled
$10 billion for the first nine months, slightly more than the growth a year
earlier. The investment pattern for these institutions has changed little
during the first nine months 'of the year as each has continued to invest
heavily in mortgages.
The increase in life insurance company assets for the first
three quarters this year, amounting to $h*k billion, was 6 per cent
larger than in 1958. There was a slight net liquidation of U. S. Government securities this year; last year there was net acquisition of these
securities. The increase in business security holdings was slightly
larger than in the January-September period of 1958. Net acquisitions
of mortgages were one-sixth larger than a year earlier. These companies
increased their holdings of State and local government securities sharply—
nearly twice as much as in the first nine months of 1958.




y
r

- 3 -

H.lk

Sources and Uses of Funds of Major types of Savings Institutions 1/
First nine months 1953-1958
(In millions of dollars)
Uses of funds"
State &
U. S. Busilocal
Govt, ness
Cash secur- securgovt,
sec.
ities ities

Other
assets

.

Total Net change
sources in deposits Borrowing
or savings
capital

Life Insurance Companies
-192
-85
-129
-180
-58
-119
-108

-36
279
-266
-7U6
108
-681
-265

1,720
1,652
1,781
1,558
2,060

1,396
1,191
1,702
2,685
2,322
1,760
1,1*53

kk5
239
2ii
150
k99
111

1,09k
908
827
621
520
950
327

k,k27
a,18L
k,006
4,152
k,k6l
1,163
3,578

Savings and Loan Associations
-770
lk9
-U72
-3hh
-361
198
-93

5,901
3,9M
3,329
3,1+06
1i,M7
3,020
2,720

712
k5k
138
390
3
U6
195

n.a.
n • cL* •

n.a.

k53
166
k29
280
167
72
101*

6,295
k,717
3,722
3,723
k,592
3,33k
2,922

li,513
3,963
3,102
3,352
3,295
i:SS

528 1,25k
-21*2
996
739
-119
665
-29k
602
695
622
-266
kk5
-63

l,k83
2,139
l,k70
1,650
1,611
1,677
l,5kk

1,108
1,791

375
318

:1,334
1,388
l,l*k9
1,36k

316
223
228
180

Savings Banks
-17k
-21*
-137
-130
-103
-3k
-78

38
-160
-121
-25k
-91
-312
-2

-21
601
580
166
-133
298
379

1,1*75
1,568
1,057
1,758
1,098

51
5k
16
28
52
161
71

111*
100
75
82
52
88
75

n.a.—Not available.
1/ For description of data see Exhibits J, K and L.




282

H.1U

- U -

Share capital at savings and loan associations increased a
record $k»5 billion during the first nine months of the year, one-seventh
more than last year. Borrowings by these associations rose §528 million,
in contrast to a net repayment of $2k2 million in the corresponding period
of 19^85 most of the borrowing was from the Federal Home Loan Banks.
The increased growth in savings capital, supplemented by substantial
borrowing, enabled these institutions to increase their mortgage holdings
by a record £5*9 billion in the January-September period, $2 billion
more than a year earlier. Net acquisitions of U. S. Government securities
were also larger this year. These associations sharply reduced their
cash balances by about the same amount as they increased their Government
holdings.
The growth in deposits at mutual savings banks wastyl.lbillion,
two-fifths less than in the first nine months last year. The reduced
savings inflow this year was reflected primarily in a slight net liquidation of business securitiesj last year net acquisitions of these securities
had totaled over $600 million. The increase in mortgage holdings was
only 6 per cent less than a year earlier. (Through March the rate of
increase in these holdings had been more rapid than in the corresponding
months of 1958.) Savings banks increased their holdings of U. S. Government securities slightly in contrast to a net liquidation last year.
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.




HIGH-GRADE

LOWER-GRADE

BOND

BOND

YIELDS

YIELDS




Exhibit b

H.llt

Tables for^xhibit A
High-grade Bond Yields
Date

Corporate
Aaa 1/

U. S. Govt,
long-term 2j

Spread between
U. S. Govt, and
Corporate State and
Aaa
local Aaa

State and
local govt.
Aaa y

(Per cent)
19514 - Low
1957 - High
1958 - High
Low
1959 - High
Low

2.85 (it/23)
2.45 (0/6)
3.76 (10/18)
lull* (9/27)
it. 13 (10/10) 3.8U (12/26)
% 0 7 (it/25)
3.55 (5/2)
It. 57 (11/20) L30 (9/18)
3.83 (1/2)
L09 (1/9)

Oct.
Oct.
Nov.
Nov.
Nov.

