The full text on this page is automatically extracted from the file linked above and may contain errors and inconsistencies.
/*// Not f o r Publication D „ 0 t t m ^ SIX „ H.1I+ September 27, 1956 CAPITAL MARKET DEVELOPMENTS Large public security offerings issued f o r new capital during the week ending September 21 totaled $180 million f o r corporations and $58 million for State and local governments. This week, ending September 28, the volume w i l l again be quite substant i a l , p a r t i c u l a r l y for corporate s e c u r i t i e s . Subscription r i g h t s expire on three stock issues with aggregate proceeds of $79 million and, in addition, there are $95 million of other corporate securities scheduled for s a l e . Four State and local government issues totaling $30 million are expected. Bond yields - Changes in yields on outstanding bonds were mixed l a s t week. Yields on corporate and Baa-rated State and local government bonds continued to edge higher, while State and local government Aaa-rated bend yields were stable and yields on U. S. Government obligations and State and local government revenue bonds declined; the decline in U. S. Government yields (old series) was quite sharp. Offering yields on new issues continue to be r e l a t i v e l y V high, but were somewhat lower than at mid-month. A new Aa-rated 30- \ year f i r s t mortgage public u t i l i t y issue was reoffered t h i s week a t a y i e l d of 4.01 per cent—16 basis points below a similar offering on September 13. This i s the f i r s t decline in yields on new issues since May. However, market reports indicate that the obligations of the issuing company rank somewhat higher within the Aa-rating group than do the issues which.were f l o a t e d at mid-September. Commercial Credit Company's $50 million note issue origi n a l l y scheduled for sale in mid-August was increased to $75 million and came to the market on September 26. The securities carried terms similar to l a s t week's offering by CIT Financial Corporation— a coupon of 4 1/4 and a 10-year -no-call provision—and were reoffered to yield 4.38 per cent. Both issues were quickly absorbed by the market. The somewhat lower offering yield on the new u t i l i t y issue, the favorable reception accorded the two finance company issues, and a narrowing in the spread between new and outstanding issues indicate some stabilization in corporate bond markets. Stock prices - Stock prices, as measured fcy t h e SEC index of 265 common stocks, declined 4.0 points during the week ending September 21, closing a t 277.3. Daily figures f o r the " f i r s t three days of - 2 - t h i s week indicate a f u r t h e r decline in prices on balance,with the drop being particularly sharp on Tuesday, but with some recovery on Wednesday. More detailed information concerning recent capital market developments i s presented in the attached exhibits. Business Finance and 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. / EXHIBIT A HIGH-GRADE BOND YIELDS \ U. S. GOVERNMENT: STATE AND LOCAL GOVERNMENT Acm long-term 2/ Corporate Aaa y Old s e r i e s New s e r i e s Spread between State and u. S. l o c a l govt. (old s e r i e s ) and Corporate(State and Aaa 3 / Aaa [local Aaa (Per cent) 1953 T High Low 195U - High Low 1955 - High Low 1956 - High Low 3.L2 2.99 3.09 2.85 3.17 2.91 3.56 3.07 August 2U August 31 September 7 September lit September 21 3.U7 3.1*9 3.53 3.55 3.56 (6/19) (1/9) (1/8) (1/23) (12/23) (1/7) (9/21) (3/2) 3.15 2.78 2.7U 2 .lilt 2.9U 2.62 3.22 2.80 (6/6) (12/26) (1/9) (8/7). (8/5) (1/7) (9/7) (2/17) 3.21 3.21 3.22 3.21 3.15 1 / Weekly average of daily figures. n.a. 3.03 2.89 3.26 2.92 3-23 3.23 3.25 3.26 3.2U (8/5) (6/10) (9/1U) (2/3) . 