Full text of H.16 Capital Market Developments : October 24, 1960
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October 2it, i960.
I CAPITAL MARKET DEVELOPMENTS
hrTGE UNITED STATES AND CANADA.
Part I - United States
Large corporate security issues with proceeds of $126 million
were offered to the public last week. State and local issues aggregating
SU6.3 million were also sold as was a $35 million bond and note offering
by the High Authority of the European Coal & Steel Community.
This week, two large corporate offerings—including .a $250 million
debenture issue by the American Telephone and Telegraph Company—are expected
to total $300 million. No large State or local issues are scheduled.
Long-term bond yields - Yields on top quality corporate bonds
increased moderately last week as .did those on U. S. Government obligations. No changes were reported in yields available oC State and. local
securities or on lower grade corporate issues.
A new Aa-rated 30-year electric utility issue was sold last week
to yield It.6? per cent, up 1*. basis points from a comparable offering on
October 5 and 22 basis points from one near the end of September. All
three issues afford protection against early refunding.
Short- and intermediate-term interest rates - Yields declined
sharply last week on both three- and six-month Treasury bills and more
moderately on finance company paper and three- to five-year Government
obligations. Other short-term interest rates remained unchanged.
Housing starts - Private housing starts, which had increased
in August, dropped 17 per cent during September to an estimated 1,077,000
units. This is the lowest level yet shown by the new Census Bureau series
which began in January of last year. Starts over the third quarter
averaged 1,185,000 units, nearly 22 per cent below the corresponding
period of 1959.
Stock prices- Common stock prices, as measured by Standard
and Poor's index of 500 issues, declined 3 per cent last week, closing
at 53.32. "While this is the lowest weekly closing level this year, it
remains somewhat above daily lows in late September and last March.
Trading volume increased moderately to an average of 2.6 million shares
a day—reflecting in part heavy activity in gold shares during the
latter portion of the week.'
More detailed information concerning recent capital market
developments is presented in the attached exhibits. Developments in the
Canadian capital markets are presented in Part II at the end of this report.
Capital Markets Section,
Division of Research and Statistics,
Board of Governors of the Federal Reserve System.
•pi
I
! HIOH-Ot API
i io Wit-OlADI
-3-
Exhibit B - Tables for Exhibit A
Long-term Bond Yields
High-grade
11.1k
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 y
(Per cent)
Low
High
Low
High
Low
i960 - H i g h
Low
2.85
k.lk
3.55
k.6l
k.09
k.6l
k.23
2.16 (8/6)
3.76 (10/16)
Sept. 23
Sept. 30
Oct. 7
Oct. Ik
Oct. 21 e/
k.26
k.27
k.28
k.29
k.31
3.79
3.81
195k
1957
1958
1959
-
3,07 (lt/2S)
It. 37 (12/31)
3.83 (1/2)
lt.lt? (1/8)
3.75 (8/5)
IIH
:£
.22
.50
I
3.53 (1/7)
2.99 ( 9 A )
.59
.19
.92
.53
1.90 (9/2)
3.06 (3/26)
3.13
3.18
3.21
3.21
3.21
3.88
3.92
3.93
.1!
.16
.66
.k7
.1*6
.10
.63
.67
.71
.72
:5
Lower-grade
Date
Corporate
Baa 1/
State and
local govt.
Baa 2/
Spread between
Aaa and Baa
State and
Corporate
local govt.
(Per cent)
Low
High
Low
High
Low
1960 - High
Low
3.a
5.10
U.51
5.32
k.83
5.36
k.98
Sept. 23
Sept. 30
Oct. 7
Oct. Ik
Oct. 21 e/
5.02
195k
1957
1958
1959
-
(12/31)
(11/29)
(7/11)
(12/31)
(li/17)
(2/12)
(9/9)
5.05
5.09
5.12
5,12
S:S
Sid,
2.93 (8/5)
k.k6 (1/7)
k.05 (9/1)
k.09
k.13
k.15
k.17
k.17
.52
1.27
.77
.77
.56
.8k
.71
.76
.78
.81
.83
.81
.96
1.21
.93
.98
.79
1.08
.92.
.96
.95
.9k
.96
.96
fiZ Preliminary.
y Weekly average of dally figures. Average tera of bonds Included Is 25-28 years.