L56
U.56
ii.57
lt.57
It. 57

23
.30
6
13
20 e /

it. 06
it.09
1|.09
•It. 10
It. 13

1.90 (9/2)
3.1*5 (8/29)
3.31 (9/11)
2.6ft (5A)
3.65 (9/2lt)
3.06 (3/26)
3.53
3.1t9
3.W
3.17
3.1a

.30
.60
.51
.22
.50
.16

.30
.it7
.72
.34
.92
.53

. .50
.lt7
.1*6
.1*7
.1*1*

.53
.60
.61
.63
.72

Lower-grade Bond Yields
Corporate
Baa 1/

State and
local govt.
Baa y

1951 - Low
1957 - High
1958 - High
Low
1959 - High
Low

3.lilt (12/31)
5.10 (11/29)
It.96 (1/3) ,
It. 51 (7/11)
5.29 (10/16)
It. 83 (L/17)

2.93 (8/5)
It. 51 (8/29)
It. 3b (9/11)
3.61t (5/1)
it. 1*6 (7/2)
3.92 (3/26)

Oct.
Oct,
Nov.
Nov.
Nov.

5.28
5.26
5.27
5.27
5.27

U.3U
It. 31
It. 31
It. 31
It.28

Date

Spread between
Aaa and Baa
State and
Corporate
local govt.

(Per cent)

23
30
6
1'3
20 2/.

.52
1.27
1.28
.77
.77
.56
.72
^

.70
.70
.70

.

.96
1.21
1.11
.93
.98
.79
;8i
.82
.83
.81t
.87

£/ 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.
2/ 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

1941-43 Averoge.10

STOCK

M

J

S

D

M

J

HSt
PRIVATE

S

D

M

J

1157
PERMANENT

/

NONFARM

V,




MAIKET

S

CIIDIT

D

M

1958
DWELLING

UNITS

J

S

1959
STARTED

Exhibit D - Tables for Exhibiu C
Stock Market
Stock price
index 1/

Date

1953-1958 - High
Low
1959 - High
~ Low

51l.ll
22.95
60.51
51.37

September
October
Oct. 30
Nov. 6
Nov. 13
Nov. 20 2/

57.05
57.00
57.52
57.60
56.85
56.97

Common
stock
yields 2/
(per cent)

(12/24/58)
(9/18/53)
(7/31)
(2/6)

Trading
Stock market customer credit
Customers1
volume 2/
Bank
(millions Total debit bal- loans to
of shares)
ances 4/ "others" 5/
(Mil]Lions of do]ilars)

3.30
6.25
3.08
3.3k

4.9
0.9
4.3
2.1

4,k92
2,055
4,761*
4,401

3,285
1,314
3,401
3,210

1,317
669
1,332 1,373
1,210 1,180

3.26
3.2k
3.23
3.22
3.27
3.26

2.7
2.8
3.8
3.5
3.2
3.4

4,443
4,401
n.a.
n.a.
n.a.
n.a.

3,250
3,210
n.a.
n.a.
n.a.
n.a.

1,193
1,191
1,191
1,195
1,193
n.a.

n.a.—Not available.
g/ Preliminary.
1/ Standard and Poor's '•^mpoalte Index of 500 common stocks, weekly closing prices, 1941-43=10, Monthly data
are averages of daily figures rather than of Fridays' only. Hlgha and lows are for Fridaya' data only.
2/ Standard and Poor's composite atook yield based on Wednesday data converted to weekly closing prices by
Federal Reserve. Yields shown are for dates on whioh price index reached its high or low.
3/ Averages of daily trading volume on the New York Stock Ebcoluvnge.
4/ End of month figures for member firms of the Mew 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 hanks account for about 70 per cent of loans to others. For further detail aeo Bulletin.

Private Permanent Nonfarm Dwelling Units Started 1/
Date

1958 - Oct.
Nov.
Dec.
1959 - Jan.
Feb.
Mar.
Apr.
May
July
Aug.
Sept.
Oct.