2.73 1.98 2.21 1.90 2.3k 2.05 2.63 2.17 2.59 2.62 2.62 2.63 2.63 (6/25) (1/8) (6/10) (9/2) (9/8) (5/26) (9/20) (2/23) .38 .19 .1*3 •32 •3l* .13 .11 .13 .81; ".30 .61 .29 .70 .51* .68 .1*5 .26 .28 .31 • 3U .62 .59 .60 .58 .52 .la Average term of bonds included i s 25-26 2/ Weekly averages of daily figures. The old series includes f u l l y taxable, marketable 2 1/2 per cent bonds due or f i r s t c a l l a b l e a f t e r 12 years through September 1955# and those due or c a l l a b l e in 10-12 years thereafter; the average term.to f i r s t c a l l of the bonds included declined from 1U years in early 1953 to 11 1/2 years in early 1956. The new s e r i e s i s comprised of the 3 per cent bond of 1995 and the 3 1/U par cent bond of 1978-83. i / Thursday f i g u r e s . Only general obligation bonds are included; average term i s 20 years. Note.—Highs and lows are f o r individual s e r i e s and may be on d i f f e r e n t dates for different series. LOWER - GRADE BOND YIELDS Weekly CORPORATE Baa I I I STATE AND LOCAL GOVT. Baa i H r^r i I i STATE AND LOCAL GOVT. REVENUE KK' i ll M 1,1 l I (Per cent) 1953 - High Low 195U - High Low 1955 - High Low 1956 - High Low 3.89 3.50 3.7U 3.UU 3.63 3.L5 k.09 3.58 August 2h August 31 September 7 September 11* September 21 3.95 3.97 U.oi U.05 U.09 (9/18) (1/2) (1/8) (12/31) (12/30) (1/14) (9/21) (3/9) 3.79 (6/25) 2.96 (1/8) 3.32 2.93 3.26 3.02 (1/7) (8/5) (12/29) (1/6) 3.61 (9/20) 3.20 (3/8) 3.57 3.60 3.60 3.60 3.61 3.27 (6/26) 2.71 (1/2) 3.00 (1/1) 2.72 2.99 2.76 3.51 2.89 (8/13) (12/30) (1/7) (9/7) (2/2U) 3.39 3.51 3.51 3.50 3.JU8 1 / Weekly average of daily figures. Average term of bonds included i s 25-26 years. 2/ Thursday figures. Only general obligation bonds are included; average term i s 20 years. ° Friday figures. Average rating of bonds included i s between Baa and Aj average term i s 20 yearsi Nate.—Highs and lows are for individual s e r i e s and may be on different dates for different s e r i e s . STOCK MARKET • Date Stock p r i c e Stock market customer c r e d i t Customers' Bank Total d e b i t b a l - l o a n s t o ances V "others" 2J Trading volume 2 / (millions yields y of shares) (per c e n t ) (Willions of d o l l a r s ) 1956 - High Low 167.1 1W.0 221.U 156.5 270.7 217.U 295.5 257.U July August September 7 September ll* September 21 290.1290.0 285.1 281.3 277.3 1953 - High Low 19SU - High Low 195$ - High (1/2) (9/18) (12/31) (1/6) (12/30) (1M) (8/3) (1/20) 2,1*5 2.5 0.9 3.7 1.U U.6 1.5 3.1 1.6 5.75 5.15 5.33 U.20 U.22 3.78 li.21 3.86 2,055 3,U36 2,U05 a,030 3,537 U,0U7 3,979 1,665 1,31U 2,388 1,653 2,805 2,517 2,810 2,710 2.2 1.9 1.8 2.0 2.1 3.87 U.02 L,026 3,979 2,812 2,785 n.a. i n.a. 780 66U 1,0U8 7L6 1,21a 1,018 1,267 1,182 1,211 c/l,19li " 1,192 1,182 n.a. c / Corrected. n.a.—Not available. 1 / SEC index of 26$ common s t o c k s , weekly c l o s i n g p r i c e s , 1939-100; converted t o 19U7-U9"100 by Federal Reserve. The conversion f a c t o r i s 1 2 3 . 9 1 . 2 / Averages of d a i l y trading volume on the New York Stock Exchange. 3 / Moody's 200 common s t o c k s ; end of month f i g u r e s . V End of month f i g u r e s f o r member firms o f the New York Stock Exchange which carry margin accounts; excludes balances secured t y U. S . Government o b l i g a t i o n s . Wednesday f i g u r e s f o r weekly reporting member banks. Excludes l o a n s f o r purchasing or carrying U. S. Government s e c u r i t i e s at banks in New York and Chicago. Weekly reporting banks account f o r about 72 per cent of loans t o o t h e 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 dates for different series. H.lU Exhibit D Corporate and State and Local Government Security Offerings and Placements (In millions of dollars) 1956 January February March . April May June July August September 579 . 