2/ Weekly average of dully figures. The serlee Includes beads due or callable In 10 years or mere.
3/ Thursday figures. Only general obligation bonds are ineludedi average term Is 20 years.
Mote.—Highs and lows are for Individual series and may be en different dates for different series.
SHORT-
AND
INTERMEDIATE-
GOVERNMENT
PRIVATE
TERM
INTEREST
RATES
-5Exhibit D - Tables for Exhibit C
Short- and Intermediate-term Interest Rates
Government
Date
Discount
rate 1/
Yields
6-month
bills 2/
3-month
bills 2/
3-5 year
issues 2/
Spread between yields on
3-month bills and yields on
6-mo. bills|3-5 yr. issues
(per cent)
Low
High
Low
High
Low
I960 - High
Low
1.50
3.50
1.75
ii.00
2.50
Loo
3.00
.61
3.64
.58
1.57
2.63
4.59
2.13
Sept. 23
Sept. 30
Oct. 7
Oct. lit
Oct. 21 £/
3.00
3.00
3.00
3.00
3.00
2.1i3
2.35
2.hO
2.54
2.23
19SU
1957
1958
1959
-
(6AD
(10/18)
(5/29)
(12/2U)
(2/20)
(V8)
8/5)
WW .
——
3.02
4.91
2.92
5.07
2.39
(12/26)
(12/31)
(1/2)
(1/8)
(8/5)
2.80
2.82
2.88
2.88
2.71
1.66
4.0b
2.14
5.00
3.70
4.97
3.47
(V30)
(10/18)
(6/6)
(12/24)
(1/2)
(1/8)
(9/23)
3.47
3.50
3.60
3.65
3.62
.26
.79
.19
.58
.16
.66
.66
.04
1.42
, .40
1.81
.38
.37
.47
.48
.34
.48
1.04
1.15
1.20
1.10
i.4o
Private
Stock Exchange
call loan 1/
Spread between 3-month
Prime
Finance company Treasury bill yield and
rate 1/
paper j/
finance company
paper rates
(per cent)
1954
1957
1958
1959
-
Low
High
Low
High
Low
I960 - High
Low
3.00
4.50
3.50
5.00
4.oo
5.50
4.5o
3.00
14.50
3.50
5.00
4.oo
5.00
4.5o
1.25 (12/31)
3.88 (11/15)
1.13 (8/8)
4.88 (12/31)
3.00 (3/6)
5.13 (1/22)
2.94 (8/26)
Sept. 23
Sept. 30
Oct. 7
Oct. 14
Oct. 21 2/
4.5o
4.5o
4.5o
4.5o
4.5o
4.50
4.5o
4.50
4.5o
4.5o
3.19
3.19
3.19
3.19
3.15
1/
0 (12/18)
.59 (7/19)
-.35 (8/29)
.86(10/9)
.13 (12/4)
1.02 (3/25)
.22 (4/15)
.76
.84
.79
.65
.92
Weekly rate shown la that In effeot at end of period. Discount rate la. for Federal Reserve Bank of Hew York.
Stock exchange call loan rate la going rate on call loans secured ty ouetooers' etook exchange collateral at
New York City banka. Prime rate la tliat charged by large banks on short-ten loana to bualneaa borrowers of
the hlgheet credit standing.
2/ Market yield; weekly avera^ee computed from dully closing bid prices. Series of 3-5 year Issues oondsttt of
eeleeted notes and bowl-i.
3/ Average of dally rates pul.llehed by r i m n u . companies for directly placed paper for varying maturities In the
10-179 day ruivt*.
,, • .
M o t e , — m H h » and lows ere for Individual series.«,nd nay be on dlffermt datee for different series. Per spread#,
refer* to widest, and low to narrowest;
STOCK
MARKET
rE
HOUSING
STARTS
a
\-\-
-I-
•7-
Exhibit F - Tables for Exhibit E
Stock Market
Stock price
index 1/
Trading
Common
Stock market customer credit
stock
volume 3/
Customers
Bank
yields 2/ (millions
Total debit bal- loans to
(per cent) of shares)
ances h/ "others" 5/
(Millions of dollars)
1957-59 - High
Low
i960 - High
Low
60.51 (7/31/59)
39.78 (12/27/57)
59.50 (1/8)
3.07
It. 66
3.18
August
September
Oct. 7
Oct. Ill
Oct. 21 2/
56.51
51*. 81
51*. 03
51*. 86
53.32
3.U3
3.51
3.58
3.52
3.62
53.32 (10/21)
3.62
a as
3.9
2.2
1I,365
4,132
3,198
3,00U
2.8
lt,2ll3
It, 282
n.a.
n.a.
n.a.