Unadjusted
Total
Seasonally
Conv,
VA
FHA '
Unadjusted
adjusted
annual rate
(Thousands of units)
1,303
1,427
1,432
1,364
1,403
1,403
1,434
1,370
1,368
1,375
1,340
E/1,325
2/1,180

113
107
90
84
94
118
137
134
•131
127
125 '
2/117
2/102

35
26
25
20
20
30
34
34
35
31
31
30
26

15
11
9
7
6
10
11
10
11
11
10
10
9

64
70
55
57
67
78
93
89
85
• S?
84
2/77
2/67

A dwelling unit Is started when excavation begins; all units in an apartment structure are considered
started at that time. FHA and VA starts are units started under commitments by these agencies to Insure
or guarantee the mortgages. As reported by FHA and VA, a unit Is started when a field office receives
the first compliance inspection report, which is made before footings are poured in some cases but normally
after the foundations have been completed. Capehart military housing units are excluded. Conventional
starts are derived as a residual, although total and FHA and VA starts are not strictly comparable In
concept or timing; they include both units financed by conventional mortgages and units without mortgages.




Exhibit E

H.llt

Long-term Corporate and State and Local Government
Security Offerings and Placements
(In millions of dollars)

1959
January
February
March

81+0

71*5
631

April
Hay
June

-899
791
871*

July
August
September

531
718
709

October
November
December

2/750
&/750

1st quarter
2nd quarter
3rd quarter
l*th quarter

2,216
2,56k
1,958

1st half
Three quarters
Year

1*,780
6,738

New capital
Corporate 1/
State and local 2/
I 195B£/| 19?T
1959
I 19SB
I 1957
728
857 v
1,553^

1,060
1,065
1,320

636
856
61*5

812
953
511

71*2
572
506

1,11+0
597
887

IS
.1,1*53

931
592
981

798
895
551

765
51*6
393

1,003
924
973

566
516
2/1*88

806
1*03
651

529
581*
1*31

1,090
789
1,076

e/600
2/1*75

1*56
1*71*
1*35

698
633
698

2,276

1,820
1,701*
1,514*
2,029

1

'5°0

1,111*
862

518

920

3,139
2,623
2,760
2,300
5,762
8,522
10,823

Excluding finance coi
1st quarter
2nd quarter
3rd quarter
• l*th quarter

2,011
2,1(09

e/1,658

Year

2,138
. 2,501*
B/1,571
>61*2
2/6,213
12,m

5 $
1,365
It,520
76;^

3,521*
5,069
7,099

nies h/

2,899
2,586
2,731

2,213

3,237
2,889
2,582
2,810

10,129

11,518

e/ Estimated.
£/ Preliminary. r/ Revised.
...
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,
y Total new capital issues excluding offerings of sales and consumer finance
companies.




Exhibit F

H.lii

Other Security Offerings 1/
(In millions of dollars)
Long-tern
Foreign government 2/
Federal agency 3/
1950
I 1957
1959
1956
1957
1959
JanuaryFebruary
March

77
59
2

196
53

April
May

56
50
42

139
198
120

July
August
September

n
36

9
5
17

&
30
1

199

72

523

125

175

U8'
42

'28
7 ,
30

1,163
251

60
164
215

x/o8

October
November
December

58
123
74

4
60
1

220

Year

992

507

2,321

ShortState and local government 4/
January
February
March

190
128
295

April
May
June

563

July
August
September

216
167
E/325

October
November
December
Year

100
572

Federal agency 3/

233
460
273

326
455
147

359
500
489

371
208
144

638
430
505

§
261

205
337
153

486
675
289

209
161
329

336
469
501

289
423
369

272
272
252

727
365
665

137
206
330

224
370
512

231
hl$
243

303
94.
459

454
114
137

1,238
255
116

3,098

5,543

3,910

3,274

2/ Preliminary.
1/ 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. Sourcei Securities and Exchange Commission.
y 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.



Exhibit 0

H.llt

Large Long-tern Public Security Issues for New Capital
(Other than D. S. Treasury) y
r

~ Proceeds of Large Issues Offered
(Millions of dollars)

