Full text of H.16 Capital Market Developments : October 9, 1959
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Not f o r Publication DECONTROLLED AFTER SIX MONTHS H.lU October 9, 1959 CAPITAL MARKET DEVisLOPMfcJtfTS During the week ending October 9, corporations sold large . issues, including the expiration of subscription rights, totaling S6U million. One large local government issue f o r iy>26 million was also sold. The calendar for this week includes corporate offerings amounting to Si25 million and State and local government bond issues with aggregate proceeds of $51 million. Bond yields - Changes in yields on outstanding bonds were mixed l a s t week. Yields on State and local and U. S. Government obligations declined. Yields on lower grade corporate bonds continued to increase, while those for high-grade corporates remained stable f o r the f i r s t time since they began to r i s e in mid-August. FNMA secondary market operations - Further pressures in residential mortgage markets were indicated by secondary market operations of the Federal National Mortgage Association in August. Total offerings to FNMA increased f u r t h e r despite the f a c t FNMA had reduced i t s mortgage commitment and purchase prices early in July and again in mid-August. FNMA purchases during August were the largest in twenty-three months, and i t s sales continued to be negligible. Stock prices - Stock prices fluctuated within a narrow range l a s t week. Standard and Poor's index of 500 common stocks closed at 57.00 on October 9, 0.20 points lower than a week e a r l i e r . Trading a c t i v i t y slackened somewhat with the daily volume averaging 2.1; million shares a day. More detailed information concerning other recent capital market developments i s presented in the attached exhibits. Capital Markets Section, Division of Research and S t a t i s t i c s , Board of Governors of the Federal Reserve System, HIGH-GRADE LOWER-GRADE BOND BOND YIELDS YIELDS H.llt fcxh.i.bit"B Tables l'or tixhibifc A High-grade bond Yields Date Spread between U. S. Govt, and Corporate State and Aaa local Aaa State and local govt, Aaa 3/ U. S. Govt, long-term 2/ Corporate Aaa 1/ (Per cent) 2.85 (4/23) Ill (9/27) 2.15 (0/6) 19514 - Low 1957 -High 1958 - High Low 1959 - High Low U.13 ( 1 0 / 1 0 ) 3.55 (5/2) U.57 (10/9) b . 0 9 (1/9) 3.8b 3.07 ii.30 3.83 Sept. 11 Sept. 18 Sept. 25 Oct. 2 Oct. 9 2/ ii.ii9 b.52 h.Sk h.57 1.57 U.25 b.30 1.27 b.21 h.lh 3.76 (10/18) (12/26) (b/25) (9/18) (1/2) 1.90 3.U5 3.31 2.6b 3.65 3.06 (9/2) (8/29) (9/11) (5/1) (9/2W (3/26) .30 .60 .51 .22 .39 3.59 3.63 3.65 3.6b 3.61 .16 .30 • b7 .72 .3b .92 .57 .2b .22 .27 .36 .b3 .67 .62 .57 .53 .66 Lower-grade Bond Yields Date Corporate Baa 1/ State and local govt. Baa y 3.bb 5.10 k.96 1.51 5.28 b.83 2.93 (8/5) Spread between Aaa and Baa State and Corporate local govt. (Per cent) 195b - Low 1957 - High 1958 - High Low 1959 - High Low S e p t . 11 Sept. 18 Sept. 25 Oct. 2 Oct. 9 p / 5.15 5.18 5.22 5.26 5.28 (12/31) (11/29) (1/3) (7/11) (10/9) (b/17) b . 5 l (a/29) b.3b 3.6b b.b6 3.92 h.Ul li. hU b.bb h.hh u.bl (9/11) (5/D (7/2) (3/26) .52 1.27 1.20 .77 .96 1.21 1.11 .93 .77 .98 .65 .66 .82 .56 .68 .69 .71 .79 .81 .79 .80 .80 g/ Preliminary. 1/ Weekly average of daily figures. Average term of bonds included i s 25-26 years. 2/ Weekly average of daily figures. The series includes bonds due or callable in 10 years or morn. 2 / Thursday figures. Only general obligation bondc are included; average term i s 20 years. Note.—highs and lows are for individual series and may be on different dates for d i f f e r e n t series. STOCK MARKET ... 