3,109
3,137 .
n.a.
n.a.
n.a.
2.9
2.1*
2.2
2.6
1,373
1,060
1,167
1,111
1,13k
1,11*5
1,160
1,151
n.a.—Hot available.
2/ Preliminary.
Standard and Poor's composite Index of 500 common stocks, weekly closing prices, 1941-43-10. Monthly data
are averages of dally figures rather than of Fridays1 only. Highs and lows are for Fridays* data only.
Standard and Poor's composite stock yield based on Wednesday data converted to weekly closing prloes by
Federal Reserve. Yields shown are for dates on which price Index reached its high or low.
Averages of daily trading voluae on the New York Stock Exchange.
End of month figures for member firms of the New York Stock Exchange which carry margin accountsj excludes
balances secured by U. S. Government obligations.
Wednesday figures for weekly reporting member banks. Bcoludes 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 banks account for about 70 per cent of loans to others. For further detail see Bullet! n.
Private Housing- Starts 1/
Date
1959 - Sept.
Oct.
Nov.
Dec.
i960 - Jan.
Feb.
Mar.
Apr.
MayJune
r/July
i/Aug.
g/Sept.
unadjusted
Seasonally adjusted
Conventional
Total
annual rate
Total
VA
Total
FHA
Nonfarm
Total
Nonfarm
Nonfarm
old series new series
old series new series old series new series
(Thousand of units)
10
117
136
30
1,323 1,509
77
97
66
81*
120
102
1,180 1,378
27
9
8
20
62
1,210 1,356
105
76
91
6
20
69
83
96
1,330 1,451
57
16
1*
1,216 1,366
67
87
55
75
88
18
65
71*
1,115 1,367
52
5
68
22
1,125 1,112
90
63
95
5
12U
109
25
76
91
1,135 1,325
7
128
96
1,31*2
25
7
26
—
r/122
88
8
1,302
111
21*
80
1,182
7
26
8
125
91
1,295
22
69
98
1,077
7
dwelling unit is started when excavation beginst all units In an apartment structure are considered started at that
time. FHA and VA starts are units started under commitments by theso 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 eceqpleted.
Capohart military housing units are excluded. Conventional starts are derived as"a/reeldual, although total and
and VA starts are not strictly comparable In concept or timing; they Include both units financed by conventional
mortgages and units without mortgages,
I
-8-
Bxhibit G
Long-term Corporate and State and Local Government
Security Offerings and Placements
(In millions of dollars)
New capital
I960
January
February
March
April
May
577
715
860
1,03k -
Corporate 1/
1
1 1959
1956
821
738
728
6I4.6
1,55^/
891
785
887
1,140
597
887
I960
1
&
1,030
JulyAugust
September
p/747
2/1,02h
e/700
535
7I4O
703
1,107
54o
1,11k
B/572
October
November
December
e/1,000
879
86J4
900
862
518
920
e/kOO
1st
2nd
3rd
Zith
2,151
2,367
e/2,471
2,20k
2,567
1,979
2,642
3,139
2,623
2,760
2,300
1,936
2,311
e/l,826
1,519
2/6,989.
4,771
6,750
9,392
5,762
8,522
10,823
4,247
e/6,073
quarter
quarter
quarter
quarter
1st half
Three quarters
Year
State and local 2/
1
1958
1
1959
639
858
6k6
812
953
511
932
593
1,006
798
895
551
B
i
806
403
651
1,'SU8
1,571
4,674
6,222
7,793
4,520
6,380
7,746
Excluding finance companies 4/
1st
2nd
3rd
4th
quarter
quarter
quarter
quarter
1,722
2,150
e/2,021
Year
/
e/
1/
2/
3/
k/
.1,999
2,ia2
1,716
2,503
2,899
2,586
2,731
2,213
8,630
10,429
Estimated.
g/ Preliminary.
rj Revised.
