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发表于 2011-9-17 13:16
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Current situation
- }, h0 z$ ?. E3 N- R e# T% C The lesson we learned from the 2008-2009 credit crunch is how credit markets affect stock valuations. As long& K0 A. i# c5 R
as funding markets stay open, equities are valued as going concerns. But if credit markets close, markets may* l! O8 S& n5 i
impose liquidation values.
% C( Z. k- m' u6 O4 @ In the summer, the European credit crisis caused another round of market worries about a credit shutdown. In# D5 s1 ?$ \( b* I. D
August, we said a credit shutdown was unlikely – we continue to hold that view.
1 V; m4 G% ?/ M& S- i The collapse of interest rates on 10-year Treasuries to 2% leaves banks, insurance companies and pension+ T$ g3 j& w. U
scrambling for higher yields to satisfy their obligations – this is supportive of corporate bond markets.
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A look at credit markets2 L& L" I+ E- m1 f* f
 Investment grade – $17 billion in new issues were placed last Wednesday. We’re expecting $80-$100 billion in" ?0 m7 u' H7 `7 b2 L" h
September. Non-financial investment grade is the new safe haven.
+ h& O: u6 p8 S9 {9 W High yield – In March, the spread above governments was 450 basis points, today it’s 740 bps. Yields were 7%
: g. w# D" `! t9 l' V9 w x/ ~- Rthen, now they are 8.5%. New issuance has been about $30 billion a month, although August saw only $1( o4 C& F9 ~. K: a5 M& Q
billion. That said, the market is still open. Risk has been repriced – but appropriately priced issues still have
! r+ e e' E) }$ I3 Y0 raccess to the market. There are only two parts of the global bond market having difficulty – ultra-low-grade6 f% E% X( H) X1 p# k+ X2 s
CCC issues and European high yield, which are both down about 2.5% year-to-date. All other bond markets are" E5 O' L" x, w U
positive for the year-do-date, including high yield., C4 K/ @2 {0 |; h e+ P) b# \
 Mortgages – There is no funding for new construction, but existing quality properties are having no trouble* {+ F) ^. j. p$ e. L) K3 t+ y
finding financing.
2 I/ _' L8 X+ A! i$ L/ y4 f Commercial mortgage-backed securities (CMBS) – In the summer, there were two failed transactions, but they
* x3 B5 F+ k9 R7 Owere subsequently repriced and placed. In the fall, there will be more deals.
; \) _9 u- _1 U2 r( c; t1 L Leveraged floating rate collateralized loans – The index was trading at $90 last September, $96 in March and5 J. v! z( l" L* i) O, `5 }
is now back to $90. Changes were a result of interest rate expectations (people thought that interest rates were
A) A' t6 {, W. D8 Y! Bgoing up) rather than liquidity. Chapter 11 companies have no problem getting secured and when they file for5 v7 l3 M' B$ e; d- J* P- Q
bankruptcy, they already have debt financing in place.
1 R! T0 Y8 q# F7 q8 S( s3 l European banks – European bank lending conditions are tighter. This is the weakest link in the financial chain
. S) i2 z: @% ]' X7 ytoday.. P7 k5 p/ r0 j9 @% ^
 Emerging markets – Sovereign rates have rallied along with U.S. Treasuries. High-grade corporates in! t* t. t6 m* l7 e# [. N3 o8 P x
emerging markets have no problem with funding. |
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