1956 FEDERAL 1957 NATIONAL SECONDARY MARKET MORTGAGE OPERATIONS / PURCHASES 1958 ASSOCIATION 1959 Exhibit D - Tables for Exhibit C Stock Market Stock price index 1/ 1953-1958 - High Low 1959 - High 5l.il 22.95 60.51 514.37 August September Sept. 18 Sept. 25 Oct. 2 Oct. 9 e / 59. ho 57.05 56.09 56.73 57.20 57.00 Trading volujue 2/ yields 2/ (millions (per cent) of shares) (12/24/58) (9/18/53) (7/31) (2/6) Common Stock market customer credit Customers1 Bank Total debit bal- loans to ances 4/ "others" 5/ (Millions of dollars) 3.30 6.25 3.08 3.3k 4.9 0.9 4.3 2.1 4A92 . 3,285 1,314 2,055 3,388 4,721 4,526 3,253 3.13 3.26 3.32 3.28 3.21 3.?5 2.4 2.7 2.4 3.2 2.7 2.1* 4,529 n.a. n.a. n.a. n.a. n.a. 1,317 669 1,332 1,277 1,210 1,193 1,259 1,193 1,240 1,222 1,193 3,270 n.a. n.a. n.a.—Not available. g/ Preliminary. 1 / Standard and P o o r ' s T m p o s l t e Index of 500 common s t o c k s , weekly c l o s i n g p r i c e s , 1941-43=10. Monthly data, a r e a v e r a g e s of d a l l y f i g u r e s r a t h e r t h a n of F r i d a y s ' o n l y . Highs and lows a r e f o r F r i d a y s ' d a t a o n l y . 2 / S t a n d a r d and P o o r ' s composite s t o c k y i e l d based on Wednesday d a t a converted t o weekly c l o s i n g p r i c e s by F e d e r a l R e s e r v e . Y i e l d s shown a r e f o r d a l e s on which p r i c e index r e a c h e d i t s h i g h or low. 3 / Averages of d a i l y t r a d i n g volume on t h e New York Stock Exchange. 4 / End of month f i g u r e s f o r member f i r m s of t h e New York Stock Exchange which c a r r y margin a c c o u n t s ; e x c l u d e s b a l a n c e s secured by U. S . Government o b l i g a t i o n s . 5 / Wednesday f i g u r e s f o r weekly r e p o r t i n g member banks. Excludes l o a n s f o r p u r c h a s i n g or c a r r y i n g U, S. Government s e c u r i t i e s • P r i o r . ^ f i T J u l y 1 , 1959, such l o a n s a r e excluded only a t banks i n New York and Chicago. Weekly r e p o r t i n g banks account f o r about 70 p e r c e n t of l o a n s t o o t h e r s . For f u r t h e r d e t a i l see B u l l e t i n . F e d e r a l N a t i o n a l Mortgage A s s o c i a t i o n Secondary Market O p e r a t i o n s 1 / •Estimated O f f e r i n g s t o 1'NmA Immediate I Standby Total purchase j commitment Purchases by l-tiMA Sales by TN ' MA ( M i l l i o n s of d o l l a r s ) 1958 - Aug. Sept. Oct. 1959 Nov. Dec. - Jan. Feb. Mar. Apr. May 10.1 23.8 57.3 40.7 39.7 37.7 44.4 52.4 57.8 80.6 84.4 109.5 123.1 9.3 22.0 49.6 392 35.3 33.9 41.2 49.8 5o.i 73.4 76.6 9%.5 109.8 .7 1.8 7.7 1.5 4.4 3.8 • 3.2 2.6 7.7 7.2 7.8 17.1 13.3 , 7.0 6.0 10.8 20.0 33.2 33.7 27.6 36.5 39.6 38.3 - 49.4 62.3 71.7 15.5 7.9 .8 1.1 .9 .3 .8 1.1 .6 .3 .3 ammmmeg July Aug. oonwltmrnt o o n t r n o t * . Date. c r e l u d e http://fraser.stlouisfed.org/ L i q u i d a t i n g Programs. Federal Reserve Bank of St. Louis FNMA a c t i v i t y under S p e c i a l A s s i s t a n c e and Management and Exhibit E Long-term Corporate and State and Local Government Security Offerings and Placements (In millions of dollars) 1959 Corporate 1/ 1 1958 1 New c a p i t a l 1957 1959 State and local 2/ 1 195b 1 1957 January February March 81*0 • 7k5 631 728 857 1/ 1,5532/ 1,060 1,065 1,320 636 856 61*5 812 953 511 7k2 572 506 April May June 899 791 87b 1,11*0 597 887 931 765 1,153 931 592 981 798 895 551 765 5k6 393 1,107 5W 1,11k 1,003 92k 973 567 ' Jg/k98 e/525 1*03 651 806 529 581* k31 862 518 920 1,090 e/600 1,076 1*56 l*7k k35 698 3,139 2,623 2,760 2,300 3,hh5 3,lk9 2,899 2,95k July August September f r e e/650 October November December e/800 1st 2nd 3rd l*th 2,216 quarter quarter quarter quarter e/1,975 1 s t half Three quarters Year . 