Securities and Exchange Commission estimates of net proceeds.
Investment Bankers Association of America estimates of principal amounts.
Includes $718.3 million AT&T convertible debenture issue.
Total new capital issues excluding offerings of sales and consumer finance
companies.
t
/;
>4'
' J>!
456
474
435
2,276
2,244
1,860
1,365
2,lii3
i
%
5
ti.li*
Exhibit H
Other Security Offerings 1/
(In millions of dollars)
Long-term
Foreign government 2/
Federal agency 3/
I960
1958
I960
1
1959
1
1
1959
January
February
March
April
May
June
July
August
September
2
175
70
81
60
2
196
53
3k
72
liO
58
50
1*2
139
198
120
11*8
354
9
5
17
__
1
85
1
35,
October
November
December
Year
182
150
150
—
199
1958
1,163
251
175
523
—
—
199
161*
98
150
.
—
220
33
30
70
58
123
7k
66
5U7
992
707
Short-term
State and local government 1*/
2,321
Federal agency 3/
January
February
March
268
3li5
365
190
128
295
233
l*6o
273
1*79
1*75
511
359
500
1*89
371
208
U4J4
April
May
365
351
297
563
1*11
2L5
357
351*
261*
509
1*86
675
289
209
161
#9
280
505
E/152
216
1*6?
399
289
1*23
369
312
1*68
296
727
3#
665
1*37
206
330
235
3h3
3#
115
21*3
733
1*71
288
hSk
111*
137
k,17 9
3,910
6,01*7'
3,098
July
August
September
October
November
December
Year
2/ PrelUiln-iry.
1/ Data presented in thla exhibit differ from thoaa In Exhibit K In ttat refunding issuns, an will oa nut
eupttal Issues, ere included. Long-term securities are dufinnd as thoai ma.tuv<ry In nuro thar. one your.
2/ Inoludos securities offered In the Ur.ilod States by foreign govovrjnonts and their ru'odi visions end by
in'.ernnttonal organisations. "ouron: Securitle? ami Sxuhnnge Coromi/islor;.
3/ Issues not guarwiod by the U, S. G overman'... Souroii long-torn, Securities and toohange Conwlsslonj
short-term, Federal Reserve.
4/ Principally tax and bond anticipation not*s, warrants or certificates ar.A Public Housing Authority
not**. In some instances VHA rites included may hive a somewhat longer t#"» than one year. Sourcei Bond Buyer.
Exhibit I
•10"
large Long-term Public Security Issues for New Capital
(Other than U. S. Treasury) \J
Proceeds of Large Issues Offered
(Millions of dollars)
Month
1959 - September
October
November
December
i960 - January
February
March
April
May
June
July
August
September
Corporate
State and
local government
199
I4OO
1*21
230
279
262
381*
309
139
1*1*2
303
581
266
21k
291*
163
21?
388
283
225
370
231*
561
191
298
367
Other 2/
175
20
70
100
320
191
71
28
30
75
25
Large Individual Issues Offered October 1 through 21
Issuer
Type 2/
Coupon
Amount
Offering
(millions Maturity rate or
net inter- yield
of
dollars)
est cost
Rating
CORPORATE
San Diego Gas & Elec. Co.
1st mtg.bds.
30.0 1990
Youngstown Sheet & Tube
Lst mtg.S.F.bds. 60.0 1990
Household Finance Coip.
Deb.
50.0 1981
Columbia Gas System
Deb.
30.0 1985
General Accept. Corp.
Sen. deb.
20.0 1976
Louisville Gas & Elec. Co. 1st mtg.S.F.bds^- 16.0 1990
Pacific Lighting Gas Supply S.F. deb.
25.0 1980
Natural Gas Pipeline Co.
1st mtg.bds.
of America
25.0 1980
Natural Gas Pipeline Co.
of America
Pfd. stk.
15.0
1st mtg.bds.
Florida Power Co.
25.0 1990
S.F. deb.
Associated Diy Goods Corp.