70U 790 816 l,ll*l* 830 e/1,120 ^e/7C0 e/850 October November December ^ 1 s t quarter * 2nd quarter 3rd quarter lith quarter Year 2,073 2,790 e/2,670 Corporate 1 1 1955 New c a p i t a l State and l o c a l 1956 * 1 1955 1 1951* 1951* 535 1*07 1,223 51*7 JU26 635 1*01* 696 390 535 312 538 • U78 886 687 1*97 656 812 377 1*90 735 1*27 350 6Ul 734 71*8 853 597 909 335 ' 71*7 e/380 670 e/350 470 21+9 lt06 279 261 61*9 1,162 y 632 900 1,003 290 6o!i 919 658 408 591* 1*23 877 2,165 2,052 1,911 2,695 8,821 1,608 1,995 1,991 1,896 7,k90 ^1,385 1,1*18 1,121* 1,981* 5,911 1,372 2,331* 1,188 1,891* 6,789 6hh ' 1,1*90 1,603 9l*5 , 396 iai 565 Excluding finance companies 2/ 1st quarter 2nd quarter 3rd quarter hth quarter Year 1,617 2,520 e/2,U70 1,727 1,870 1,1*3** 2,551 7,569 1,527 1,927 1,911 1,792 7,158 e/ Estimated. ' " ™~ 1 / Includes $637.2 million AT&T convertible 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 to t o t a l s due to rounding. * H.llt Exhibit E Large Public Security Issues f o r New Capital (Other than U. S. Treasury) 1 / Proceeds of Large Issues Offered (Millions of dollars) Month Corporate 1955 - August September October November December 1956 - January February March April • May June July August . State and local government li05 = 3# ^ 805 221 263 . 95 212 278 395 623 185 592 217 Other 2/ __ 65 23b 716 Uoi 227 192 25 50 hhk I63 157 233 L63 16U 35 50 20 37 Large Individual Issues Offered Sept. 1 through 21 Issuer . •type 3/ Amount Coupon (millions rate or Offering Maturity Rating of net i n t e r yield dollars) e s t cost CORPORATE Gulf States U t i l i t i e s Co. General Telephone of Cal. Southern Cal. Edison Northern States Power Co. Procter & Gamble Co. Detroit. Edison Co. Tennessee Gas Transmis„ sion Co. Tenessee Gas Transmission Co. C.I.T. Financial Corp. Southern P a c i f i c R.R.Co. 1st mtg.bds. 1st mtg.bds. Common s t k . 1st mtg. bds . Deb. Conv. deb. 15.0 20.0 2U.3 15,0 70.0 59.8 1986 1986 It 1/lt It 1/2 U.iil h.20 Aa A 1986 1981 1971 It 1/lt 3 7/8 3 3/lt U.17 3.88 3.75 Aa Aa A 1st mtg.bds. 50.0 . 1976 It 3/lt U.70 A Pfd. stk. Deb, 1st mtg.bds. 20.0 75.0 35.0 1971 1983 5 iA It 1/lt • ho 32 5.25 Baa i E-2 Large Individual Issues Offered Sept. 1 through 21 (Cont'd.) Issuer Type 3/ Coupon Amount r a t e or Offering Rating (millions Maturity yield of net i n t e r dollars) e s t cost STATE AND LOCAL GOVERNMENT Port of New York Autho r i t y , it. Y. Allegheny Co. I n s t . Disto, Pa. Oakland Unified School D i s t i , Cal. New York, New York State of Michigan Lo.i Angeles School D i e t s . , Calif. Nassau Co., New York Kansas City, Mo. Rev, 25.0 1986 3,52 3.U5 A G.O. 6.3 1957-86 3ol7 2.20-3.20 A. G.O. G.O. L*L. 10.0 30.0 25.0 1957-81 1957-71 1957-79 2.85 3.28 2.10-2.90 Aa 2.25-3.30 A 2.15-3.00 Aa G.O. G.O. Water Rev. 29.0 19.6 9.5 1957-81 1957-85 1961-86 3.08 3.0k 3o3h 2.99 2.00-3.10 2,25-3.35 2.50-3.00 Aa A Aa OTHER fc>ne 1 / Includes corporate and other s e c u r i t y o f f e r i n g s of $15 million 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 i n g s of $5 million and over. 2/ Includes foreign 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/ Hi the case of State and l o c a l government s e c u r i t i e s , G.O. denotes general obligation; Rev., revenue