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Mot f o r P u b l i c a t i o n DECONTROLLED AFTER SIX MONTHS lit September 15, 1955 CAPITAL MARKET DEVELOPMENTS Three l a r g e S t a t e and l o c a l government i s s u e s with p r o - . ceeds of ij.1 million d o l l a r s were o f f e r e d f o r new c a p i t a l during the week ending September 9 . No l a r g e corporate o f f e r i n g s w e r e - f l o a t e d , but 181 m i l l i o n d o l l a r s of such i s s u e s a r e expected t h i s week i n cluding 100 m i l l i o n d o l l a r s of debentures from GIT F i n a n c i a l . About 2 1 . m i l l i o n d o l l a r s of l a r g e S t a t e and l o c a l government i s s u e s a r e a l s o scheduled. T Bond y i e l d s - Outstanding corporate Aaa bond y i e l d s i n creased one b a s i s p o i n t during the week ending September 9 . Yields - on U. S. Government o b l i g a t i o n s decreased t h r e e b a s i s p o i n t s , and S t a t e and l o c a l government Aaa bond y i e l d s remained steady. For lower-grade bonds, corporate Baa y i e l d s r o s e one b a s i s p o i n t ; S t a t e and l o c a l government Baa bond y i e l d s increased two b a s i s p o i n t s ; and y i e l d s on S t a t e and l o c a l government revenue bonds.decreased two b a s i s p o i n t s . Corporate Aaa y i e l d s decreased s l i g h t l y on Monday but r e mained steady on Tuesday of t h i s week. Treasury bond y i e l d s r o s e on Tuesday. Stock p r i c e s - As measured by the SEC index of 265 common s t o c k s , p r i c e s r o s e l a s t week t o 262.3, a new h i g h . S u b s t a n t i a l p r i c e r i s e s occurred on Tuesday*and \ednesday of t h i s week according t o d a i l y i n d e x e s . Stock market c r e d i t - Customers' d e b i t balances, excludi n g c r e d i t extended on U. S . Government o b l i g a t i o n s , of member firms of the New York Stock Exchange, t o t a l e d 2,710 m i l l i o n d o l l a r s a t the end of August, a d e c l i n e of 2k m i l l i o n from t h e preceding month. Total customer c r e d i t , excluding Governments, d e c l i n e d h6 m i l l i o n d o l l a r s . The following t a b u l a t i o n shows data on stock market c r e d i t f o r July and August. -2- Eiid. of month J u l y . |August Change (Millions of d o l l a r s ) Customer c r e d i t Excluding U. S. Govt, s e c u r i t i e s - T o t a l Net debit balances Bank loans to others Net d e b i t balances secured by U. S. Govt, s e c u r i t i e s Bank loans t o others f o r purchasing or carrying U. S. Govt, s e c u r i t i e s Broker and dealer c r e d i t Money borrowed except on U. S. Govt, s e c u r i t i e s Money borrowed on U." S . Govt, s e c u r i t i e s Customers' n e t f r e e c r e d i t balances It# -1|6 1,177 b$ m 1,1# >3 29 ,29 2,003 1,99k 71 887 •918 ! -22 -2 — -9 -6 -31 S t a t e and Local Government S e c u r i t y O f f e r i n g s in the Second Quarter and F i r s t Half of 19$h and 19$$ S t a t e and l o c a l governments i s s u e d 1,1*29 and 2,838 m i l l i o n d o l l a r s of long-term s e c u r i t y o f f e r i n g s in the second q u a r t e r and f i r s t half of 19$$ r e s p e c t i v e l y , as shown in t h e a t t a c h e d t a b l e . The q