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LIBRARY SEP 25 1962 d f i p/ /y) ft ft X f c T September 25, 1962, H.lli pffl£sili Supplement) La FEDERAL RESERVE BANK OF RICHMOND Corporate Security Offerings in the F i r s t Half of 1962 Net proceeds f r o m c o r p o r a t e s e c u r i t y o f f e r i n g s i n t h e f i r s t h a l f of 1962 t o t a l e d $ 5 . 5 b i l l i o n , o n e - f o u r t h below t h e r e c o r d f i r s t h a l f volume of l a s t y e a r b u t l a r g e r t h a n i n 1959 and i 9 6 0 . P r a c t i c a l l y a l l of t h i s y e a r ' s s e c u r i t y f i n a n c i n g was t o o b t a i n new c a p i t a l . New i s s u e s so l d t o r e f u n d o u t s t a n d i n g s e c u r i t i e s t o t a l e d $2l|l m i l l i o n , l e s s than o n e - t h i r d of l a s t y e a r ' s s u b s t a n t i a l f i r s t h a l f volume, even though i n t e r e s t r a t e s t h i s y e a r were n o t much d i f f e r e n t than i n t h e f i r s t h a l f of 1961. Corporate s e c u r i t y o f f e r i n g s f o r new c a p i t a l t o t a l e d $ 5 . 3 b i l l i o n d u r i n g t h e f i r s t s i x months of t h i s y e a r , o n e - f i f t h l e s s t h a n i n the f i r s t h a l f of 1961. This d e c l i n e in new o f f e r i n g s took p l a c e even though e x p e n d i t u r e s on plant, ana equipment by a l l i n d u s t r i e s i n 1962 a r e expected t o run a b o u t 8 p e r c e n t ahead of l a s t y e a r and r e f l e c t s t h e s u b s t a n t i a l r i s e i n i n t e r n a l s o u r c e s of c o r p o r a t e f u n d s a s w e l l a s the f a c t t h a t a p o r t i o n of l a s t y e a r ' s f i n a n c i n g was done i n a n t i c i p a t i o n of n e e d s . The volume of new f i n a n c i n g d u r i n g t h e f i r s t quarter) a t $ 2 . 3 b i l l i o n , was somewhat l a r g e r t h a n the r a t h e r s m a l l volume l a s t y e a r , b u t second q u a r t e r f i n a n c i n g , a l t h o u g h i t i n c r e a s e d s e a s o n a l l y t o $3.0 b i l l i o n , was o n e - t h i r d l e s s t h a n the r e c o r d second q u a r t e r 1961 volume. I n d u s t r i a l d i s t r i b u t i o n of new c a p i t a l i s s u e s . The d e c l i n e i n c o r p o r a t e s e c u r i t y o f f e r i n g s t h i s y e a r was l a r g e s t f o r communication companies, r e f l e c t i n g a s m a l l e r volume of f i n a n c i n g by AT&T. New i s s u e s of m a n u f a c t u r i n g , o t h e r t r a n s p o r t a t i o n and f i n a n c i a l and r e a l e s t a t e concerns a l s o were a p p r e c i a b l y lower than l a s t y e a r , w h i l e o f f e r i n g s of e l e c t r i c , gas and w a t e r u t i l i t i e s were o f f only m o d e r a t e l y . New o f f e r i n g s by o t h e r i n d u s t r y groups were s l i g h t l y l a r g e r t h a n l a s t y e a r . New c a p i t a l i s s u e volume of manufacturing companies t o t a l e d $1.7 b i l l i o n i n t h e f i r s t h a l f of t h e y e a r , o n e - s i x t h l e s s than d u r i n g t h e s i m i l a r p e r i o d of 1961. In c o n t r a s t t o l a s t y e a r , when t h e s e f i r m s r e p a i d $35>0 m i l l i o n of bank l o a n s , borrowing from banks t h i s y e a r r o s e by a s i m i l a r amount. No l a r g e i s s u e s of &100 m i l l i o n o r over were s o l d t h i s y e a r and volume was spread widely among t h e major i n d u s t r i a l c l a s s i f i c a t i o n s . In 1961, a $300 m i l l i o n i s s u e tyr U. S. S t e e l had produced an unusual conc e n t r a t i o n of f i n a n c i n g i n t h e primary i r o n and s t e e l c a t e g o r y . New f i n a n c i n g by e l e c t r i c , gas and w a t e r u t i l i t i e s amounted t o frl.U b i l l i o n d u r i n g t h e f i r s t s i x months of t h i s y e a r , 3 p e r cent below t h e J a n u a r y - J u n