Month

1958 - October
November
December
1959 - January
February
March
April
. May
June
July
August
September
October

j

Corporate

State and
local government
k

259
227
305
369
31*0
215
359
31*2
281*
110
363
199
1*00

172
259
229
335
551
369
563
258
635
191*
263
211*
291*

Other 2/

209
100
79
17k
35
176
20
50
60
50
98
175
20

Large Individual Issues Offered November 1 through 20
Issuer

Type 2/

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

CORPORATE
Sylvania Elec. Prod., Inc. S.F. deb.
25.0 " 1981*
Tenn. Gas Transm. Co.
Pfd. stk.
29.5
U.S. Fidelity & Guaranty Ca Cap. stk.
21*. 1
Amer. Tel. & Tel. Co.
Deb.
250.0 1986
Transwestern Pipeline Co. Sub.deb.&stk. 61.5 1969
STATE AND LOCAL GOVERNMENT
Humboldt Bay Mun. Water
Dist., California
G.O.
State of Mississippi
G.O.
State of South Carolina
G.O.
State, of Delaware
G.O.
Chicago, Illinois
G.O.
Los Angeles Dept. of Wtr. &
Pwr., California
Rev.-Ut.
State of New York
G.O.
Philadelphia, Penna.
G.O.
OTHER




10.7 1961*-98/7l*
11*. 0 1960-75
10.0 1960-79/71*
16.1* 1960-79
10.0 1961-77

5 1/2

5.50

Baa

5 3/8
5

5.22
n.a.

Aa

3.25-1*. 15
2.80-3.60
2.60-3.30
2.60-3.35
2.80-3.70

A
Aa
Aa
Aa
A

1*.12
3.59
3.21*
3.29
3.68

12.0 1960-89/61* 3.75
55.1 1961-2009/99 3.1*8
2l*.8 1961-90
3.71

—

2.80-3.80 Aa
2.65-3.90 Aaa
2.90-U.25 A

G-2
Footnotes

1/ Includes corporate and other security offerings of $l£ 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.
2/ In the case of State and local government securities, G. 0, 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 f rom specific taxes only; Rev.-Rent.,
revenue bonds secured solely by leasel payments.




H.lk

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

1958 - Oct. 31
Nov. 28
Dec. 31
1959 - 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
Corporate
Other 2/
local govt.
local govt.
20k
301
210
270
198
396
21*6
287
165
238
198
37k
385

258
229
261
551
292
550
25k
2k7
lk6
356
385
270
115

71
75
k5
20
50
50
25
—

•
.

326
koi
370
365
279
k76
3k6
332
272
305
517
69k
509

675
683
515
856
k8l
761
517
761
500
ko6
k02
k70
336

71
75
1*5
20
50
5o
25
——

—

Forthcoming Large Offerings, as of November 20
Issuer

Type

Amount
(millions Approximate date
of dollars) of offering

CORPORATE
Potomac Electric Power Co.
1st mtg. bds.
Gulf States Utilities Co.
- 1st mtg. bds.
Consolidated Edison Co. of New York
1st ref. mte. M s .
General Telephone Co. of Calif.
. 1st mtg. bds.
Arkansas Louisiana Gas Co.
1st mfcg. bds.
James Talcott, Inc.
Senior notes
Arkansas Power & Light Co.
, 1st mtg. bds.
Dallas Power & Light Co.
1st mtg. bds.
Public Service Electric & Gas Co.
Com. stk.
Commerce Oil Refining Corp.
Deb., bds. & com

15.0
16.0
-75^-0
30.0
16.0
15.0
15.0
20.0
25.0
k5.0

Nov. 2k
Nov. 25
•Dec. 2
Dec. 3
Dec. k
Dec. 8
Dec. 9
Dec. 15
Dec. 16
Indefinite

Rev.-Ut.
Rev.-lit.

10.0
10.0

Nov. 2k
Nov. 30

Rev.-Ut.
G.O.
G.O.
Rev.-Ut.
G.O.
G.O.

15.0
21.5
10.0
13.0
21.6
20.0

Dec.
Dec.
Dec.
Dec.
Dec.
Dec.

STATE AND LOCAL GOVERNMENT
Alabama Highway Auth.
•^Montgomery Wwks. & Sanit.Swr.Bd. ,Ala.
*Salt River Project Agile. lmp._& Pwr.
Dlst., Arizona
Los Angeles Sch. Diets., California Columbus, Ohio
Los Angeles Co., California
*State of Massachusetts
^Commonwealth of Puerto Rico




1
1
1
3
3
8

•

H.12+

H-2
Forthcoming Large Offerings, as of November 20 (Cont'd)
Type

Amount
(millions Approximate date
of offering
of dollars)

S y E AND LOCAL GOVERNMENT (Cont'd)
State of California
Chesapeake Bay Ferry Commission

^Credit Foncier de France

G.O.
Rev.-Ut.

Ext. loan bds.