u a r t e r l y volume was 1+0 per cent and the half year t o t a l 2h per cent l e s s than the corresponding amounts i n 19$h* These declines i n new i s s u e volume were l a r g e l y due t o the f a c t t h a t no very l a r g e t o l l highway bond i s s u e s were sold during the second quarter t h i s y e a r , whereas four i s s u e s with aggregate par value of 872 m i l l i o n d o l l a r s were sold during t h i s p e r i o d l a s t y e a r . Issuing a u t h o r i t y M u n i c i p a l i t i e s sold the l a r g e s t volume of bonds during, the second q u a r t e r of t h i s y e a r , accounting f o r o n e - f o u r t h of a l l i s s u e s , b u t s e v e r a l other types of i s s u i n g a u t h o r i t i e s were almost as important. During the second q u a r t e r l a s t y e a r , in c o n t r a s t , S t a t e s and s p e c i a l a u t h o r i t i e s were t h e l a r g e s t i s s u e r s , accounting together f o r more than t h r e e - f i f t h s of t h e t o t a l . This i s l a r g e l y a t t r i b u t a b l e t o the lack of l a r g e t o l l highway i s s u e s t h i s y e a r , a s noted above, since t h i s type of i s s u e i s u s u a l l y sold by a S t a t e or a s p e c i a l a u t h o r i t y e s t a b l i s h e d f o r t h a t p u r p o s e . Except f o r c o u n t i e s and townships, a l l types of issuing a u t h o r i t i e s sold fewer bonds during t h e second q u a r t e r t h i s year than l a s t , t h e d e c l i n e being l a r g e s t f o r S t a t e s and s p e c i a l a u t h o r i t i e s . H a l f - y e a r data show a , s i m i l a r p a t t e r n . H.lU -3Long-Term S e c u r i t y I s s u e s of S t a t e and Local Governments Second Quarter and F i r s t Half of 1954 and 1955 ( i n m i l l i o n s of d o l l a r s ) Second q u a r t e r 1955 F i r s t half 1 1954 1955 1 1954 254 134. 363 241 312 125 668 118 466 247 745 129 598 243 696 535 479 287 885 244 878 479 1,003 268 1,1*29 2,372 2,838 3,756 l,4l8 2,334 hM 3^706 365 226 140 28 192 37 lit . 59 20 3 210 125 502 1,068 133 43 162 57 8 22 25 1 186 127 814 401 315 58 350 114 ' 27 59 102 3 275 284 11 39 35 .50 1,429 2,372 2,838 3,756 945 457 27 1,238 1,125 9 2,067 744 27 2,266 1,481 9 Total 1,1*29 2,372 1 / Issues of l e s s than $#00,000 not f u r t h e r c l a s s i f i e d . 2,838 3,7# Issuing authority: State County and township Municipality z School d i s t r i c t Special autliority Unidentified 1/ ^ Total Purpose of i s s u e : New c a p i t a l t o t a l ' Schools Highways, b r i d g e s , t u n n e l s . Residential buildings Hospitals and i n s t i t u t i o n s Sewer and water Misc. public s e r v i c e e n t e r p r i s e s Recreation Port and a i r p o r t Veterans aid I n d u s t r i a l building Other Unidentified 1/ Refunding Total Type of i s s u e : . General cb l i g a t i o n Revenue General revenue - Note.—Details may n o t add t o t o t a l s because of rounding. Sources.--Bond Buyer and Federal Reserve. 