e volume of l a s t y e a r b u t s l i g h t l y l a r g e r t h a n d u r i n g t h e f i r s t h a l f of i960. C a p i t a l e x p e n d i t u r e p l a n s of t h e u t i l i t i e s on p l a n t f o r 1962 a r e i n about t h e same magnitude a s l a s t y e a r . Repayments of bank l o a n s i n the f i r s t h a l f were about $200 m i l l i o n more than a y e a r e a r l i e r , r e f l e c t i n g t h e c o n t i n u i n g growth i n i n t e r n a l s o u r c e s of f u n d s a v a i l a b l e t o t h e s e f i r m s . The new i s s u e c a l e n d a r f o r t h e second h a l f of t h e y e a r i s currently appreciably smaller than a year ago. F i n a n c i a l and r e a l e s t a t e companies r e c e i v e d n e t proceeds of $0.7 b i l l i o n from s e c u r i t y o f f e r i n g s d u r i n g t h e f i r s t h a l f of t h i s y e a r , o n e - f o u r t h l e s s than i n 1961. This d e c l i n e -was due e n t i r e l y t o a l a r g e d r o p - o f f i n new o f f e r i n g s by s a l e s and consumer f i n a n c e companies. O f f e r i n g s of t h e s e companies amounted t o $lL6 m i l l i o n , only 37 p e r c e n t of l a s t y e a r ' s volume and t h e s m a l l e s t f i r s t h a l f t o t a l s i n c e 1952. Net r e c e i v a b l e s of t h e f i n a n c e companies rose moderately i n t h e f i r s t h a l f , b u t t h i s was f i n a n c e d l a r g e l y by an i n c r e a s e i n s a l e s of d i r e c t l y - p l a c e d s h o r t - t e r m f i n a n c e company paper. Net s a l e s of t h i s open-market paper during t h e f i r s t h a l f of t h e y e a r t o t a l e d $1 b i l l i o n , over t h r e e t i m e s the 1961 volume. Type of i s s u e . Gross proceeds f r o m s e c u r i t y o f f e r i n g s , which i n c l u d e r e f u n d i n g and c o s t s of f l o t a t i o n , amounted t o @5.6 b i l l i o n during the f i r s t s i x months of t h i s y e a r . P u b l i c l y o f f e r e d i s s u e s t o t a l e d $ 3 . 6 b i l l i o n , 27 p e r c e n t l e s s than d u r i n g t h e corresponding p e r i o d of 1961, while p r i v a t e placements of $2.0 b i l l i o n were o n e - s i x t h below l a s t y e a r ' s total. Bond f i n a n c i n g of $1*.5 b i l l i o n d u r i n g t h e f i r s t h a l f was about o n e - e i g h t h under l a s t y e a r ' s volume. S a l e s of common s t o c k s dropped much more s h a r p l y t o $950 m i l l i o n , which was l e s s than o n e - h a l f t h e y e a r e a r l i e r volume. I f t h e l a r g e AT&T i s s u e s o l d i n A p r i l 1961 i s excluded, however, t h e volume of o t h e r common s t o c k f i n a n c i n g in t h e f i r s t h a l f of t h i s y e a r was down o n l y s l i g h t l y . P r e f e r r e d s t o c k f i n a n c i n g of $ 0 . 2 b i l l i o n was 30 p e r cent below l a s t y e a r and i n t h e s m a l l e s t volume f o r any f i r s t h a l f s i n c e 19^3. Financing through c o n v e r t i b l e bonds ( i n c l u d e d i n t o t a l bond s a l e s above) t o t a l e d $0.2 b i l l i o n , almost o n e - f o u r t h l e s s than a y e a r e a r l i e r and s h a r p l y below t h e f i r s t h a l f of most o t h e r y e a r s . Capital Markets S e c t i o n , D i v i s i o n of Research and S t a t i s t i c s , Board of Governors of t h e F e d e r a l Reserve System. Table 1 Corporate Security Offerings f o r New Capital by Type of Business of I s s u e r and Use of Proceeds F i r s t Half 1957-62 (Net proceeds in mill ions of dollars) 1962 196L i960 1959 1958 1957 5,505 7,212 4,679 4,835 6,121 6,688 21*1 5,261* 709 6,50k 61t 1,771 *•§? $9 152 1,527 1,152 375 359 5,762 5,347 415 94 6,593 6,128 465 Manufacturing New money Other purposes 1,650 1,356 29k 1,981 1,636 346 809 690 119 1,109 967 142 1,542 1,363 178 2,373 2,100 273 E l e c t r i c , gas & wtr. u t i l . New money Other