20.0 1980
Aa
Aa
2*-5/8
k-1/2
l*-7/8
5-1/8
5-1/2
a-7/8
5
I4.63
1*.60
1*.88
5.05
5.50
l*.7l*
1*.95
Aaa
A
5
5.00
A
k-3/k
h-3/h
k. 67
1*.83
Aa
A
A
——
STATE AND LOCAL GOVERNMENT
Los Angeles Co. Flood
Control Dist., Calif.
Chicago
Sch. Dist., H I .
Pa. State Pub. Sch. Auth.
G.O.
G.O.
Rev.-Rent.
10.0 1962-89
15.0 1962-80
21.3 1961-2000
3.71
3.1*9
1*.07
1.90-3.85
2.10-3.70
1.75-1*. 50
Aa
A
—
Large Individual Issues Offered October 1 through 21 (Cont'd)
Issuer
type 3/
Amount
Coupon
(millions
rate or Offering
Maturity net Inter- yield
of
dollars)
est cost
Rating
OTHER
Federal Land Banks
High Authority of the
European Coal & Steel
Community
Bds.
1*2.0
Sec. bds.
25.0
Ser.sec.notes 10.0
1965
1?80
1963-65
h
1*.03
5-3/8
5.63
k-3/h - 5 it. 15-5.00 —
and local government .security offerings of $L0 million and over.
Includes foreign government and International Bank for Reconstruction and.
Development issues and non-guaranteed issues by Federal agencies.
5/ 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; flev.-Rdnt.,
revenue bonds secured solely by lease payments.
2/
-12-
Exhibit J
Forthcoming Large Long-term Public Security Offerings for New Capital
(Other than D. S. Treasury) 1/
Expected Proceeds from Forthcoming Large Issues
During month following
date shown
State and
Corporate
local govt. Other 2/
Date of
computation
1959 - Sept. 30
Oct. 30
Nov. 30
Dec. 31
I960 - Jan. 29
Feb. 29
Mar. 31
Apr. 29
May 31
June 30
July 29
Aug. 31
Sept. 30
374
385
226
210
207
301
299
202
m .
23?
596
216
576
270
115
295
445
210
255 -250
21*3
277
180
275
283
212
70
30
- 45
35
30
30
77
Subsequent to
date shown
State and
Corporate
local govt. Other 2/
694
509
271
280
252
372
3144
357
553
455
1,006
731
836
470
336
485
545
310,
385
280
258
502
380
324
283
336
70
30
45
35
60
30
127
Forthcoming Large Offerings, as of October 21
Issuer
Type
Amount
Approximate date
(millions
of offering
of dollars)|
CORPORATE
Deb.
American Telephone and Telegraph Co
Deb.
John Deere Credit Corp.
Bds. & deb.
United Gas Corp.
1st ref. mfcg. bds.
Pacific Gas & Electric Co.
1st mtg. bds.
Idaho Power Co.
1st mtg. bds.
Wisconsin Elec. Power Co.
Deb.
*New Jersey Bell Telephone Co.
^Consolidated Edison Co.
1st ref.mtg. bds.
Commercial Credit Co.
Sen. notes
Deb.
*B. F. Goodrich Co.
^Consumers Power Co.
1st mtg. bds.
Commerce Oil Refining Corp.
Deb., bds. & com.
Libeiian Iron Ore, Ltd.
Bds. & stk.
S.F. deb.
•^Northern Natural Gas Co.
250.0
50.0
60.0
60.0
15.0
30.0
20.0
75.0
50.0
60.0
35.0
45. 0
30.0
20.0
Oct. 25
Oct. 27
Nov. 1
Nov. 2
Nov. 16
Nov. 16
Nov. 16
Nov. 22
Nov.
Nov.
Dec. 12
Indefinite
Indefinite
Indefinite
-13-
J-2
Forth coming Large Offerings, as of October 21 (Cont'd)
Issuer
type
Amount
Approximate date
(millions
of offering
[of dollars)
STATE AND LOCAL GOVERNMENT
Cook County, Illinois
Trenton, New JerseyState of Mississippi
Los Angeles Harbor Dist., Calif.
New York State Housing Fin. Agency
afort of Los Angeles, Calif.
•^Philadelphia, Pa.
*San Diego Sch. Dist,, Calif.
Los Angeles Dept. of Wtr. and Pwr.,
California
Orleans Parish,School Dist., La..