100.0
190.0

50.0

Dec. 9
Indefinite

Dec. 10

*—Included in table for first time.
1/ 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: New York State
Electric and Gas Company's common stock issue—proceeds of less than &15 million.




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 (9/14/57)
2.93 (3/31/54)

1959 - January
February
March
April

87
-3
37
4
10
17

May 1

3.

20
21
26
June 4

S
July 9
10
15
30
Aug. 5
20
Sept , 18
Oct. 22
23
28 ,
29 v
30 :

4.95
4.95

5.00
4.95

£
38
29

4.93

31

ix.85

4.80

24
22

4=952/
5.15

46
16
hO

5.15

42

5.SO (11/7/57)
3.00 (3/17/54)

123
-15
23

*4.75%/
*4.67

18

4.85

5.06

17
13

5.13

27

4.92^/
5.io .
5.10

;

6
24
19

5.io
5.oo

19
13

5.65

60

5.25
5.40

35
50

*—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.




Exhibit J

H.l4

Sources and Uses of Funds by
Life Insurance Companies
(In millions of dollars)
Uses of Funds 1/
u. s. 1 Busi- State and
Govt. ness
local govt. Mort' secursecurgages
ities ities
ities •
1957,- July
Aug.
Sept.
Oct.
Nov.
Dec,
Value of Assets
at End of Year
1958 - Jan.
Feb.
Mar.
Apr.
May
June
July
Aug.
Sept.
Oct.
Nov.
Dec.
Value ^-'Assets
at E n ^ y t e a r
1959 ^ :-Jan.
Feb.
Mar.
Apr.
May
July
Aug.
Sept.

-9
-30
47
-17
22
138

5
-32
-32
13
-92
-181

324
163
198
244
212
258

14
11
7
13
10
10

163
195
154
. 170
132
237

1,29k

7,028

42,133

2,377

35,271

171
15
-119
• 11
-70
47
175
42
7
12
25
-139

221
106
277
208
135
194
182
128
201
303
133
394

51
10
23
13
28
35
24
36
19
25
31
13

• 191
125
i4o
113
116
104
123
140
139
186
146
303

1,365

7,205

4u,6i5

2,685

-83
-57
-lit
-24
10
3
-15
19
-31

280
-71
-185
22
-16
11
13
95
-185

185
223
251
242
193
242
214
75
95

59
30
66
49
79
, 23
94
30
15

-93
-51
20
-17
71*
-20
20
-17
—I.--;'"
-19
52
123

37,097

114
139
136.
116
135
157
214
174
211

Total
sources
or uses
87
77
93
6
110
7

13,206 101,309

111
144
60
19
167
140
46
147
74
53
100
185

652
349
401
347
450
500
570,
476'
439
560
487
879

14,452 107,419

171
174
108
80
97
60
208
101
95

1/ Uses of funds represent net changes in assets and therefore reflec
rather than gross, uses.
Source: Institute of Life Insurance.




584
384
467
429
394
469

726
438
362
485
498
496
728
494
200

Exhibit K
Sources and Uses of Funds ty
Savings and Loan Associations
(In millions of dollars)
Sources of Funds
Uses of Funds 1/
Total
Net
U. S.
Mortsources
change
Other
BorrowGovt,
gages
Cash
assets or uses savings ing J/ Other
secur2/
capital
ities
1957 - July
Aug.
Sept.
Oct.
Nov.
Dec.
Value of Assets
at End of Year
1958E/ - Jan.
Feb.
Mar*
Apr.
May
June
July
Aug.
Sept.
Oct.
Nov.
Dec.
Value of Assets
at End of Year
Jan.
Feb.
Mar.
Apr.
May
June
July
Aug.
Sept.

-320
-103
11
-18
86
2,11*6

lil
2l*

26
-2
23

-91*

357
1*16
278

B

3,173 1*0,01*9

1*1*
-19
-1
38
13
81
1*0
111
11*7
107
50
37

-119
173
209
116
38
177
-297
-70
-78
-108
1*1*
338
2,569

107

1*60

191*
21*7
335
398
528
582
533
557
571*
605
1*65
532

3,821 1*5,599

-300
-26
1
-183
28
21*9
-1*1*1*
-1*1*
-52

296
97
79
106
23
-5
105
21
-10

1*1*0
1*50

-52
252

-37

123
151
79
103
59

1*1*7
6ii*

378

kl
16
10

2,770

1*8,138

1*1,912

1,379

1*,81*7

12
. 8
10
102
100
-37
-80
9
42
131
. 102
-1*1*

131
1*09
553
651*
679
803
196
607
685
735
661
863

l*5o
373
1*81*
356
508
937
62
353
1*1*0
501
1*77
1,073

-377
-127
-89
113
-32
169
-39
55
85
58
1*1
215

58
163
158
185
203
-303
173
199
160
176
11*3
-1*25

1,1*51

5,737

87
60

3,125'

1*10 .
1*27
593
701*
750
81*0
779
728
670
.