purposes 1,415 1,328 86 1,462 1,1*19 1*3 1,406 1,371 36 1,791 1,710 81 2,095 2,020 75 2,116 2,015 101 Communication New money Other purposes 688 680 7 1,176 1,168 8 338 337 1 149 146 2 930 927 3 696 687 9 Railroad New money Other purposes 6k 84 82 82 90 90 108 108 127 127 210 210 Other t r a n s p o r t a t i o n New money Other purposes 172 170 1 31*1 297 43 230 223 7 385 37 0 15 276 211 65 195 192 3 Commercial and other New money Other purposes 407 337 68 370 315 55 29k 232 62 409 299 110 104 87 16 150 126 25 Mining New money Other purposes _ll4 101 13 110 101 9 159 87 71 70 65 5 115 102 13 122 101 21 Financial and real e s t a t e New money Other purposes Je7 179 982 901 80 1,200 1,121 79 750 647 103 574 510 64 732 ' 697 36 ( Sales and consumer finance) ( Other f i n a n c e , e t c . ) 1U6 591 r/390 i/592 646 554 356 394 277 297 468 264 Total corporate o f f e r i n g s Refunding New c a p i t a l New money Other purposes lfk New c a p i t a l vj—Revised. Note.—Details may not add to t o t a l s due to rounding. Source.—Securities and Exchange Commission and Federal Reserve. Table 2 Security Offerings f o r New Capital byManufacturing Companies F i r s t Half 1957-62 (Net proceeds i n m i l l i o n s of d o l l a r s ) 1962-^ Manufacturing E l e c t r i c a l machinery Petroleum and r e f i n i n g N o n e l e c t r i c a l machinery Chemicals T e x t i l e s and apparel Primary iron and s t e e l Foods Stone, clay and g l a s s products Paper / Other transportation equipment Beverages Printing - ' Fabricated metal products Primary nonferrous metals Lumber, wood products Rubber products Motor v e h i c l e and equipment Tobacco Other 2/ 1,650 2 Oil 196 16U 170 107 93 85 68 .60 U5 30 29 2k 20 13 11 6 325 1961 i960 1959 1958 1957 1,981 200 177 120 81 I4I 1*39 72 91 88 119 3 5U 15 23 23 27 29 U7 332 809 123 6 78 108 1,109 lii9 11 6U 78 36 231 65 6 57 53 15 11 38 65 18 1,51*2 115 225 69 92 8 55 27 2,373 58 Wil Loo 86 2k 31 3k 23 17 63 8 39 32 53 25 13 132 1 / Less than $500,000. 2 / Includes i s s u e s of f o r e i g n manufacturers not f u r t h e r c l a s s i f i e d . Note. — D e t a i l s may not add t o t o t a l s due to rounding. S o u r c e . — S e c u r i t i e s and Exchange Commission and Federal Reserve. k2 y Co 130 k2 122 89 98 22 9k kk 163 39 90 78 38 3 20 69 383 287 12 8 17 8 168 160 231 3k Table 3 Total Corporate Security Offerings by Type of Issue F i r s t Half 19*7-62 (Gross proceeds in m i l l i o n s of d o l l a r s ) Type of i s s u e 1962 1961 I960 1959 1958 1957 7,3Wi It,802 U,9li7 6,216 6,815 3,113 1,688 3,168 1,780 5 ; § li,9li9 1,866 3,57k 2,008 1,566 (198) •3,U76 1,7U7 1,729 (338) 5,37lt 3,7U8 1,626 (957) 5,060 3,251* 1,805 (639) T o t a l corporate o f f e r i n g s 5,628 Type of o f f e r i n g Public Private 3,61*6 1,982 Type of s e c u r i t y Bonds and n o t e s Public Private (Memo: Convertible) 2$!U 1,938 (229) I f x 2,156 (299) ' P r e f e r r e d stock 196 288 211 315 336 237 Common stock 950 1,936 1,017 1,157 506 1,519 Source.—Securities and Exchange Commission. J CORPORATE SECURITY OFFERINGS; USE OF NET PROCEEDS F i r s t Half 1957-62 B i l l i o n s of d o l l a r s Refunding 6.0 New Money 4.0 purposes 1957 lvvi 1959 lv 1961 CORPORATE. SECURITY OFFERINGS FOR NHTY . CAPITAL BY TYPE OF BUSINESS F i r s t Half 1957-62 B i l l i o n s of d o l l a r s .Manufacturing 4.0Public Utilities Communications Real E s t a t e Financial 1957 1S-58 1959 i960 1961 1962 v CHART 3 CORPORATE SECURITY OFFERINGS BY TYPE OF ISSUE F i r s t Half 1957-62 B i l l i o n s of d o l l a r s Preferred Stock 6.0 Common Stock U.o ~ Nonoonvertible 2.0 Convertible 1957 1958 1959 i960 1961 1962 /&, PBRCrSlTA-lR DISTRIBUTION OF RONIfi SOLD .BET.7FFJ THOSE PUBLICLY OFFER ED AN D i-R JVATELY PLACED Per c e n t 100 75 50 25 1957 1953 1959 ly'o 1961
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