908 1,213 315 58 347 126 18 47 92 1 319 263 H.Ik -h- Purpose of i s s u e Offerings f o r new c a p i t a l amounted t o 1,1*18 million d o l l a r s in the second q u a r t e r compared to t h e unusually l a r g e second period l a s t year when 2,33k m i l l i o n was s o l d . The r e f u n d i n g volume, as u s u a l , was small in both p e r i o d s . More bonds were s o l d f o r school c o n s t r u c t i o n t h a n f o r any other purpose during the second q u a r t e r . Such i s s u e s t o t a l e d 36£ m i l l i o n d o l l a r s , but t h e volume was s t i l l one-fourth smaller t h a n during t h e same period l a s t y e a r . Highway and bridge bonds, v:hich accounted f o r the l a r g e s t volume l a s t y e a r , aggregated only 226 m i l l i o n d o l l a r s t h i s y e a r , only o n e - f i f t h l a s t y e a r ' s t o t a l which was augmented by l a r g e t o l l highway i s s u e s . Bonds f o r other purposes were i s s u e d in about t h e same volume i n the' second quarter t h i s year as l a s t o O f f e r i n g s f o r new c a p i t a l purposes t o t a l e d 2,803 m i l l i o n d o l l a r s i n the f i r s t s i x months of t h i s y e a r , or about 900 m i l l i o n l e s s t h a n i n the year b e f o r e . L'ost of the decline was in highway f i n a n c i n g , but bonds i s s u e d f o r most other purposes e i t h e r declined in volume or increased only moderately. As i n t h e second q u a r t e r , funds f o r school f i n a n c i n g accounted f o r more than one-fourth of total offerings. ' Type of i s s u e The volume of both general o b l i g a t i o n and revenue bond i s s u e s was smaller during the second q u a r t e r t h i s year than l a s t . The d e c l i n e was much greater f o r revenue bonds however—about 60 per cent l a r g e l y because of the lack of l a r g e t o l l highway i s s u e s t h i s year—so t h a t such bonds accounted f o r only crie-third of the t o t a l t h i s y e a r , compared t o n e a r l y one-half l a s t y e a r . The v o l ume of general revenue bonds was small i n both p e r i o d s . The proportion of revenue bonds t o the t o t a l declined i n a s i m i l a r manner i n the f i r s t half of 19$h compared t o t h e c o r r e sponding p e r i o d of 19$$. The volume of revenue i s s u e s was 1,1*81 m i l l i o n d o l l a r s in the f i r s t s i x months l a s t year or 39 per cent of the t o t a l . This year such o f f e r i n g s represented l i t t l e more than one-fourth the t o t a l . Almost a l l other f i n a n c i n g was i n the form of general o b l i g a t i o n bends, t o t a l i n g 2,067 m i l l i o n d o l l a r s i n 19$$ compared t o 2,266 m i l l i o n the year b e f o r e . Llore d e t a i l e d information concerning r e c e n t c a p i t a l market developments w i l l be found i n the a t t a c h e d e x h i b i t s . Business Finance and C a p i t a l Markets Section, Division of Research and S t a t i s t i c s , Board of Governors of the Federal Reserve System. EXHIBIT A H I G H - G R A D E B O N D YIELDS Weekly /J 1952 Date 1953 Corporate Aaa 1/ 1954 — U. S. Govt, long-term 2 / 1.50 1955 S t a t e and l o c a l g o v t . , Aaa 3 / Spread between U. S . Govt, and Corporate S t a t e and l o c a l Aaa (Per cent) 1%2 - High Low 1953 - High 1955 - High Low 3.03 2.91 3.1*2 2.99 3.09 2.85 3.Hi 2.91 August 12 August 19 August 26 September 2 " September 9 3.10 3.12 3.12 3.13 3.Hi 19~$k - High (lA) (2/15) (6/19) (1/9) (1/8) (k/23) (9/9) (1/7) 