bonds; G.R., general obligations a d d i t i o n a l l y secured tiy f a c i l i t i e s revenues; L . L . , limited l i a b i l i t y obligations secured by pledge of designated revenues. $ Exhibit F ' H.lU Forthcoming Large Public Security Offerings f o r New Capital (Other than U. S. Treasury) 3/ Expected Proceeds from Forthcoming Large Issues Date of computation During month following date shown Corporate State and Other 2/ local govt. 222 805 202 215 70 176 123 380 568 198 137 1955 - Aug. 31 Sept. 30 Oct. 31 Nov. 30 Dec. 30 1956 - Jan. 3 ! Feb. 29 Mar. 30 Apr. 30 , May 31 June 30 July 31 Aug. 31 r > 2h7 369 181 81*3 330 205 121 327 220 132 173 332 81 131 50 37 -- Subsequent to date shown Corporate State and Other 2/ local govt. 920 909 1*12 230 85 376 233 1,013 818 as 567 1,096 1,202 1,971 2,205 1,650 756 618 917 785 811 832 91*1 690 726 958 ' 50 37 — Forthcoming Large Offerings, as of 'September 21 Type Amount (millions Approximate date I of dollars) of offering CORPORATE North American Aviation, Inc. Cap. stk. "Virginia Electric & Power Co. Commercial Credit Co. New England Tel. & Tel. Co. 1st mtg. bds. Notes Cap. stk. Pacific Tel., & Tel. Co. U3.5 ' 20.0 75.0 18.9 Common s t k . 16.2 Conv. pfd. stk. 38.8 Columbia Gas System, Inc. Southern Bell Tel. & Tel. Co. *Seaboard Finance Co. *Long Island Lighting Co. Deb. Deb. S.F. notes Conv. pfd. stk. 25.0 60.0 15.0 18.0 ^Consolidated Edison Co. *Ohio Power Co. ^Southern New England Tel. Co. 1st &ref.mtg.bds. 1st mtg. bds. Common stk. 1*0.0 28.0 20. 1* United A i r c r a f t Corp. American Tel. & Tel. Co. J . P. Stevens & Co. P a c i f i c Finance Corp* Michigan Wisconsin Pipe Line Co. Common stk. 580.0 S.F. deb. Deb. 1st mtg. bds. 28.7 25.0 25.0 September 2k (rights expire) • September 26 September 26 September 28 (rights expire) September 28 (rights expire) October 2 (rights expire) October 3 October 8 October 9 October 15 (rights expire) October 23 October 30 November 2 (rights expire) November 5 (rights expire) 1956 1956 1956 '0 H .Hi F-2 Forthcoming Large Offerings, as of September 21 (Cont'd) Issuer Type Amount date (millions Approximate of offering of dollars) STATE AND LOCAL GOVERNMENT Kalamazoo School D i s t . , Mich. *Cook Co. High School D i s t . , No. 209, H I . Washington State Toll Bridge Auth. Westchester Co., N . Y . ^Detroit, Michigan *State of California •*Stata of South Carolina *San Bernardino Co., Calif. *State of Massachusetts •^Territory of Hawaii e s t a t e of Ohio Chicago Bd. of Education, 111. Jacksonville Expressway Authority Memphis, Tennessee Florida State Turnpike Authority Oklahoma Turnpike Authority Pennsylvania Turnpike Commission 1 Washington State Toll Bridge Auth. Inter-American Center Auth., Fla. New Jersey Highway Authority New York State Thruway Authority G.O. G.O. Rev. G.O. G.O. G.O. G.O. G.O. G.O. G.O. L.L. G.O. Rev. Elec. rev. Rev, Rev. Rev. Rev. Rev, , Rev. G.O. 10.0 September 26 6.8 5.1* 7.3 12.3 35.0 15.0 6.0 58.0 12.0 25.0 10.0 1*2.0 135.0 185.0 65.0 62.0 227.0 31.0 25.0 50.0 September 26 September 26 September 26 October 2 October 3 October 9 October 9 October 17 October 23 October 25 . November li; Fall Fall Fall 1956 1956 1956 1956 1956 1956 OTHER None *—Included in table, f o r f i r s t 1 / Includes corporate and other issues of $1$ million and over; State and local government issues of &5 million and over. 2/ Includes foreign government and International Bank for Reconstruction and Development issues. Note.—Deletions for reasons.other than sale of issue; Florida Development Commission $5.5 million issue—rejection of bid. # .
@FedFRASER