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发表于 2011-9-17 13:16
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Current situation
+ d t0 w# j% f+ d The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long b' r. W" |# o i& b6 I& ^, T
as funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may( L7 o0 P; M4 y% \6 O
impose liquidation values.
; r0 q( b6 Z' q) M9 X# _8 [ In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In
' o% F) P, ]- F# yAugust, we said a credit shutdown was unlikely – we continue to hold that view.
$ `9 _4 k7 a+ m9 E6 t7 l6 F The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension
& ^4 p) ]1 v2 l3 ^/ s; E" cscrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets.# \7 X: _) g3 z; x3 b6 _
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A look at credit markets7 F8 K$ _, V* `$ d' Z$ D, q
 Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in& O& g$ \. q) H" @" {6 z1 N
September. Non-financial investment grade is the new safe haven.
) r! I- v' ^: D4 a High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7%
! }* C' w0 Q) z; t( Uthen, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $12 j) p4 b) S$ f7 m+ N% `6 V
billion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have0 C: F/ X/ @: p2 p B: z' x
access to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade. c/ |1 c; s+ B' X" }0 Y$ B
CCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are. [* j) F i- C; E7 W5 o u' R
positive for the year-do-date, including high yield.- J7 A+ X5 j3 H: F- {- o4 f
 Mortgages – There is no funding for new construction, but existing quality properties are having no trouble# J: b% w0 f, J3 O- [+ X
finding financing.
3 N1 K6 | Z3 V; d; { a) M Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they
/ @, t# N( ]- O C0 a0 i; cwere subsequently repriced and placed. In the fall, there will be more deals.
1 N0 J# D# g! j Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and
2 o: |6 n9 |# K: a0 l* ^is now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were
8 e8 I4 C5 Q0 @going up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for
# o" Q) c' V* F3 bbankruptcy, they already have debt financing in place.
$ h$ O8 X" p v) n; W2 d European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain
+ q5 Q- }; A" B9 Vtoday.
) x3 i. M4 v& S7 ~( H Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in
( L5 a" S: ^6 U: J% t5 Semerging markets have no problem with funding. |
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