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发表于 2011-9-17 13:16
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Current situation
) Z7 b9 M* l1 k7 [! e( H The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long! ~8 {& l& j+ E/ _8 I3 V w
as funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may- a/ h* k' F4 F6 ?3 [ O% n
impose liquidation values.9 w+ {9 Z$ S2 A0 n
 In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In7 t1 N' ~* E0 m. j; ]+ t5 x4 A
August, we said a credit shutdown was unlikely – we continue to hold that view.! Q4 X! W$ ^/ L2 a) d& z$ @$ m
 The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension
' J! V! Q2 P+ D- o+ Q: c1 l$ h% Sscrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets.
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* ^# E% o3 M; c. \4 w. c) hA look at credit markets# W. ^: J5 Q( G3 d0 L# {
 Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in
3 L; M D$ @8 USeptember. Non-financial investment grade is the new safe haven.
; ]# q; E. ?* U7 z High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7%- y6 {/ ~& v* A6 n. N4 X
then, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $1( Z; { O# |7 }' [+ S
billion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have
. J4 V; U" p7 q$ kaccess to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade( @5 O& l# y% f0 S" m
CCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are
9 d9 f5 b- h. y* y# E* H: @' Lpositive for the year-do-date, including high yield.7 R/ j! Y3 A; Z4 O' k. f8 E
 Mortgages – There is no funding for new construction, but existing quality properties are having no trouble
# D- ~$ Y: \: G( i# C1 K' m' u0 cfinding financing.
5 V$ u/ U9 \( I& ? Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they7 R- W: c$ \) H2 Y
were subsequently repriced and placed. In the fall, there will be more deals.4 |7 P2 J$ C& T* v" f, n
 Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and# P4 z1 @5 [- Y! D3 E6 c/ \
is now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were3 l3 h+ N5 i0 O
going up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for& c+ I) Z0 @8 a0 q7 c }
bankruptcy, they already have debt financing in place.
2 U+ F4 K0 O1 b" ~# ] European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain
2 c2 w4 m! B* B$ D9 j ?today.
) [: \& l! t' @+ \+ [ Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in
5 R# F" i8 B9 b- L, w& M2 Memerging markets have no problem with funding. |
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