-53
80
92
153
181
6
-92
17
69

1*80

55, ill* 1*7,926

353
578
765
780
982
1,090
31*8
722
677

-181
100
1*31*
1*08
227
-57
21*1
529
-5
262
1*20
98
601*
63
315
1,090
313 . -313
127
190 \
31
210
391* . 118
1*1*1*
11*8
85

^ Preliminary.
'
1/ Uses of funds represent net changes in assets and therefore reflect net,
rather thanxgross, uses. Savings and loan associations do not hold business securities and d$ta on holdings of State and local government bonds, presumed to be small,
are not available.
2/ 1957 data adjusted to include mortgage pledged shares as currently reported.
Advances from Home Loan Banks and other borrowing.
Digitized fory FRASER
Source! Federal Savings and Loan Insurance Corporation.



"

Exhibit L

H.llt

Sources and Uses of Funds byMutual Savings Banks
(In millions of dollars)
Uses of Funds 1/
Sources of Funds
U. S. Busi- State and
Net
Total
local
sources change
Govt. ness
MortCash
govt. gages Other or uses
Other
securin
securities itiesi/
deposits
ities
1957 - July
Aug.
Sept.
Oct.
Nov.
Dec.

-73
-1*2
27
-21*
6
125

-7
11
-17
-136
-136
-26

Value of Assets 890 7,552
at End of Tear
1958 - Jan.
Feb.
Mar.
Apr.
May
July
Aug.
Sept.
Oct.
Nov.
Dec.

-60
63
36
-1*7
-5
1*2
-66
-5
18
-8
-38
101

-21
111
-85
-62
-36
11
19
-27
-92
-32
-2

Value of Assets 921 7,266
at End of Year
1959 - Jan.-2/
Feb.
Mar.
Apr.
MayJune
July
Aug.
Sept.

-96
119
18'"
39
62
1*5
-111*
-Id*
8
13
1*3
-85
-13
-79
-12
3
-2
-32

62
61
55
60
93
75

7
-3
2
-3
7
-7

122 -29
111
28
18
103
' 12l* - a
100
38
till -9

82
.166
188
-20
108
299

16
90
206
3k
36
1*05

66
76
-18
-51*
72
-106

It, 331

682

20,951

761

35,168

31,695

3,U73

160
86
86
97
120
-2l*
3b
8
31*
-6

23
1*
6
1*
-19
2h
8
2
2
-3
-1
-7

130
99
165
15U
195
253
193
198
181
195
151
171*

25
20
9
-29
1*0
5
-28
29
29
-1*6
1*3
-3

278
251
31*3
91*
269
2 6k
152
251
237
1*0
123
309

231*
11*9
336
93
181
300
- 88
11*3
267
95
1*2
118

1*1*
102
7
1
88
-36
61*
108
-30
-55
81
-109

1*7
1*,973

725

23,039

855

37,779

-16
6
-31
58
-20

17
-i*
1*1
-33
10
19
1*
-1
8

208
125
175
155
161
11*5
179
156
160

-58
32
38
-32
1*5
39
-12
33
31

175
216
330
-10
217
161
32
192
163

-1*7
13
-2

31*, 01*1
122
113
313
6
120
202
-51*
80
197

3,738
53
103
17
-16
97
-1*1
86
112
-31*

than gross, uses.
2/ Includes Canadian government and1 political subdivisions, International Bank for
Reconstruction and Development, non-guaranteed Federal agehcy and other bonds as well
as corporate bonds and stocks.
y Adjusted to eliminate the effect of a consolidation of a large savings bank with
a commercial bank.
Source.--Nat.
Assoc. of Mutual Savings Banks and Federal Depbsit Insurance Cozp.