4,780 e/6,755 5,762 8,52? 10,823 . 789 6,59k 9,k93 12,1*1*7 .2,138 - 2,501* e/1,590 k,61*2 2/6,232 698 633 2,276 1,820 1,365 1,860 a 2,029 k,520 6,380 7,71*6 3,521* 5,069 7,099 2,21,1* Excluding finance companies hj 1st 2nd 3rd kth quarter quarter quarter quarter Year - 2,011 2,1*09 e/1,675 J 2,899 2,5% 2,731 2,213 3,237 2,889 2,582 10,129 11,518 2,610 e/ Estimated. 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 1 . lii Other Security Offerings 1/ (In millions of dollars) Long-term Foreig n government 2/ Federal agency' 3/ 1950 | 19 59 1 1958 1959 1 1 1957 | 1957 Januaiy February March April May June July August September 77 59 2 V 56 50 1*2 7h 81* 1*9 30 196 53 — 199 175 __ 28 7 30 161* k 60 1 %20 507 2,321 Year 992 58 7h . — January Februa ry March 190 128 295 233 1*60 273 326 1,55 11*7 April May 1*11 563 357 351* 261* 205 337 153 289 123 369 272 272 252 231 1*15 21*3 303 9U 1+59 3,910 3,27U &A62 October November December Year 60 — — - - 215 — 100 — Short-term State and local government 1|/ 2# 523 9 5 17 123 21*6 — 125 198 120 October November December July August September — 123 1+8 U2 139 72 1,163 251 Federal agency 3/ 359 500 1*89 1*86 675 289 727 365 1 — 572 371 208 11*1* 638 1*30 505 209 161 329 336 1*69 501 1437 206 330 221* 370 512 1*51* ill* 137 1,238 255 116 3,098 5,51*3 1/ Data presented in t h i s exhibit differ'from those in Exhibit E in t h a t 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 t h e i r subdivisions and by international organizations. Source: Securities and Exchange Commission. Issues not guaranteed by the U. S. Government. Source: long-term, Securities and Exchange Commission; short-term, Federal Reserve. h/ Principally tax and bond anticipation notes, warrants or c e r t i f i c a t e s and Public Housing Authority notes. In some instances PtiA notes included may have a somewhat longer tenn than one year. Source: Bond, Buyer. K.Ik Exhibit G Large Long-term Public Security Issues for New Capital (Other than U. S. Treasury) 1/ Proceeds of Large Issues Offered (Millions of dollars) Corporate Month 1958 - September October November December 1959 - January February March April May State and local government 172 259 229 335 551 22? 305 369 3k0 215 359 3h2 281 110 363 199 1 . J 18 209 100 79 17h 35 176 20 50 60 50 98 175 288 825 259 July August September Other 2/ 369 563 258 635 19k 263 214 Large Individual Issues Offered October 1 through ? Issuer CORPORATE Boston Edison Co. So. hew England Tel. Co. Columbia Gas System, Inc. Northern Natural Gas Co. type 2/ Amount Coupon Offering (millions Maturity Rating of net i n t e r - yield dollars) est cost 1st mt%. bds. Com. stk. Deb. Pfd. stk. 15.0 18.8 25.0 20.0 1989 198b -5.17 5 3/8 5-38 Aaa . . A /. STATE AND LOCAL GOVERNMENT Port of New York Authority Wayne Co., Mich. 5 1/U Rev.-Ut. G.O. OTHER None 25.0 1989 26.0 1962-68/65 h.tf h.08 . L.31 3.50-4.00 A A H.lli Footnotes n.a.—Not available, 1/ Includes corporate and other security offerings of $15 million and over; State and local government security offerings of $.0 million and over. 2/ Includes foreign government and International Bank f o r Reconstruction and Development issues and non-guaranteed issues by Federal agencies. In the case of State and local government secur ities, G. 0. denotes general obligations; Rev.-Ut., revenue obligations secured only by income from public u t i l i t i e s ; Rev.-Q.Ut., revenue bonds secured only by revenue from q u a s i - u t i l i t i e s ; Rev.-S.T., revenue bonds secured by revenue from specific taxes only; Rev.