2.79 2.56 3.15 2.78 2.74 2.iiii (12/27) (5/17) (6/6) (12/26) (1/9) (8/7) 2.91(8/5) 2.62 (1/7) 2.89 2.89 2.91 2.91 2.88 2.00 1.65 2.73 1.98 2.21 1.90 2.3k 2.05 2.3*1 2.3k 2.3ii 2.3k 2.3k- (10/23) (5/D (6/25) (1/8) (6/10) (9/2) (9/8) (5/26) .37 .19 .38 .19 .li3 .32 .3k .13 .21 .23 .21 .22 .26 1.02 .71 .8k .30 .61 .29 .70 .5U .55 .55 .57 • .57 •5ii 1/ Weekly average of d a i l y f i g u r e s . A v e r a g e term of bonds included i s 25-26 years. . ' 2 / Weekly average of d a i l y f i g u r e s j old s e r i e s . Average term t o f i r s t c a l l of bonds included i s 13-ill y e a r s . 3 / Thursday f i g u r e s . Only general o b l i g a t i o n bonds are included; average term i s 20 y e a r s . Note.—Highs and lows are f o r i n d i v i d u a l s e r i e s and may be on d i f f e r e n t d a t e s for different series. ' EXHIBIT B L O W E R - G R A D E BOND YIELDS Weekly Per cent p e r \ STATE AND LOCAL GOVT. Boo U"z V 1952 1953 Corporate .. Baa 1/ Date 1954 1955 S t a t e and l o c a l govt. Baa 2 / S t a t e and l o c a l govt, rev. 3/ (Per c e n t ) 1952 - High 1955 - High Low 3.63 3.1*8 3.89 3.50 3.74 3.kh 3.59 3.1*5 August 12 August 19 August 26 September 2 September 9 3.56 •3.57 3.58 3.58 3.59 1953 - High . 195U. - High . (1A) (5/16) (9/18) (1/2) (1/8) (12/31) (9/9) (lM) 2 . 9 8 (10/23) 2 . W (1/17) 3.79 ( 6 / 2 5 ) 2.96 (1/8) 3.32 ( 1 / 7 ) 2.93 (8/5) 3.25(9/8) 3.02 ( 1 / 6 ) 3.21 3.22 3.23 3.23 3.25 2.69 2.27 3.27 2.71 3.00 2.72 2.95 2.76 (12/19) (4/25) (6/26) (1/2) (1/1) (8/13) (9/2) (1/7) 2.90 2.93 2.95 2.95 2.93 i Average) term of bonds i n c l u d e d i s 25-26 y e a r s . 2 / Thursday f i g u r e s . Only g e n e r a l o b l i g a t i o n bonds a r e i n c l u d e d ; average terra i s 20 y e a r s . 3 / F r i d a y f i g u r e s . Average r a t i n g of bonds i n c l u d e d i s .between Baa and Aj average term i s 20 y e a r s . Note.—Highs and lows a r e f o r i n d i v i d u a l s e r i e s and may be on d i f f e r e n t d a t e s f o r d i f f e r e n t s e r i e s . I STOCK MARKET 1952 Stock price index l / 1953 1954 Common Trading stock volume 2 / (millions yields 3/. (per cent) of shares) 1955 Stock market customer credit Customers' debit bal- loans to ances 4 / "others" 5 / (Millions of dollars j 1952 •- High Lew 1953 - High Low 1954 - High 1955 - High July August August 26 September 2 September 9 165.3 151.7 167.1 lWt.O 221.it 156.5 262.3 217.4 (12/26) (10/21) (1/2) (9/18) (12/31) (1/6) (9/9) (lM) 257.3 254.5 257.4 260.6 262.3 2.0 0.9 2.5 0.9 5.77 .1:8 S 5*33 4.20 4.22 3.78 2.It ' 3.78 3.91 1.5 1.8 2.0 2.0 2.0 1,986 1,804 2,445 1,332 1,241 1,665 1,314 2,388 3,911 3,537 2,734 2,517 3,911 2,734 if 1)653 656 552 780 664 1,048 746 1,177 1,018 1,177 til 1,155 n.a. Not available. 1 / SEC index of 265 common stocks, weekly closing prices, 1939-100; converted to 1947-49=100 by Federal Reserve. The conversion factor i s 123.91. 2 / Averages of daily trading volume en the New York Stock Exchange. 3/ Moody's 200 common stocksj end of month figures. %/ 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. 5/ Wednesday figures for weekly reporting member banks. Excludes a l l loans . for purchasing or carrying U . S . Governments for 1952j since 1953 only these loans at banks in New York and Chicago are excluded. Weekly reporting banks account for about 72 per cent of loans to others. • Note.