November 23, 19$9
Appendix 1
MONEY AND CAPITAL MARKET DEVELOPMENTS IN CANADA
There were no large new Canadian issues reported last week
either internally or in the New York market, Canadian interest rates
showed mixed movements and most spreads between internal rates and
comparable United States rates narrowed, especially at the short end of
the market* As a result, it ontee again became profitable for funds to
move from Canada to the United States, A rough calculation of spread
differentials between Treasury bills in the two markets, given in Appendix
Table 1-3, showed Canadian yields only 0o58 per cent per annum above
U.S. yields; with the 3-month future Canadian dollar at an 0.71 per
cent per annum discount below the spot rate, an investor could thus
obtain a slight interest gain by shifting from Canadian to U.S. bills.
The Government's cash balances continued to increase as a result of
large sales of savings bonds to the general puBMfc, Chartered bank
loans fell rather sharply but at the same time there was a slight
tightening in the banks' liquid assets position.
Money market rates - Last Thursday's auction rate on 91-day
bills rose very slightly for the second straight week to it,91 per cent
compared to L.88 per cent the week before. The 182-day bill rate
declined a bit further to 5,18 per cent from 5.2U per cent 7 days earlier.
Canadian short money rates thus remained relatively stable in spite of
the steep jump in money rates in the United States earlier in the week.
These developments made it profitable for short funds to move from
Canada to the United States, the reverse of the normal money flow relation
between the two countries. The interest arbitrage incentive was net,
however, very large.
Bond market developments - No large new Canadian security >
flotations were reported last week. A $35 million Bell Telephone Company
of Canada issue and a $50 million Ontario Hydro borrowing — both
anticipated over the past two weeks — have been postponed because of
disagreements between borrowers and lending institutions over precise
details. On November 13, the City of Montreal was authorized to raise
$30 million in the United States market to repay bank loans floated
earlier in the year in Canada.
Government bond yields (to midweek) showed mixed movements,
with a slight rising tendency on balance0 At midweek spreads between
comparable Canadian and United States Government securities were»
0,58
0,Wi
0,61
1,08
loOU




per
per
per
per
per

cent on
cent on
cent on
cent on
cent on

91-day bills
IS 2-day bills
a 9-year bond
a 20-year bond
a 36=year bond

Appendix L-2
Very large net purchases of Government Savings Bonds continued
to be reported in the Treasury's current campaign. In the four weeks
through November 18, sales in excess of redemptions amounted to $6b3
million.
Stock prices — Although trading was more active last week,
prices of Canadian stocks failed to show any sustained movement away
from their average level the week before• At Thursday's close the
Montreal industrial average was 1.3 per cent lower than it had been
seven days earlier.




Appendix ZL-3
Selected Government of Canada Security Yields
3-month
Treasury
bills!/

Date
1 9 5 U - 5 5 - Low

1957 - HLgh
1958 - High
Low
1959 - High
Low

Oct. 28
Nov. U

11

Intermediate

Long-

a

0.78
4.08
3.65
0.87
6,16
3.25

2.81
U.81
U.52
3.31
5.30
U.U5

3.13
U.35
U.U2
3.78
5.30
U.U1

5.02
U.83
U.88
li.91

5.22
5.21
5.16
5.10

5.17
5.19
5.15
5.17

Spread between
Canadian & U.S. rates
long-term
3-mo..
bondMZ
billsEZ

1.19
0.U7

2.96
0.30

1.15
1.16
1.11

1.00
0.69
0.79
0.58

Discount
on 3-mo.
Canadian
dollarS/

1.U2
1.06
0.77
0.71

18
l.Oit
Average yield at weekly tender on Thursday following Wednesday date shown7
Government of Canada 2-3/1*. per cent of June 15, 1967-68.
Government of Canada 3 - V U per cent of 1979*
E / U.S. Government 3 - V U per cent of 1978-83• Government of Canada 3-1/1; 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-montha forward and spot price of the Canadian dollar,
expressed as per cent per annum, on Friday following Wednesday date shown.

f

Sales of new Canadian Government Municipal and Corporate Bonds
(in millions of Canadian dollars)
1959
to Nov. 9
Government
Provincial
Municipal
Corporation
Less shor'Uterm financing
(less than one year)

1958
to Nov. 10

1957
to N o t . 11

7,599
65k
372

6,1,01*
535

7,610
609
385
286
5^90

5J2

961
MB3

hSSL
2,937

3,356

hm.
2,528

Of the above, the following have been sold in New York
Provincial
230
170
Municipal
10$
139
Corporation
Ul
112
Source: A. E. Ames & Co., Limited.




277

97
95
365