Kentucky Turnpike Autn.
State of Massachusetts
Dade County, Florida
0.0.
G.O.
Q.O.
Rev.
Rev.
Rev.-Ut.
G.O.
G.O.
Rev.-Dt.
G.O.
Rev,
G.O.
G.O.
25.0
10.9
12.0
12.0
100.0
lli.O
35.1
10.0
12.0
Nov,
Nov.
Nov.
Nov.
Nov.
Nov.
Nov.
Dec.
1
3
9
15
15
15
16
6
55.0
69.5
JU6.0
Indefinite
Indefinite
Indefinite
Indefinite
Indefinite
5o.o
Nov. 15
10.0
OTHER
Tennessee Valley Auth.
Bds.
*—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: None. : 1
'
—lil—
. Exhibit K
Yields on New and Outstanding
Electric Power Bonds, Rated Aa and A 1/
Date
1952-1959
High
Low
1959 - July
Aug.
Sept.
Oct.
Nov.
Dec.
- Jan.
Feb.
Mar.
Apr.
May 10
12
25
June 17
28
29
July 8
13
Sept. 15
23
28
Oct. 5
21
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)
5.30 (12/8/59) 87
2.93 (3/3X/5U) -3
*4.93
It. 83
31
23
5.13^
*5.08
*5.30
36
i|2
63
5.09
it.82
it. 91
it. 88
it5
25
37
32
It. 82
L8it
25
27
5.65 (9/18/59) 123
3.00 (3/17/5U) -15
5.07
17
*5.65
5.33
60
h3
4 - >
51
28
U.97
$.lk
9
35
5.io
26
33
11
5.20
L95
it.93
it. 88
it. 80
L 5 %
i:t0
27
17
2h
22
11
8
2h
*—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 betweeiLJthese 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.
October 2h, I960
-15Part II - Canada
Interest rates rose sharply in Canada for the third straight
week in spite of continued heavy purchases by the Bank of Canada. The short
Treasury bill was 75 basis points higher than the U.S. short bill, in part
because of declining U.S. yields. For the first time in ten weeks, there
was an incentive above one-half per cent per annum in favor of the Canadian
bill.
Canadian short term commercial paper also rose sharply above yields
in the United States last week. The chartered banks and the general public
sold $53 million of bills in the last two weeks and the Bank of Canada
purchased $71 million. Bond yields also rose sharply with the large sales
by the general public. Industrial stock prices declined slightly during
the week. The Canadian dollar fluctuated within narrow limits and closed
at 102.39 (U.S. cents) last Thursday.
Money market. For the third straight week, there was a sharp rise
in Canadian Treasury bill rates even though the Bank of Canada made heavy
purchases. The average yield on the Canadian 3-month Treasury bill rose
39 basis points from 2.U8 per cent a week ago to 2.87 per cent last Thursday
(see Table). The 6-month Treasury bill yield also rose sharply from 2.82
per cent to 3.2h per cent last week. The Bank of Canada purchased $27
million of Treasury bills while the chartered banks sold $20 million and the
general public sold $U million,(see Table).
For the first time since August 18, the yield on the Canadian
Treasury bill rose above the U.S. bill yield, in part because of a sharp
fall in U.S. rates; the difference last Thursday was 75 basis points. The
premium on the forward Canadian dollar was eliminated. As a result, on a
covered basis there was a net incentive of 0.75 per cent per annum in favor
of holding the Canadian bill compared with 0.31 per cent a week ago.
Yields on Canadian short-term commercial paper also rose sharply
last week while U.S. yields declined. A comparison of 1-3 month rates in
leading Canadian and American acceptance houses indicates that Canadian
yields were 1.12 per cent per annum above the yields in the U.S. last week*
During the previous two weeks there was no difference between the yields
and during the month of July the difference was in favor of the United
States paper .