-Rent., revenue bonds secured solely by lease payments. Exhibit H H.ili Forthcoming Large Long-term Public Security Offerings f o r New Capital (Other than U. S. Treasury) 3 / Expected Proceeds from Forthcoming Large Issues During month following Date of computation Corporate State and l o c a l govt. 1958 - Sept. 30 Oct. 31 Nov. 28 Dec. 31 1959 - Jan. 30 Feb. 2? Mar. 31 Apr. 30 May 29 June 30 July 31 Aug. 31 Sept. 30 113 204 301 210 270 198 396 2U6 287 • 165 238 198 37k Subsequent to date shown Other 2/ Corporate State and Other 2 l o c a l govt. 295 258 229 261 551 292 550 . 25k 21*7 116 . 356 385 270 216 326 401 370 365 279 476 31*6 332 272 305 517 69k 71 75 45 20 50 50 25 — 5214 675 . 683 515 856 481 761 517 7611 500 71 75 45 20 50 50 I1O6 402 470 25 . — Forthcoming Large Offerings, as of October 9 Issuer Type Amount | Approximate date (millions of o f f e r i n g of dollars) CORPORATE Boston Edison Co. Philadelphia E l e c t r i c Co. American E l e c t r i c Power Southern Bell Telephone & Telegraph Texas Gas Transmission Corp. Florida Power & Light Co. Puget Sound Power & Light Co. Central & South West Coip. Hilton Hotels Corp. American Telephone & Telegraph Co. •^Northern Natural Gas Co. Commerce Oil Refining Corp. Sylvania E l e c t r i c Products, Inc. Com. s t k . 1st r e f . mtg. bds. Com. s t k . Deb. Pfd. s t k . 1st mtg. bds. 1st mtg. bds. Com. stk. Sub. S.F. deb. Deb. S.F. deb. Deb., bds. & com. S.F. deb. 15.4 50.0 60.0 70.0 15.0 20.0 20.0 15.0 30.0 250.0 25.0 45.0 25.0 Oct. 13 ( r i g h t s expire) Oct. 15 Oct. 15 Oct. 21 Oct. 22 Oct. 28 Oct. 29 Oct. 30 Oct. Nov. 17 Nov. Indefinite Indefinite STATE AND LOCAL GOVERNMENT Denver, Colorado New York, New York State of New Hampshire Public Housing Authorities G.O. G.O. G.O. G.O. 17.0 18.0 16.0 102.1 Oct. Oct. Oct. Oct. 14 15 15 20 h„lU H-2 Forthcoming Large Offerings, as of October 9 (Cont'd) Type Amount (millions Approximate date of offering of dollars) STATE AND LOCAL GOVERNMENT (Cont'd) -a-Consumers Public Power Dist. 3 Neb. Los Angel.es Flood Control D i s t . , California Baltimore Co., Md. Pennsylvania General State Auth. Columbus, Ohio Chesapeake Bay Ferry Commission 'Rev.-Ut. 23.3 G.O. G.O. Rev. G.Gu Rev.-Ut. 21.2 20.0 25.0 10.0 190.0 Oct. 22 Oct. 27 Oct. 28 Oct. 28 Dec. 1 Indefinite OTHER -^-Montreal, Canada Ext. S.F. deb. 20.0 Oct. 20 Included in t a b l e f o r f i r s t time. 1/ Includes corporate and other issues of ftl£ million and over; State and local government issues of #10 million and over. -2/ Includes forer^rv government and International Bank f o r Reconstruction and Development issues and non-guaranteed issues by Federal agencies. Note.—Deletions for reasons other than sale of issue: None. H.lli 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 1 (per cent) seasoned yields (basis points) (basis points) 5.00 (9/14/57) 2.93 (3/31/51*) 1959 — Jan. 7 20 28 Feb. 18 Mar. 11 25 26 31 Apr. 3 15 16 29 May 1 13 lh 20 21 26 June It 17 26 July 9 10 15 30 Aug. 5 20 Sept. 18 L60 h.ho?/ 4.43 4.4 3 4.47 I4.60 87 -3 34 hO 4 11 9 9 13 22 21 7 14.95 14.95 5.oo 4.95 1.93 31 4.85 4. <30 21+ 22 5.50 (11/7/57) 3.00 (3/17/54) 123 -15 k.7& 23 1+.67 18 14.85 5.06 17 13 5.13 27 lj.92^ 5.10 5.10 6 2li 19 5.10 5.00 19 13 5.65 60 1/ Covers only 30-year f i r s t mortgage bonds, as reported in Moody's Bond Survey. Except where indicated, the actual yield figure and the amount above seasoned 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 f o r 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 f o r refunding at a lower coupon r a t e . Other issues have no such provision. 3/ Provides f o r a 7-year period during which issue way not be called f o r refunding at a lower coupon rate.