—Highs and lows are for individual series and may be an different dates for different s e r i e s . Exhibit D Corporate and State and Local Government Security Offerings and Placements ( i n millions of d o l l a r s ) 1955 January February March April May June July August. September Corporate 1954 1 Fe»7 c a p i t a l 1953 1955 S t a t e and local 1 1954 1 1953 546 436 1,261 547 J4.26 635 623 623 666 5# 312 539 396 411 565 903 697 .197 656 8U2 779 6# 1,123 427 350 641 734 748 853 531 e/750 1/625. 909 335 747 183 325 753 e/460 &235 e/350 279 261 649 £19 259 475 1,003 290 60k • 577 42? 1 / 1,438 594 423 877 453 408 774 1,608 1,995 1,991 1,896 7,490 1,912 1,385 1,418 2,578 1 , # 1 1/ e/1,045 2,444 # 8,495 1,372 2,334 1,188 1,894 6,789 1,176 1,412 1,253 1,636 5,477 October November December | l s t quarter 2nd quarter 3rd quarter 4th quarter Year 1 2,2h3 2,09k e/l,905 - 39P 360 426 • 329 649 434 Excludin g finance companies 2 / 1st quarter 2nd quarter 3rd quarter 4th quarter Year 1,791 1,912 e/1,455 1,527 1,927 1,911 1,792 7,158 .1,669 1,991 1,223 2,344 7,227 . e / Estimatedo 1/ Includes 602.5 million dollar AT&T debenture i s s u e , 2 / Total new c a p i t a l issues excluding o f f e r i n g s of sales and personal finance companies. Note.—Details may not add t o t o t a l s due t o rounding. # H.ih Exhibit : Large Public Security Issues f o r New C a p i t a l (Other t h a n U. S. Treasury) 1 / Proceeds of Large I s s u e s Offered (Millions of d o l l a r s ) Month Corporate 19$h - August September October November December 1955 - January February March ' April May June July August S t a t e and local'government Other 2 / 86 155 388 268 689 31a 107 337 238 152 409 278 72 75 36U 433 0 121 141 63 750 175 1*83 182 101 1*05 30 35 15 Large I n d i v i d u a l Issues Offered September 1 through 9 Issuer Type 3 / Amount Coupon Offering Rating (millions Maturity r a t e or net i n t e r - yield of dollars) e s t cost CORPORATE None STATE AND LOCAL GOVERNMENT S t a t e of Delaware Essex County, New Jersey . Middlesex Co. Sewerage A u t h o r i t y , N. J . OTHER None G.O. G.O. 7.0 8.8 25.0 1956-75 1956-76 2.12 2.20 1,15-2.20 Aa 1.50-2.25 . Aa 1962-95. 3.33 2.50-3.35 E-2 1 / Includes corporate and other s e c u r i t y o f f e r i n g s of 15> m i l l i o n d o l l a r s and over; S t a t e and l o c a l government s e c u r i t y o f f e r ings of 5' million and o v e r . 2 / Includes f o r e i g n government and I n t e r n a t i o n a l Bank f o r Reconstruction and Development i s s u e s , 3 / In the case of S t a t e and l o c a l government s e c u r i t i e s , G.O. denotes general obligation3 Rev., revenue bonds; G.R., general o b l i g a t i o n s a d d i t i o n a l l y secured by f a c i l i t i e s revenues; and, L.L. l i m i t e d l i a b i l i t y o b l i g a t i o n s secured by pledge of designated revenues. R.l/4 Exhibit F Forthcoming Large Public S e c u r i t y O f f e r i n g s f o r ilev? C a p i t a l (Other than U. S . Treasury) 1 / • Expected Proceeds from Forthcoming Large Issues Date of computation. 192k - Aug. 31 Sept. 30 Oct. 29. Nov. 30 Dec. 31 1922 - J a n . 