1-3 month yields
Sept. 29
Oct. 6
13
20
Canada
United States
2.00*2.50
2.50-3.00
2.75-3.00
3.25
2.75
2.75
2.75-3.00
2.13
Spread
favoring Canada
-0.50
—
+1.12
Bond market. Bond yields rose rather sharply last week for most
maturities, and the spread favoring the Canadian bond widened. The spread
-16-
between selected comparable Canadian and United States securities (Thursdayyield for bills and Wednesday yield for bonds) were as follows (figures
in parenthesis refer to the previous week):
0.75
0.60
0.69
0.96
1.15
per
per
per
per
per
cent
cent
cent
cent
cent
on
on
on
on
on
a 91-day bill (-0.12)
a 182-day bill (-0.03)
an-8-year bond (0.57)
a 30-year bond (0.87)
a 35-year bond (1.07)
The general public reduced its holdings by SU2 million and the Bank of
Canada sold $U million, while the chartered banks purchased $23 million
and the Government accounts purchased $21 million (see Table).
There were several new offerings of corporate and other bonds
last week, some of which were oversubscribed. The Thompson Newspapers Ltd.,
million, 20-year, t nor cent bonds were offered at par and oversubscribed.
Alberta i.atural
.Co. offered 2':-!<,000 riar '10 shares at $10.65 and the
quotations on t;-v o--.;v-.h;-uoua:,er :x-ir,{ct .juwx-.d to vl5-£L6. The market
quotation for the 552,500 n o par value Pacific Gas Transmission Co. shares
offered at S9.U7 was SlU-515 per share. The Province of Quebec has issued
$10 million, 5-month, 2 per cent notes due March 2U, offered at 99*63 to
yield 2.90 per cent. A $3.5 million Vancouver serial is being offered,
including $2.2 million of 5-1/2 per cent 11 to 20 year maturities priced
to yield 5.6 per cent. Thetford-Mines School (Quebec) has issued a $1.2
million, 5 per cent, 20-year serial debenture, and Brossard (Quebec) has
issued a $1 million 5 per cent to 5-1/2 per cent, 10-year serial.
The City of Quebec h-l/U per cent Swiss franc, 20 million ($U.6
million) offering on the Swiss market a week ago (Capital Market Developments, October 17, I960) was substantially oversubscribed.
Investments of Canadian life insurance companies, Total investments of leading life insurance companies during the first 8 months of
I960 showed little change from the previous year. However, investments in
Canadian securities and stocks are smaller than last year, while investments
in provincial and corporate bonds, mortgage loans, real estate, and policy
loans have been increasing.
Stock exchange. Prices of industrial stock on the Canadian
exchanges declined slightly early last week after remaining fairly steady
the week before. The total volume of sales during the week of October 11-lU
was $6.8U million compared with $9.78 million the week before. The decline
reflected the October 10 holiday in Canada.
Toronto
I960 - High
Low
Oct. 11
12
13
FRASER 1U
Digitized for
http://fraser.stlouisfed.org/
11
Federal Reserve Bank of St. Louis
Montreal
New York
Standard & Poor
532.56
U73.38
27U.8
250,3
60.51
#.98
1*87.9U
262.7
262.6
263,2
262.1
57.U3
U88.38
U88.U1
U88.98
kfo
I f i
58.15
-17A direct telephone line has been established between the Montreal ..jtocic Exchange and the Boston Stock Exchange to permit members of each
exchange to trade on either floor, but trade of Boston members will be
restricted to SEC annroved issues. The ne'-r arrangement will provide the
advantage of a wider choice of issues, and a greater volume of sales is
expected. A similar arrangement between the New York Stock Exchange and
the Toronto Exchange has been in effect for some time.
Foreign exchange. The spot rate on the Canadian dollar rose
during the week from 102.16 (U.S. cents) a week ago to 102.39 (U.S. cents)
last Thursday. The premium on the forward Canadian dollar was eliminated
last week after being in effect since the beginning of September.
British Commonwealth Section
Division of International Finance
Board of Governors of the Federal Reserve System
-18-
Selected Canadian Money Market and Related Data
3-mo. Treas. bills
Spread
Canada
U.S.5/ over U.S.
S^t
1959 - High
Low
I960 - High
Low
6.16
3.25
5.1U
1.68
4.49
2.80
4.63
2.12
2.96
0.30
0.90
-0.82
105.51
102.58
105.27
102.16
Sept,. 2 2
29
Oct. 6
13
20
1.68
1.70
2.20
2.U8
2.87
2.50
2.33
2.U7
2.60
2.12
-0.82
—0*66
-0.27
-0.12
0.75
102.63
102.28
102.20
102.16
102.39
Canadian dollar
discount {-)
3-mo.
forward premium(+)d/
Net incentive to
hold Can.
bills/
__
—
102.75
102.38
102.33
102.27
102.39
0.99
-0.72
0.94
-0.57
0.49
0.43
0.49
0.43
0
-0.33
-O.23
0.22
0.31
0.75
a/ Average yield at weekly tender on Thursday.
15/ Composite market yield for the U.S. Treasury bill on Thursday close of business.
c/ In U.S. cents.
d/ Spread between spot rate and 3-month forward Canadian dollar on Thursday
x
closing, expressed as per cent per annum.
e/ Spread over U.S. Treasury bill (column 3), plus 3-month forward discount or
premium (column 6).
Selected Government of Canada Security Yields
6-mo. Treas. bills
Spread
over
Canada
U.S.b/
1 9 # - High
Low
I960 - High
Low
Sept. 21
28
Oct. 6
13
20
6.2L
5.11
5.33
1.99
-0.86
1.99
2.05
-0.78
2.52
2.82
3.2I4
0.85
-0.86
-0.35
-0.03
0.60
Intermediate
bonds (8 yr.)
Spread
Canada
over .
$
U.S.5/
Long-term bonds
(20 year!
(35 yearT"
Spread
Spread
e
Canada
Canada „°s I/
uTE/
1/
5.27
U.50
5.55
U.09
0.21
5.30
ii.UU
5.k2
L.63
U.lU
U.09
U.23
1.27
h.hh
0.67
0.52
0.57
0.57
0.69
4.72
U .77
4.87
1.11
U.66
U.66
5.05
a.73
0.85
5.28
4.68
0.92
0.91
0.87
0.87
0.96
4.70
U.'fO
4.74
4.84
4.92
1.22
a/ Average yield at weekly tender on Thursday.
b/ Spread between Canadian auction rate and composite market yield of U.S.
bill on close of business Thursday.
c/ Government of Canada 2 - 3 A per cent of June 1967-68.
d/ Spread over U.S. Government 2-1/2 per cent of 1963-68.
e/ Government of Canada 3 - 1 A per cent of October 1979.
1/ Spread over U.S. Government 3-1/4 per cent of 1978-83.
g/ Government of Canada 3 - 3 A per cent of September 1996 - March 1998.
Digitized
FRASER
n/for
Spread
over U.S. Government of 1995.
1.61
0.95
1.03
1.01
1.00
1.07
1.15
Canada! Changes In Distribution of Holdings of Canadian
Government Direct and Guaranteed Securities
t minions of Canadian dollars, par Talus J
Bank of Canada
toeas#
bills
Bonds
Aug. 18
25
31
Sept . 7
1U
21
28
Oct, 6
13
20
Sources
-
•
+
3
6
0
0
0
16
27
1
uu
27
Government
Total
+ 17
+ 1
0
0
0
0
- 2
+ 5
- 1
- h
+
+
+
+
+
+
+
+
2
1
u
it
0
3
1
3
2
23
Chartered banks
Trsas.
bills
Bonds
+
+
+
+
+
+
+
-
+
+
+
+
*
+
•
+
+
+
21
2U
11
11
8
52
Ui
2
20
20
10
2
9
18
11
3
16
68
23
23
General public
savings %eam.
bonds
billk
Itends
+
+
5
6
5
h
2
7
5
5
5
2
+
*
-
19
1U
10
13
3
37
1U
3
19
U
Bank of Canada, Weekly Financial Statistics•
Canadian Investment Transactions of Twelve Life Insurance Companies
(millions of Canadian dollars)
I960 .
Jan.-Aug.
Government of Canada securities
Provincial bonds
Municipal bonds
Corporate and other bonds
Preferred and common stocks
Mortgage loans
Real estate
Policy loans
Total
Sources
15.1
39.U
22.6
50.1
12.0
285.1
16.3
lit.O
- M
U5U«6
U57.8
Bank of Canada, Statistical Summary!"
19#
Jan.-Aug.
36.7
30.8
26.0
33.7
U0.6
276.U
8.1
- 23
- U
- 9
- 19
- 12
0
- 5
+165
- 27
- U2
@FedFRASER