31 Feb. 28 Mar. 31 Apr. 29 May 31 " June 30 J u l y 29 Aug. 31 During month following date shown S t a t e and Other 2 / Corporate l o c a l govt. 33b 3b3 12 9b 18k 16 710 211 %22 160 67 1*07 222 300 . 383 1*36 661 2# 682 = 22U 208 116 339 . 3kk 100 18k Subsequent t o date shown S t a t e and Other 2( Corporate l o c a l govt. 30 608 klb 132 2k6 216 . k22 1,392 922 lflkl 820 830 1,132 %0 1,876 2,128 1,927 2,682 2,ia 1,961 1,978 2,009 1,917 1,861 1,81*2 2,018 1,971 __ 30 30 32 Forthcoming Large O f f e r i n g s , as of September 9 Type Amount (millions Approximate date of o f f e r i n g of d o l l a r s ) CORPORATE Utah Power and Li git Tennessee Gas Transmission Tennessee Gas. Transmission GIT F i n a n c i a l Ohio Power Columbia Gas Public Service E l e c t r i c and Gas -Public Service E l e c t r i c and Gas -American Telephone and Telegraph Southern B e l l Telephone and Telegraph New York S t a t e E l e c t r i c and Gas •Long I s l a n d Lighting •Kaiser Aluminum & Chemical • Southern C a l i f o r n i a Gas Freedom Insurance Company 1 s t mtg. b d s . 1 s t mtg. PL b d s . Common s t k . • Deb. 1st mtg. b d s . Deb. P f d . stock Deb. Conv. deb. Deb. 1st mtg. b d s . 1 s t mtg. b d s . . P f d . stock • - Bonds Common s t k . 12.0 50c0 16.0 100.0 17.0 ' ItO.O 22.o 32.0 637.2 30.0 22.0 12-0 * 32.0 itOsO 22.0 September lU September lb September lH September 12 September 20 September 21 October October b October 13 October 17 October 19 October 26 October November 1955 H.1U F-2 Forthcoming Large O f f e r i n g s , as of September 9 (Cont'd) Type Amount Approximate date (millions of o f f e r i n g of d o l l a r s ) STATE AND LOCAL GOVERNMENT B u f f a l o , New York Volusia County, F l o r i d a ^ D e t r o i t , Fichigan Los Angeles, C a l i f o r n i a S t a t e of New Mexico Sedgwick County, Kansas Richmond-Petersburg Turnpike Auth. Chicago Regional Port D i s t . , 111. ^ P h i l a d e l p h i a , Pennsylvania Texas Turnpike Company I l l i n o i s Turnpike Authority -^•State of C a l i f o r n i a ^ T e r r i t o r y of Hawaii Connecticut Expressway Inter-American Center A u t h . , F l a . iiichigan Turnpike Authority S t a t e of Louisiana C a l i f o r n i a T o l l Bridge Authority ^ Louisiana Turnpike Commission ™ C a l i f o r n i a T o l l Bridge A u t h o r i t y New York S t a t e Thruway Authority Oklahoma Turnpike Authority ITashin'gton S t a t e T o l l Bridge Auth. G.O. G.R. ' n.a. Rev. ; L.L. G.O. Rev. , Rev. n.a. Rev. Rev. n.a. Rev. Rev. Rev. ^ n.a. . Rev. = • Rev. " Rev. G.R. Rev. Rev. 12.8 8.0 9.1 18.0 8.9 5.8 69.0 2l;.0 39.9 130.0 400.0 60.0 7.5 100.0 25.0 186.0 80.0 235,0 100.0 43.0 125.0 146.0 227.0 September 13 September 15 September 20 September 21 September 23 September 28 September 28 September October 18 October October November 2 November 16 1955 3955 1955 1952 1955 1955 1955 1955 1956 None ^7"Includes corporate and other i s s u e s of 15 m i l l i o n d o l l a r s and over3 State"and l o c a l government i s s u e s of 5 m i l l i o n and over. . 2 / Includes f o r e i g n government and I n t e r n a t i o n a l Bank for Reconstruction and Development i s s u e s . •n.ac Not a v a i l a b l e . —Included i n t a b l e f o r f i r s t t i m e .
@FedFRASER